
Given the current cost of components, a prepaid contract-free iPhone with less internal storage would likely earn Apple only about 16 percent gross margin if it were priced at $300, a new analysis has estimated.
Analyst Charlie Wolf with Needham & Company took a closer look at the prospect of a hypothetical “iPhone lite,” to see if it would be in Apple’s best interest to build such a product. A cheaper iPhone has been viewed as a strategy that would work to Apple’s advantage in emerging markets like China.
In February, both Bloomberg and The Wall Street Journal reported that Apple is working on a smaller and cheaper iPhone that it could sell contract-free. Soon after, The New York Times chimed in, and claimed that while Apple is not working on a smaller iPhone, it has explored opportunities in developing a cheaper handset.
Wolf largely agrees with the Times, and doesn’t see a smaller iPhone with a new form factor as something that would be in Apple’s best interest, even though it would be the easiest way to cut costs and created a cheaper handset.
“In our view, the iPhone would not be an iPhone if the display were, say, cut in half,” he said. “Such a move would (dramatically) reduce the value of the iPod module for video viewing as well as the size of web sites accessed through the Safari browser. A smaller screen would also degrade the experience in using some applications, not to mention the possibility that some applications would probably have to be rewritten to accommodate a smaller screen.”
iSuppli estimated that the 16GB iPhone 4, when it launched last June, carried a bill of materials of $188. The iPhone has an average selling price of $625 with a carrier subsidy, while gross margin is usually around 50 percent, suggesting that additional costs like assembly, software, testing, licenses and warrantees add up to $100 or more.
Ruling out the possibility of a smaller iPhone, Wolf said Apple could reduce internal storage from 16GB to about 4GB, but that would only reduce the bill of materials by $30 to about $157. By his estimation, such a handset would still have a total cost of $270.
“Apple would at best break even if it priced an iPhone Light at $250; and it would earn a modest 16% gross margin if it priced it at $300, which we regard as the high end of the range for a prepaid phone,” Wolf wrote.
Gross margins of just 16 percent would be a number uncharacteristically low for Apple. For example, in its last quarterly results for the 2010 holiday buying season, Apple reported margins of 38.5 percent, or more than twice Wolf’s estimate for a low-cost, no-contract iPhone.
“We suspect that the iPhone’s designers and engineers have thought about this a lot more than we have so that the cost savings would be somewhat greater than we’ve estimated,” Wolf said. “If, for example, the expenses incurred beyond the cost of components could be materially reduced, Apple might be able to earn a gross margin of 20% pricing the phone at $250 and 33% gross margin pricing it at $300.”
The possibility of a cheaper iPhone with fewer features was hinted at by Apple Chief Operating Officer Tim Cook earlier this year. Cook, in an interview with Bernstein Research analyst Toni Sacconaghi, said Apple doesn’t want its products to be “just for the rich.”
Cook reportedly said that Apple is planning “clever things” to compete in the prepaid handset market. He also stated that Apple is “not ceding any market.” He also referenced China, where Apple has found great success of late, and noted that it is a “classic prepaid market.”
Apple co-founder Steve Wozniak said in an interview this week that he would consider returning to an active role at the company he helped start if asked.
During an interview in England this week, Wozniak said, “I’d consider it, yeah,” when asked whether he would play a more active role if asked, Reuters reports.
Wozniak, Steve Jobs and Ronald Wayne founded Apple Computer in 1976. Wozniak left his full-time role with the company in 1987, but remains an employee and shareholder of Apple.
Since leaving Apple, Wozniak has been involved in a wide range of entrepreneurial and philanthropic endeavors. He currently serves as Chief Scientist for storage company Fusion-io.
Meanwhile, Jobs is currently taking an indefinite leave of absence to focus on his health, though he remains CEO of Apple and continues to be involved in strategic decisions.
Wozniak, who has widely been acknowledged as the technical genius behind Apple’s early success, believes that he has a lot to offer the company he helped start, which went on to become the world’s second-largest company in terms of market value.
“There’s just an awful lot I know about Apple products and competing products that has some relevance, some meaning. They’re my own feelings, though,” Wozniak said during the interview.
When asked his opinion on Apple today, Wozniak praised the company for its track record with recent products. “Unbelievable,” he said, “The products, one after another, quality and hits.”
Even so, Wozniak admitted that he’d prefer Apple’s devices to be more open, so he can “get in there and add [his] own touches.” Last December, Wozniak revealed that he had purchased a DIY kit for the iPhone 4 and “modded” the device into the as-yet-unreleased white version.
“My thinking is that Apple could be more open and not lose sales,” said Wozniak, while adding, “I’m sure they’re making the right decisions for the right reasons for Apple.”
Wozniak has been committed to openness since the beginning. In December, Wozniak told reporters that he didn’t design the original Apple I to make a lot of money and had given the designs away for free after his former employer HP showed no interest in the computer.
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Technical Data:
Processor: Intel® Core™2 Duo T5550
Speed 1.83GHz FSB 667 L2 Cache 2MB
Memory: 1GB DDR 667
Hard disk: 120 GB 5400RPM - SATA
Graphics: SIS Mirage 3
Screen: 14.1″ WXGA TFT LCD 1280×800
Interconnection: 802.11a/b/g/n & BlueTooth 2.0
USB: 4
FireWire: 1
HDMI: 1
E-SATA: -
Card Reader: SD/MMC/MS/MS-Pro
ODD: DVD-RW
OS: Non OS
Weight: 2.485 kg
Dimension: 340×2246x27.5
Equipment: Manual Book, CD Drive
This notebook is very interesting. That may be thought by you at the first time you see this notebook. The back screen cover is wrapping by brown color which combined with the chassis color (black and silver) in the whole body. This makes BenQ Joybook notebook looks luxurious.
Despite good appearance, the BenQ does not mean forgetting the performance. The score that is produced is high enough because of use the Intel ® Core ™ 2 Duo T5550 processor with speed of 1.83 GHz. This processor is combined with Intel’s PM965 chipset. 1 GB of memory enough qualified to run the latest OS. The interesting thing is the VGA chipset of this notebook using NVDIA ® GeForce ® 8400M, which can still be invited play 3D games, although not with the maximum setting.
The designs could be minimal. At the top, there are only a power button and the button to activate the Wi-Fi without any key shortcuts to gain access favorite programs. In the bottom of track pad, there are some key indicators. This make the dimension be measured very fit for the notebook with a 14.1 inch screen size. At the top of the LCD screen there are 2 MP resolutions Webcam. Another interesting from the notebook is the availability of HDMI port that you can connect to LCD TV. This feature can be used as a directly secondary monitor via HDMI cable.
Conclusion:
Although has feature more than most notebook, the BenQ Joybook R45 has a capacity for battery that can give power up to 1.49 minutes.
Pros:
1. Interesting chassis design
2. HDMI Port
Cons:
Without OS
Benchmark Poin
PCMark Vantage: 2589
MobileMark 2007: 142/109 min