Low Cost iPhone

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    Posted: 21 May 2012 03:50 PM #16

    Time to bump this year-old thread.

    Question: what is the BOM for the 3GS now? I think it was ~$180 in 2009. I forget who posted numbers here that suggested the 3GS has the highest margins of the current lineup of iPhones. Lower ASP in exchange for higher margins & unit sales?

    Why Apple’s iPhone contract-free plan won’t mean an ‘iPhone nano’

    Jeffries analyst Peter Misek this week is telling clients that he’s heard Apple’s agreeing deals to continue to offer the iPhone 3GS contract-free in emerging markets while expanding availability of the device in pre-paid markets worldwide…

    ...in light of Apple CEO Tim Cook’s observations concerning the prepaid and postpaid mobile market uttered at a Goldman Sachs event in February, when he said: “For example, in most of the developed markets, the carrier owns most of the distribution themselves, but in the emerging markets, the retailer has a significant portion of the distribution. And so, the whole go-to market has to be changed significantly as you go in there.”

    He also observed that while Apple has prices in the subsidized markets covered, it doesn’t make for big sales in the contract-free markets which are popular in developing economies…Reading between the lines this suggested company plans to address the contract-free markets.

    Apple will be hoping that offering an iPhone contract-free at a relatively affordable price into emerging markets, and widening distribution of a contract-free alternative in developed markets will boost iPhone sales.

    http://blogs.computerworld.com/20198/why_apples_iphone_contract_free_plan_wont_mean_an_iphone_nano

         
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    Posted: 21 May 2012 04:00 PM #17

    I’ve been contract free now since the iPhone 4s came out and love saving money.  Was paying average of $110/mo to AT&T.  Now I pay AT&T $25/mo for 2 gigs of data and Line2 gets $9.95/mo for their VoIP/SIP app which works most of the time pretty well.  I just put the iPad micro sim in the iPhone and changed the APN  It is not jailbroken either.  I purchased a full price factory unlocked device at the outset, and have already more than paid for it.  It’s all gravy from here on!!

         
  • Posted: 21 May 2012 04:12 PM #18

    Drew Bear - 21 May 2012 06:50 PM

    Time to bump this year-old thread.

    Question: what is the BOM for the 3GS now? I think it was ~$180 in 2009. I forget who posted numbers here that suggested the 3GS has the highest margins of the current lineup of iPhones. Lower ASP in exchange for higher margins & unit sales?

    Why Apple’s iPhone contract-free plan won’t mean an ‘iPhone nano’

    Jeffries analyst Peter Misek this week is telling clients that he’s heard Apple’s agreeing deals to continue to offer the iPhone 3GS contract-free in emerging markets while expanding availability of the device in pre-paid markets worldwide…

    ...in light of Apple CEO Tim Cook’s observations concerning the prepaid and postpaid mobile market uttered at a Goldman Sachs event in February, when he said: “For example, in most of the developed markets, the carrier owns most of the distribution themselves, but in the emerging markets, the retailer has a significant portion of the distribution. And so, the whole go-to market has to be changed significantly as you go in there.”

    He also observed that while Apple has prices in the subsidized markets covered, it doesn’t make for big sales in the contract-free markets which are popular in developing economies…Reading between the lines this suggested company plans to address the contract-free markets.

    Apple will be hoping that offering an iPhone contract-free at a relatively affordable price into emerging markets, and widening distribution of a contract-free alternative in developed markets will boost iPhone sales.

    http://blogs.computerworld.com/20198/why_apples_iphone_contract_free_plan_wont_mean_an_iphone_nano

    Turley Muller has said for a while that the 3GS has the best margin of any iPhone today. Of course, its margins are likely getting better and better as it ages and as Apple’s scale continues to grow.

         
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    Posted: 21 May 2012 08:05 PM #19

    The iPhone 3GS is one of the greatest smartphones ever. But, it is showing its age. Even at $250. However, this is merely the start of Apple’s plan for global iPhone domination. They crush the competition in the postpaid market. Soon, I expect, they will do the same on the prepaid side.?

    Yes, iPhone 3GS has its limitations. However, what about 2 years from now? When the iPhone 4S will be available for purchase off-contract for $250 anywhere in the developing world??

    That will be extremely tough to beat. Even $100 Android devices in 2014, I suspect, will have a hard time matching a $250 iPhone 4S. Apple wants iPhone to be the global smartphone standard.

    While maintaining margins. I think they will succeed.?

    http://www.brianshall.com/content/android-dead-iphone-world-domination-going-after-giant-global-prepaid-market

         
  • Posted: 21 May 2012 11:00 PM #20

    “The iPhone 3GS is one of the greatest smartphones ever. But, it is showing its age. “

    Yes and no. It’s showing it’s age compared to other iPhones. But if you’re moving from a dumb or feature phone to an Iphone 3GS you’re making a monster leap. In addition to Apple’s world class engineering, you get:

    - iTunes
    - App Store
    - iCloud

    There are over 180,000 free Apps on the App store alone. You can get them over the air, no connection required. If you download and use 1 free App a day you’ll stay busy for the next 493 years.

    People aren’t buying the antiquated iPhone 3GS. For $250 they’re buying the spanking new Apple ecosystem. What a bargain.

         
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    Posted: 21 May 2012 11:43 PM #21

    FalKirk, I agree with you. But the 3GS does have hardware limitations that precludes full functionality of iOS 5. I think a $250 iPhone 4 next year will be a pretty spectacular deal and the 4S even more so the year after. It’s likely that the hardware specs of the 4S will be able to fully run iOS 7 in 2014, just more slowly.

    In another thread we were talking about a billion iPhones over the next few years. The prospect of the 4S dropping to the bottom of the iPhone lineup makes that practically a certainty.

         
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    Posted: 21 May 2012 11:46 PM #22

    We were?

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    Posted: 22 May 2012 01:38 AM #23

    iPhone 4 will be able to run iOS 6.  Aside from that, while it may be possible to run more versions of iOS acceptably on higher-power devices like the iPhone 4S, I think it’s perfectly fine for Apple to continue supporting 2 full iOS upgrades per handset.  That’s up to three years of the latest iOS.

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    Posted: 22 May 2012 02:18 AM #24

    Mav, my point is that within two years Apple will have a phone that can handle 90+% of what even the most powerful smartphone can handle, yet at a price that most of the world can afford.

    Some time ago I think Horace mentioned $80-90 as the “sweet spot” in the prepaid market. Although $250 is over twice that amount, I think that is a price that a healthy majority in the emerging markets can handle.

    So if smartphones will eventually hit 70-80% of all cell phones sold and 60-70% of those will be phones in the over-$250 price range, Apple will be very competitively placed in a massive market.

    I don’t know if anyone tracks this, but I suspect that Apple has 50+% share of the over-$400 smartphone market. There’s no reason they can’t similarly dominate the $250-399 market in the next few years.

    BTW, here’s the thread where I quoted Horace’s “Apple will need to sell at least 1 billion iPhones in the next few years.”

    http://www.macobserver.com/tmo/forums/viewthread/82715/#635430

         
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    Posted: 22 May 2012 02:34 AM #25

    I get it, Drew. 

    But how will Apple tackle the dual problem of lower-end iPhones and innovating like crazy on software?  Apple wants a full-stop no-compromises best iOS it can do each year.  Obviously it must run on the year-old
    iPhone and OK enough on the two-year-old iPhone, but segmentation or lowest common denominator is not Apple’s game.

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    Posted: 22 May 2012 04:20 AM #26

    Mav - 22 May 2012 05:34 AM

    I get it, Drew. 

    But how will Apple tackle the dual problem of lower-end iPhones and innovating like crazy on software?  Apple wants a full-stop no-compromises best iOS it can do each year.  Obviously it must run on the year-old
    iPhone and OK enough on the two-year-old iPhone, but segmentation or lowest common denominator is not Apple’s game.

    Increasingly apples software innovations are powered in the cloud rather than by the iPhones onboard SOC, so it’s possible the iPhones of today can still be sold for years to come.

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    Posted: 22 May 2012 12:34 PM #27

    I don’t think that Apple has to compromise on iOS development. They’re going full-bore with iOS 6. If they do keep the 3GS for another year, it might be limited to the version of iOS 5 it currently runs. But as FalKirk pointed out, for $250 that is still a powerful device with access to nearly the full iOS ecosystem.

    I don’t know what Apple has planned for iOS in the next few years. But just imagine the iPhone 4S locked with the current iteration of iOS 5…for $250 in 2014. That will be an incredibly capable phone no matter what new features the 8th gen. iPhone offers. And I think many people would choose it over whatever $100 Android phones are available in 2014 (Galaxy S2?).

         
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    Posted: 22 May 2012 12:35 PM #28

    New today is the lowest data pricing I have seen.  It is from Freedom Pop and is only $10/gig, no contract.  AFAIK, AT&T was until today the cheapest at $25 for 2 gigs.  But the cool part is how they deliver it with this new device, which can turn even an iPod into a phone.

    [ Edited: 22 May 2012 12:39 PM by zulu ]      
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    Posted: 22 May 2012 01:53 PM #29

    zulu - 22 May 2012 03:35 PM

    New today is the lowest data pricing I have seen.  It is from Freedom Pop and is only $10/gig, no contract.  AFAIK, AT&T was until today the cheapest at $25 for 2 gigs.  But the cool part is how they deliver it with this new device, which can turn even an iPod into a phone.

    That link goes to an unreleased hardware case for the iPhone 4 & 4S. Where did you find that it would be available for the iPod touch?

    The hardware costs $99 and you get 500MB “free” WiMAX data per month. Additional 1GB capacity costs $10. If you use your phone primarily in WiMAX areas, then this might be a good option to buy an unsubsidized iPhone and go contract-free.

    Note that you’d have to rely on the WiMAX coverage to provide voice calls via Skype/FaceTime/SIP.

         
  • Posted: 22 May 2012 02:07 PM #30

    What they did with the iPod Nano was to create a super attractive, low cost product using the latest technology. I suspect they would do the same for a low cost iPhone. Yes, the production kinks are worked out for the 3Gs, but surely a new design based on all the experience gathered sunce then could be made cheaper?