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Smartphone market and the next iPhone
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sleepygeek
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Originally, I thought that as iPhone distribution became wider, Apple would have to accept lower subsidies. But my impression now is that Apple can stick to the current pricing, and any carrier, anywhere in the world, will queue up to buy iPhones. It’s the only sure way to get and keep subscribers, and subscribers are the only way to make the payments on the capital investments. I think Apple can keep carrier prices just below outrage levels, and bend the carriers’ operations to suit itself. Carrier management will remain in denial.
Surely the next iPhone will have an Apple SOC in it. With the iPad using an Apple SOC, Apple drives the same sized screen as a netbook, faster than a netbook, with twice the battery life of a netbook, at half the system weight and less than half the battery capacity. That represents at least five times the system performance per watt.
SJ told the troops the next iPhone is an A+ upgrade. Does that mean videoconferencing? Probably not yet. I think the main thrust will be a doubling of performance and battery life, combined with iPhone OS 4 goodies for the feature list.
Using a bought in CPU, iPhone has been slower than some other smartphones between product refreshes. I think now it may be permanently ahead of others in raw performance and battery life as well as customer satisfaction. (PA Semi’s claim to fame is performance per watt).
It looks as though the competition is going to throw dozens of models of handset at consumers, running Android and the other aspirant OS’s, backed by heavy advertising, but there won’t be any margin for the handset makers, much like the Wintel PC business, because the carriers will throw their weight behind whatever’s cheapest for a given set of tick boxes, and the other OS’s are available to all, with no pricing power at all.
Am I right, or are there other factors?
[ Edited: 07 February 2010 06:25 PM by sleepygeek ] -
... It looks as though the competition is going to throw dozens of models of handset at consumers, running Android and the other aspirant OS’s, backed by heavy advertising, but there won’t be any margin for the handset makers, much like the Wintel PC business, because the carriers will throw their weight behind whatever’s cheapest for a given set of tick boxes, and the other OS’s are available to all, with no pricing power at all ...
That’s what Google wants. Dirt cheap good enough smartphones dominate the market containing iPhone to single digit market share. The issue is whether Google is able to sell a free phone supported by ad revenue.
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DawnTreader
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... It looks as though the competition is going to throw dozens of models of handset at consumers, running Android and the other aspirant OS’s, backed by heavy advertising, but there won’t be any margin for the handset makers, much like the Wintel PC business, because the carriers will throw their weight behind whatever’s cheapest for a given set of tick boxes, and the other OS’s are available to all, with no pricing power at all ...
That’s what Google wants. Dirt cheap good enough smartphones dominate the market containing iPhone to single digit market share. The issue is whether Google is able to sell a free phone supported by ad revenue.
The Android will do well but by no means will Google be able to pigeon hole the iPhone. The market is fractious and not a single OS will have dominant market share. While the Android has enjoyed early appeal, a two-year contract is a long time to go without free OS upgrades and without a robust app store on the scale of Apple’s iTunes app store.
We’ve yet to hear back from Microsoft and a major upgrade to WinMobile is due. Nokia isn’t going roll over either.
Back on SG’s point, I expect to see an Apple designed chip perhaps in the next iPhone. Extended battery life would be among the benefits. The graphics power is another consideration. Also important is Apple taking control of the chip availability and release time table.
I wrote a quick piece on the benefit of A4 chip for these reasons for Colum’s new site.
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... Nokia isn’t going roll over either ...
How about Google manages to convince Nokia to adopt Android?
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DawnTreader
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... Nokia isn’t going roll over either ...
How about Google manages to convince Nokia to adopt Android?
I don’t see that happening. Nokia needs something to differentiate its products. Being an Android also ran does nothing to maintain market share.
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danthemason
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Maybe they could sweeten the offer to Nokia, you know sink alone or float together.
According to analyst firm Flurry Inc., Google sold just 80,000 of its Android powered Nexus One smartphones during its first month on sale.The low number could be the way it’s being sold: instead of offering it for sale directly through a wireless service provider, Google sells the phone online at its Google.com/phone website. Phones like Verizon Wireless’ Motorola Droid sold 525,000 units during its first month of sale; and the iPhone sold 600,000 units during its debut.
Dow Jones Newswires points out that the low sales figures could also be a result of Google’s lack of Nexus One advertising, compared to the extensive TV and Web ads for the Droid and the iPhone, or due to early issues involving its 3G connectivity and confusion over where customers should go for support. [via The Wall Street Journal]
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Originally, I thought that as iPhone distribution became wider, Apple would have to accept lower subsidies. But my impression now is that Apple can stick to the current pricing, and any carrier, anywhere in the world, will queue up to buy iPhones. It’s the only sure way to get and keep subscribers, and subscribers are the only way to make the payments on the capital investments. I think Apple can keep carrier prices just below outrage levels, and bend the carriers’ operations to suit itself. Carrier management will remain in denial.
Surely the next iPhone will have an Apple SOC in it. With the iPad using an Apple SOC, Apple drives the same sized screen as a netbook, faster than a netbook, with twice the battery life of a netbook, at half the system weight and less than half the battery capacity. That represents at least five times the system performance per watt.
SJ told the troops the next iPhone is an A+ upgrade. Does that mean videoconferencing? Probably not yet. I think the main thrust will be a doubling of performance and battery life, combined with iPhone OS 4 goodies for the feature list.
Using a bought in CPU, iPhone has been slower than some other smartphones between product refreshes. I think now it may be permanently ahead of others in raw performance and battery life as well as customer satisfaction. (PA Semi’s claim to fame is performance per watt).
It looks as though the competition is going to throw dozens of models of handset at consumers, running Android and the other aspirant OS’s, backed by heavy advertising, but there won’t be any margin for the handset makers, much like the Wintel PC business, because the carriers will throw their weight behind whatever’s cheapest for a given set of tick boxes, and the other OS’s are available to all, with no pricing power at all.
Am I right, or are there other factors?
I will go step out on a limb and say the next Iphone will have the same A4 SOC. Why design cost. A SOC design cost about 20M so I need to spread that fix cost across many devices. The cost of single die depends on die size and yield. With some public math. Assuming a 45NM process and 300MM wafer which is what the Samsung Fab is doing and using 50mm2 for die size. I get about 1384 dies per wafer. If we guess 80% yield we get 1100 SOCs per wafer. A processed wafer runs about 3.5K or about 3.18 per die plus packaging. Apple is paying 10-15 per vs maybe paying $30 per unit for the current Samsung designed unit in the IPhone/IPOD. My point is once you spent the NRE, you need to build a ton and Apple will do that. The packaging may be different between Iphone and IPAD but I will be shocked if we don’t see this in the Iphone assuming of course Apple is getting decent yields. As far as pricing, once they recover the NRE, they should be able to lower pricing. The BOM for units with the new SOC should be about $15 per unit less, they can either spend that BOM budget on other parts or lower the wholesale cost. I would question the statement permanently ahead. The Tegra 2 and OMAP4 are definitely in the same performance class as Apple’s A4. The advantage Apple should have is time to market. I wouldn’t to see Tegra2 or OMAP4 in a handset until late 2010 or early 2011 and by that time Apple should be finalizing a new design.
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Nokia has other plans.
http://www.electronista.com/articles/10/02/08/nokia.salo.plant.loses.285.in.smartphone.focus/In a few years it will be hard to find a phone that isn’t a SmartPhone. IMO you can thank the iPhone for the turnaround in SmartPhone popularity in North America. Before they were a tiny fraction, now everyone, including me, wants one.
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alcatholic
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I agree with everything SG says, except I think Apple will become aggressive with the next iPhone and lower the price. And I think they’ll do that, because of SJ’s claim that groups within Google want to kill the iPhone. So Apple will try to kill Android. I see them hitting the $99 price point on AT&T, with guarantees that AT&T will invest in their network to support the traffic. The free OS model on Android has nothing on Apple’s model. Apple doesn’t pay os licensing fees, and the os development just got another whole product line to amortize across, iPad.
On the other hand, I wonder if that is why Google is marketing “SuperPhones”? Touting high end hardware would be one way to counter Apple’s price offensive. The high end screen resolution and integration with Google Voice in the top Android phones are two features I don’t see Apple matching in 2010.
Google Voice might be a sleeper factor in smartphones. I think it has the potential to reshape voice and I don’t think Apple will move quickly in that direction. I think Apple are focused on data (apps) not voice.
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Off again, on again…
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sleepygeek
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I agree with everything SG says, except I think Apple will become aggressive with the next iPhone and lower the price. And I think they’ll do that, because of SJ’s claim that groups within Google want to kill the iPhone. So Apple will try to kill Android.
But Google isn’t currently killing the iPhone. Google is still good for iPhone. Microsoft may be in the rear view mirror for Apple, but collectively the carriers are still marginally ahead. Android is still good for iPhone - it’s moving mindshare forward to choosing between iPhone and an iPhone alternative, where Apple gets 20% of the whole phone market, not just 20% of a small segment. The more successful Android is, the more confused and inconsistent their handset product message will become, so I don’t think Apple would be playing with fire here.
Google Voice might be a sleeper factor in smartphones. I think it has the potential to reshape voice and I don’t think Apple will move quickly in that direction. I think Apple are focused on data (apps) not voice.
Again, voice remains the carrier’s killer app, to which all the contracts, calling plans, data plans and handset subsidies are hitched. Because Google doesn’t actually need the handset business, they are better placed to challenge the carriers on service. Just as Android handsets have slipped into the market behind the cover of iPhone’s frontal assault, Apple can enter the person-to-person real time service business behind the cover of a Google success. Meantime there are still lucrative carrier deals galore to be had by Apple.
In other words, on Apple’s behalf, I’m very happy at how things are working out. I even suspect SJ’s “leaked town hall comments on Google” may just be what he and Schmidt want the world to believe. I’m not sure they’re done yet cooperating under cover of apparent competition.
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I just saw this about a new alliance by an assortment of mobile companies, who are trying to band together to “regain control of apps”.
All I could think was “what a cheek”. They never had “control of apps” at any point. It was Apple that created the market for their own products. I notice that most of them are the fools that decided against going with Apple, or have an axe to grind with Apple. These jokers will likely go the way of all similar consortiums?straight into to garbage bin of history. I can’t imagine that Apple will be overly concerned at what will open the door to a spam and malware-fest on other devices.
Apple have created a moat against competitors. These guys are trying to copy it, but it will fail simply because of all the parties involved.
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DawnTreader
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Apple have created a moat against competitors. These guys are trying to copy it, but it will fail simply because of all the parties involved.
There’s no way it can work. The hardware and OS markets are becoming increasingly fragmented and there’s no means to cajole use of the consortium’s app economy (if it ever develops).
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sleepygeek
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These jokers will likely go the way of all similar consortiums?straight into to garbage bin of history.
The problem with companies run by bean counters and office politicians is that they think if it’s got Apps and it’s a store, customers won’t know the difference. If they’re very lucky, they’ll have a platform as good as Windows Mobile 6 working on multiple real devices in about 2 years.
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DawnTreader
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These jokers will likely go the way of all similar consortiums?straight into to garbage bin of history.
The problem with companies run by bean counters and office politicians is that they think if it’s got Apps and it’s a store, customers won’t know the difference. If they’re very lucky, they’ll have a platform as good as Windows Mobile 6 working on multiple real devices in about 2 years.
There’s no way to effectively monetize the market tiers that remain outside of what Apple, RIM and Google take off the top.
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How Hacked Smartphones Can Be Used to Spy on You.
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HERE is another way to blame the iPhone for AT&T’s problems.
How smartphones are bogging down some wireless carriers
What do you think?
Maybe ATT isn’t the worst after all. PC World has this to say
After generating disappointing results in our tests last spring, AT&T?s 3G network is now the top performer in our 13-city tests, with download speeds 67 percent faster than its competitors’.
It is clear that at this time AT&T has the highest-performing network with the highest user capacity, based on our sample,? says Novarum CTO Ken Biba, who conducted the tests. ?With the additional investment in HSPA 7.2 base stations [last year] and high-speed backhaul infrastructure, AT&T has room for growth in demand.? Biba says. ?
[ Edited: 23 February 2010 05:08 PM by pats ]In our winter tests involving 280 testing locations in 13 cities, the Droid rarely approached Verizon’s promised upload speed of 500 kbps. Overall, the Droid delivered an average upload speed of just 116 kbps, the lowest average of any carrier/phone combo in our smartphone tests. And in numerous tests using the Droid, we recorded upload speeds of less than 75 kbps—painfully slow if you?re trying to send data of any size up through the network.
We also had trouble establishing a reliable connection between the Verizon network and the Droid during our tests. Verizon delivered an uninterrupted signal at reasonable speed in only 76 percent of our tests—far below the success rates of the 90+ percent that the other three carriers achieved.
