So your big idea is a manufacturer who is making very little to none profit on its own handsets with a free os, pay a freeking large fee to make a handset they will definitely lose money on. Yeah win win for them.... not.
A company like Sony/HTC could make profit selling iOS licensed phones.
Apple sells the iPhone SE at $399. Apple's profit margin company wide is about 30% before taxes. Pretty sure the SE makes at least 30% profit margin. So Apple makes $120 profit on that phone. So it costs Apple about $280 to make and sell the SE.
With a few cost cutting measures: older A8 chip instead of A9, less premium case, ect the phone would only cost about $250 to make and sell. The cost would less also because they won't be spending as much on R&D as Apple and much lower selling and admin costs.
So lets say Sony can make and sell a licensed iOS phone for $250. Sell Price would be $350. Royalty to Apple would be $50. Profit per phone would be $50.
If Sony sells 20,000,000 of those phones they would make ONE BILLION in profit. That is a HUGE win for them.
The reason why most Android phone sellers lose money is because they don't sell enough phones to cover fixed costs. By selling iOS licensed phones they will sell a ton of units and make profit.
Sure Sony won't make as high profit margin as Apple. But even if you SPLIT the profits in half that is still a super healthy 15% pre tax profit margin. Any hardware maker would bend over backwards to get a 15% pre tax profit margin.
Your wild guesstimates would be more convincing if you could at least keep the numbers the same in between your posts.
Mercedes does sell its engines to other companies like Nissan. BMW/Merc also sells their chassis platform to other companies also. These phones won't be branded as iPhones or Apple phones. But iOS powered phones. Just as Nissan cars with Merc engines are not called Merc cars.
Yes hardware profits in the sub $400 range is limited. But services on those platforms is a HUGE opportunity.
A company like Sony, LG, ect would get a huge boost in profits selling iOS licensed phones. Not Apple level profits but nice profits because they would be selling a differentiating product compared to the thousands of Android models. They will basically be the exclusive seller of sub $350 iOS devices.
Keep in mind besides Apple there still is about $6 billion in profits in the phone business. That is still huge. Sony, LG, ect would love to get a bigger piece of that pie and selling an iOS device would do that.
Dear God you've found another horse to flog.
So your big idea is a manufacturer who is making very little to none profit on its own handsets with a free os, pay a freeking large fee to make a handset they will definitely lose money on. Yeah win win for them.... not.
A company like Sony/HTC could make profit selling iOS licensed phones.
Apple sells the iPhone SE at $399. Apple's profit margin company wide is about 30% before taxes. Pretty sure the SE makes at least 30% profit margin. So Apple makes $120 profit on that phone. So it costs Apple about $280 to make and sell the SE.
With a few cost cutting measures: older A8 chip instead of A9, less premium case, ect the phone would only cost about $250 to make and sell. The cost would less also because they won't be spending as much on R&D as Apple and much lower selling and admin costs.
So lets say Sony can make and sell a licensed iOS phone for $250. Sell Price would be $350. Royalty to Apple would be $50. Profit per phone would be $50.
If Sony sells 20,000,000 of those phones they would make ONE BILLION in profit. That is a HUGE win for them.
The reason why most Android phone sellers lose money is because they don't sell enough phones to cover fixed costs. By selling iOS licensed phones they will sell a ton of units and make profit.
Sure Sony won't make as high profit margin as Apple. But even if you SPLIT the profits in half that is still a super healthy 15% pre tax profit margin. Any hardware maker would bend over backwards to get a 15% pre tax profit margin.
You have them buying Apple hardware too (A8)? Cases? Lower selling costs? How so?I don't see money in it for the OEM's. The whole segment is already seeing price pressures, particularly from Chinese manufacturers who could undercut any of them if they wish and still offer darn nice hardware and features.
Nope, Apple ain't licensing iOS nor should they IMHO.
Licensing iOS is a terrible idea, but open sourcing OS X may not be a terrible idea. Enabling PC owners to jump into the iOS app market by programming in Swift using Apple's Dev tools would open the rest of the world to profits and content control and distribution that would support the iOS environment in all new ways and further expand the audience for iOS products, which may soon expand beyond the core iOS product line.
Of course it would, and more than that it would open Apple up to a whole other world of support problems that they currently don't have to deal with because they own the vertical.
Terrible, terrible idea that even if it were successful would destroy Apple as we know it.
A company like Sony/HTC could make profit selling iOS licensed phones.
Apple sells the iPhone SE at $399. Apple's profit margin company wide is about 30% before taxes. Pretty sure the SE makes at least 30% profit margin. So Apple makes $120 profit on that phone. So it costs Apple about $280 to make and sell the SE.
With a few cost cutting measures: older A8 chip instead of A9, less premium case, ect the phone would only cost about $250 to make and sell. The cost would less also because they won't be spending as much on R&D as Apple and much lower selling and admin costs.
So lets say Sony can make and sell a licensed iOS phone for $250. Sell Price would be $350. Royalty to Apple would be $50. Profit per phone would be $50.
If Sony sells 20,000,000 of those phones they would make ONE BILLION in profit. That is a HUGE win for them.
The reason why most Android phone sellers lose money is because they don't sell enough phones to cover fixed costs. By selling iOS licensed phones they will sell a ton of units and make profit.
Sure Sony won't make as high profit margin as Apple. But even if you SPLIT the profits in half that is still a super healthy 15% pre tax profit margin. Any hardware maker would bend over backwards to get a 15% pre tax profit margin.
You have them buying Apple hardware too (A8)? Cases? Lower selling costs? How so?I don't see money in it for the OEM's. The whole segment is already seeing price pressures, particularly from Chinese manufacturers who could undercut any of them if they wish and still offer darn nice hardware and features.
Nope, Apple ain't licensing iOS nor should they IMHO.
They would not have to worry about price pressure because they would have an EXCLUSIVE license to have iOS light. Only one hardware maker will have the rights to make these special iOS phones.
Curious what you think the advantages of iOS light would be since I assume by "light" you mean with truncated features and running on lesser hardware than similarly-priced Android devices without stripped out features. Why would a consumer spend more for the handicapped iOS one? Long-time Apple fans wouldn't buy 'em and without "Apple" on the case there's no sense of prestige either in developing Asian markets. iOS by itself won't cut it IMO.
Now Apple needs to get iOS on phones from $100-$300. To do that they should license iOS light version to selected manufacters.
If Apple plays its cards right it can get 50% market share of the smartphone market.
Apple should charge the greater of $20 or 15% license fee per phone. They could probably sell 600,000,000 licensed phones a year.
600,000,000 x $30 license fee = $18 billion in almost pure profit
It's an interesting idea on the surface. Sure would boost the stock price alright! I just wonder if those other phones would have all sorts of performance issues and incompatibilities with the hardware or software.
I'm not sure putting their iOS on other phones is a good idea, doubt they would ever do it.
Because there are far too many traders and get rich quick agents who buy Apple stock.
Easy fix? Take the company off of the public exchanges.
I would not be shocked if the stock tested the $92 low this summer. Until Apple proves they can grow earnings again the stock will be controlled by traders and weak hands.
Arrghhh. Ok Sog35, how many crusades are you gonna rant???
They would not have to worry about price pressure because they would have an EXCLUSIVE license to have iOS light. Only one hardware maker will have the rights to make these special iOS phones.
Curious what you think the advantages of iOS light would be since I assume by "light" you mean with truncated features and running on lesser hardware than similarly-priced Android devices without stripped out features. Why would a consumer spend more for the handicapped iOS one? Long-time Apple fans wouldn't buy 'em and without "Apple" on the case there's no sense of prestige either in developing Asian markets. iOS by itself won't cut it IMO.
Curious what you think the advantages of iOS light would be since I assume by "light" you mean with truncated features and running on lesser hardware than similarly-priced Android devices without stripped out features. Why would a consumer spend more for the handicapped iOS one? Long-time Apple fans wouldn't buy 'em and without "Apple" on the case there's no sense of prestige either in developing Asian markets. iOS by itself won't cut it IMO.
... The advantage is you have access to the Apple ecosystem - iTunes, App Store, AppleMusic, Apple Pay, Messages, ect. I think the iOS lite version will be similar to what 4 year old iPhones get today. Like if own an iPhone 4s today you can run iOS9 but you won't have all the features. Same thing with this lite version of iOS.
Another advantage of owning an iOS licensed phone is privacy and less chance of security breaches from Malware. Also iCloud integration with other iPhones, iPads, or Macs. ...
What is the "light" part then? It would ruin the ecosystem experience.
Advantages of an iOS licensed phone vs a $300 android phone:
1. Security 2. Privacy 3. iOS 4. Integration with other iPhone/iPads and other iPhone users (exa Messages)
A $300 iOS licensed phone would basically be an iPhone6 in a different shell. Maybe with a larger screen. That would blow the doors off of $300 Android phones.
Essentially then you're saying sell an iPhone 4S without "Apple" on it. Their hardware, their truncated limited feature OS, with someone else's name on it. Why?? I don't think you've actually looked at more recent Android phones. They aren't prone to malware, slow, insecure, or suffer from a lack of apps as you seem to think they do. A "light" version of iOS on even two-year old hardware wouldn't compare feature-wise with a comparably-priced Android one. Old hardware would run iOS slowly and of necessity not be able to run some of Apple's latest features. Some apps wouldn't be compatible with the old hardware either.
Gosh, sounds like buying a new Android phone pre-loaded with three-year old KitKat. At the end of the day you'd have dozens of Android model phones running rings around that old handicapped not-an-iPhone you think everyone will want to buy. They wouldn't. On top of that it becomes Apple's own fragmentation headache since they'd have to support various hardware builds according to you, some with large screens, some with small, some with more or less memory to support them, or different controllers with different drivers than others. Guess what, some won't get more than an update or two just like some Android phones. iOS by itself is not the advantage you think it is IMHO. It's Apple's total package that makes them attractive.
Apple would not want to be associated with that not-an-iPhone's
Essentially then you're saying sell an iPhone 4. Why?? I don;t think you've actually looked at Android phones. A light version of iOS wouldn't compare feature-wise with a comparably-priced one, old hardware would run iOS slowly and of necessity not be able to run some of iOS latest features. Some apps wouldn't be compatible with the old hardware either. Gosh, sounds like a new Android phone loaded with three-year old KitKat. At the end of the day you'd have dozens of Android model phones running rings around that old handicapped not-an-iPhone you think everyone will want to buy. They wouldn't. On top of that it becomes Apple's own fragmentation headache since they'd have to support various hardware builds according to you, some with large screens, some with small, some with more memory or different controllers than others. Guess what, some won't get more than an update or two.
Apple would not want to be associated with that.
Who said anything about iPhone4?
i said it would be a 3 year old iPhone. So if they license it out next year it would be an iPhone6 hardware. An iPhone6 runs better than most $300 Android phones.
And there would be no fragmentation. Adjusting for screen size is no problem. But if it is then they could just stick with the same screen size as the iPhone.
The phones will be IDENTICAL to the 3 year old iPhone. The only difference is the case and maybe screen size.
Updates won't be a problem. They will fall under the same terms as Apple's iPhones.
Go over to an Android forum and proclaim your plan. It does not hold water here.
3 year old iOS will quickly become incompatible with apps in the app store, no AppleMusic, No ApplePay, etc. And remember, 3 year old hardware is a 5S, you must mean 3 models ago. Get the words right.
If it happens, I will sell my iPhone and go to Android forever. It handled like your self ban, I guess I get to keep my iPhone.
its absurd. the margin on iOS licensing to HTC for that wouldnt equal what they make from their own hardware sales, which is where apple makes its money as its a hardware company. you can chicken little all you want, but they've been doing it this way for a long time, and are still boss of multiple industries -- digital media players, PCs, cell phones... i have no reason to believe they won't continue to adapt as they have thus far.
you're worried about playing the numbers. good businessmen worry about delighting their customers.
Apple is doing a great job dominating the high end market. But the problem is there is no growth left in the high end.
Apple has zero players in the $200-$398 range. That is where licensing comes to play. If Apple can get royalties of $30-$60 per unit that would be huge. Or would you rather Apple do nothing in that price range and just allow Android to continue to dominate that price point? Also don't forget the additional services revenue Apple would get from the added iOS users.
In the past Apple didn't have to mess with the $200-$398 price point because there was still growth in the high end market. It would be a waste of time and resources for Apple to chase the mid/low end. But now the high end is saturated and its time for Apple to focus on the mid/low end. They have already done this with the SE. Licensing is the next logical step.
This is a MASSIVE opportunity.
Last year 1.4 billion smartphones were sold. Apple sold about 230 million. With licensing they could sell an additional 200-400 million units at $200-$398 next year. That would give iOS a 45% marketshare.
400,000,000 x $45 average royalty = $18 billion Now add $5 per unit in services = $2 billion That's a $20 billion opportunity with 75% gross margin That's a bigger profit than iPad, Mac, Watch, and AppleTV COMBINED.
This is such a massive opportunity. I predict that in 3 years or less Apple will open up iOS to licensing.
Apple should not make $200-$300 phones themselves because it will cheapen the iPhone brand. Plus its much more risky (inventory) and much lower margins. Instead they should pass the risk to other hardware makers.
This is not about maximizing shareholder value. This is about increasing the iOS user base to TWO BILLION. The only way to do that is to allow for iOS devices in the $200-$300 range.
With TWO BILLION iOS users Apple can generate crazy profits with services. That is the long term goal. Selling more and more iPhones is not. We have reached its peak. Its time for Phase 2.
if you don't think licensing iOS to cheap brands like HTC is going to cheapen it...well, I don't know what to tell ya. you're nuts. having to support other non Apple hardware would ruin iOS.
That's why Apple needs to license iOS to capture a large chunk of the $200-$350 market. Its just too huge of a base to totally ignore. Right now there are about TWO BILLION users who buy sub $399 phones.
I could see Apple licensing this type of phone next year:
HTC Red powered by iOS Light 5 inch AMOLED screen A9 CPU 2 GB Ram TouchID ApplePay 32 GB $300
This would a freakin hot seller to those who only can afford $200-$300
I don't understand what you mean by iOS Light if you include TouchID and ApplePay. Any sort of iOS light would have the basic Phone,Camera, Email, Safari, Maps, Contacts, etc. and Apps but seems like it should exclude TouchID, Apple Pay, SIRI, iCloud, Apple Music - those should be available by monthly charge whether its manufactured by Apple or HTC. By the way I've liked the design of the HTC ONE M7 and the new HTC ONE M10 and would buy the new one full price if it came with iOS. I like that you recognize that Apple needs to greatly grow the number of users now in order to sell services in the future. Id prefer APPLE buy HTC out right and start switching their high and mid tier phones over to iOS Lite but keep HTC as a separate brand with its own hardware design. I'm sure there are some areas like photo processing that HTC would benefit from apple but would prefer to see Apple on a different platform design.
FALSE. Not if you only allow a light version of iOS to be licensed. The light version would not have all the features of a flagship iPhone. Also Apple will license iOS Light to only mid/low range phones. They will not allow iOS light on top end phones like a Samsung S7. The phone will not be branded as an iPhone or made by Apple. It will be an HTC phone running iOS light. This will make a clear line between the iPhone and these licensed iOS devices. Licensed devices will only be $200-$350 phones. In other words it won't compete with iPhone.
2. It will canibalize iPhone sales.
Not by much. These licensed iPhones will have inferior hardware to the iPhones. Probably 2 years behind at least. I doubt many who are use to iPhones would buy an HTC with 2 year old tech to save a few hundred dollars. These licensed phones are for people who can only afford $200-$300.
3. Why waste time selling licenses when iPhone units make much more profit?
Why does Apple sell 1 year old and 2 year old iPhones with less profit? Because Apple understands some people just can't afford or won't pay for the flagship model. This is an extention to that model. Also top end phones sales have reached a maximum. If Apple wants to continue to grow they need to address lower price points. Not address lower price points is giving Google a virtual monopoly on over a BILLION units a year.
4. Why license if Apple can just build it themself?
Because it would tarnish the iPhone brand. Apple can't be the brand name on new phones costing $200-$300. Also there is massive risk in building and selling $200-$300 phones. Apple is better off passing on this risk to other hardware makers who already accepted this risk (already selling $300 Android phones) and who lack a solid OS. For exchange for a world class OS the hardware maker pays a small royalty and accepts the risks of building/selling the phones. To make it worth their while, Apple may offer exclusive iOS licenses in each country. For example Sony would have exclusive rights to iOS Light in Japan. That way these phone makers can tout that they are the only phone that runs iOS that is not an iPhone.
5. Is it worth the effort?
This is a huge opportunity. Over 1.4 billion smartphones are sold a year. And almost ONE BILLION are in the $200-$350 price range. If Apple can get 40% of that market they would make a killing. 400 million units x $45 royalty fee = $18 billion in royalties. And remember royalties are a super high profit margin. That would be more profit than iPad, Mac, Watch, AppleTV, and Accessories COMBINED.
Also note that a much larger user base would be much larger services revenue. After 5 years of licensing Apple would increase its user base by over a BILLION users. If those users just spend $5 a year on services (or nothing and use ad generating services) that is an additional $5 billion in almost pure profit. That's more profit than either the iPad or Mac lines generate.
6. What would be the ultimate goal of licensing iOS?
To create a platform that will dominate. Apple already dominates the high end. But to truly disrupt they need to increase their markeshare beyond 18%. Apple cannot afford Android to continue to have a virtual monopoly on a BILLION USERS. With licensing Apple can increase its iOS install base to TWO BILLION. That would be close to a 50% market share. With a massive install base all Apple would need to do is provide services. No longer would Apple have to worry about beating last years hardware numbers. It would be all about building and maintaining the best ecosystem on the planet. And those TWO BILLION users buying valuable services.
Imagine how much more powerful ApplePay would be with TWO BILLION USERS? Do you think WalMart could ignore ApplePay? hell no. That's the power of a big platform. Same with LiveTV service. Same with Music streaming. Same with Home Automation.
With TWO BILLION USERS (and many being big spenders unlike Android) Apple will have massive leverage to buy services at cheaper prices and give their customers the best.
With TWO BILLION USERS ApplePay could actually grow to a $100 BILLION company on its own.
You're forgetting one question.
Why pay to license iOS?
Your suggested $30-60 license fee would take whatever little profit the manufacturer would earn. It's also well known that customers in the $200-350 range spend very little on apps/services.
Comments
Nope, Apple ain't licensing iOS nor should they IMHO.
Terrible, terrible idea that even if it were successful would destroy Apple as we know it.
I just wonder if those other phones would have all sorts of performance issues and incompatibilities with the hardware or software.
I'm not sure putting their iOS on other phones is a good idea, doubt they would ever do it.
FBI Approved!!!!
Gosh, sounds like buying a new Android phone pre-loaded with three-year old KitKat. At the end of the day you'd have dozens of Android model phones running rings around that old handicapped not-an-iPhone you think everyone will want to buy. They wouldn't. On top of that it becomes Apple's own fragmentation headache since they'd have to support various hardware builds according to you, some with large screens, some with small, some with more or less memory to support them, or different controllers with different drivers than others. Guess what, some won't get more than an update or two just like some Android phones. iOS by itself is not the advantage you think it is IMHO. It's Apple's total package that makes them attractive.
Apple would not want to be associated with that not-an-iPhone's
3 year old iOS will quickly become incompatible with apps in the app store, no AppleMusic, No ApplePay, etc. And remember, 3 year old hardware is a 5S, you must mean 3 models ago. Get the words right.
If it happens, I will sell my iPhone and go to Android forever. It handled like your self ban, I guess I get to keep my iPhone.
don't quit your day job.
I like that you recognize that Apple needs to greatly grow the number of users now in order to sell services in the future. Id prefer APPLE buy HTC out right and start switching their high and mid tier phones over to iOS Lite but keep HTC as a separate brand with its own hardware design. I'm sure there are some areas like photo processing that HTC would benefit from apple but would prefer to see Apple on a different platform design.
Why pay to license iOS?
Your suggested $30-60 license fee would take whatever little profit the manufacturer would earn. It's also well known that customers in the $200-350 range spend very little on apps/services.