I only know about taking apart iPhones from what I see on Youtube and from the general spec sheets. Today Apple announced their new 3G iPhone at $199 worldwide. That means some significant cost cutting and also being smart vs the competition with the feature set. That means the new sales target is off the previous charts. With a little more info a good analyst should be able to create an effective prediction. How many must Apple sell? One thing is possible, it could be the best selling smartphone of all time by Christmas. Then the carriers may get greedy with their new plans and….targets will be missed.
How does Apple cut costs?
- First run 6 million units; 3G production 30m? What’s the impact? Even 20 million?
- Keep the same chip; no upgrade in processing power.
- Keep the storage to 8gb and 16gb (and charge a huge premium for 8 extra gigs of storage) So 16gb subsidizes the 8gb.
- Keep the same screen.
- Change the backplate from aluminum to plastic. Make it cheap for carriers to put their own backplates on.
- New battery / higher volume / lower cost.
How do they keep costs down vs Nokia smartphones and others?
- Continue with the 2mpx camera, no auto focus or second camera and ignore video calls for now. Oh how I wish for a decent camera.
- No streaming bluetooth in stereo which saves power? and makes for a cheaper antenna no doubt although it frustrates me.? Still not sure about this.
- Forget about adding a keyboard and keyboard lights. It’s just software and use less buttons.
- Use one cord for both the charging and the synchronization.
- Use a smaller box to ship in and eliminate paper instructions and CD’s. Ship many more per container. Lower freight costs.
- Provide a simpler headset and mic unit.
- Make one charger with plugs that swap out. It is more elegant and you can sell more plugs.
Adding Cost:
- Add 3G antenna (but the comp has this!)
- Add GPS capability (again the competition increasingly has this at the top end)
Net net this one costs them quite a lot less…. and they will get a subsidy payment upfront from the carrier. Appears profitable.
Note on volumes:
- The Nokia 1100 is deemed the worlds best selling mobile phone. Nokia has sold over 200 million of them. Apple sold over 100m iPods and Sony over 115m PS2′s.
- 10+ million ipods shipped (which type??) in the first quarter of 2008 and 1.7m iPhones.
- 69.5 million PCs were shipped in the first quarter of 2008
- First quarter 2008 sales of Symbian phones were 18.5 million.
So if you are the competition you have to match the costs as well as the utility. I really don’t think you can keep building mobile phones the way the industry has been. Apple proves that the screen not only saves cost but makes up for it in design utility.
The lesson here may be important for more than the mobile industry. The iPhone is about to invent a new genre of games. (Why can’t it stream game outputs to a TV? iWii?) Concurrently, I keep looking at it and asking why I can’t have one that is paperback sized… or notebook sized. Where’s my folding screen? Apply the same type of cost cutting to a laptop and where might it go? What would a kids “slate” look like where they can draw letters on a larger screen etc. What happens when Crayola provides the markers without the ink?
That’s it enough on iPhone today. Unlike the US auto industry this thing designed in California might be more than a game changer.
{ 3 comments… read them below or add one }
The Nokia 1100 is a cheap throwaway phone that you can generally get for free. It is cheap, extremely basic. Of course, Nokia is going to sell a ton of them.
But so what? Who cares. The Nokia 1100 is no iPhone. The iPhone will sell a few million, but it will be far more profitable than the Nokia 1100.
Someone else commented with expletives that Apple cuts the costs just by getting the subsidies. Of course. That’s the consumer cost not the manufacturing cost which this was directed at. If you are a competitor and not subsidized then your phone just won’t compete. If your costs to design and make the phone are more expensive then your margin will be less. It may well have been a poor choice of picture.
Re the basic phone. The iPhone may be tomorrow’s basic phone. I agree they are also subsidized but not in markets that are prepaid.
If you were Apple and had the subsidies how would you get the cost down to Zero? Is that the iphone nano challenge?
Hi all
So, finally comapny understood mindset and problem of common man of not want to spend such a big amount of Rs. 31000/36000 to buy an iphone and made it available through EMI with tying up with few banks. I saw this info on iphone section of airtel site (http://www.airtel.in/iphone3g)
Rajesh