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.
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.
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