More Claims of Apple Using Qualcomm's Snapdragon Chips for Lower-Cost iPhone

[Premium1]

I just don't see Apple doing this. The 4/4S are the cheaper iPhones. Just imagine once the 5S gets released: an iPhone 5 for 100 on contract. People will eat that up!

This is for other markets where contracts aren't the norm like they are in the US. Cheaper iphone means cheaper off contract

 

[powers74]

Well wait till the 5s and 6 comes out. The 5 will be the new cheap phone.

That's how it's been playing out year after year so far. We'll see. Maybe it's going to change. The rumors certainly are coming on hot&heavy

 

[mdriftmeyer]

Are we going through this again? One is 1.5 years old, the other is almost 3 years old.

And they will shift up one to the 4S and 5 when the 5S arrives.

 

[iGrip]

What's more expense Apple to completely design a new lost-cost iPhone from scratch, get new machines, research materials OR have Apple sell an iPhone 4 at a reduced price?

I'm pretty sure that Wall Street is happy that Apple looks at both the expense side AND the revenue side before deciding upon any course of action.

If one were to look only at the expense side, as you are doing, one might conclude that it would be most profitable to continue to produce the original iPhone, and to never spend anything on R&D, retooling, or anything else.

Thank Goodness that The Steve knew that this strategy was a path to ruin. And thank Goodness that you are not the CEO of Apple. Personally, I trust Apple's current management to make decisions which are, at the least, not completely foolish.

 

[NOV]

To me it's clear that what we see here is a result of internal struggle at Apple. The Schiller 'Quality' camp versus the other camp that want to aggressively compete with the Samsungs, LG's and HTC's of this world in the cheap phone department.

Cook seems to tend to the latter camp. Won't be surprised if in 2013 we see an exodus of many Apple big shots like Schiller and probably even Ives.

 

[iGrip]

What would be the difference between a low-tech new iPhone and an old iPhone?

The old iPhones had tiny screens and expensive, slow processors.

A new iPhone would have a form factor that people want to buy and an efficient processor.

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So, strip the casing off an old iPhone 4 and put on a newly-designed, plastic case.

Job done?

Nope. It would still have the antiquated screen.

 

[SmileyBlast!]

This again.

People seem to have trouble imagining that:

1. There's a world outside the U.S.
2. Cell phone market outside the U.S. is siginificant.
3. Pricing in other countries doesn't follow U.S. pricing.
4. In other countries, people may not be paying subsidized prices but rather full prices for their phones.
5. Average selling price of phones may be way different in another country given the average income is lower and the previous fact.
...

I wonder how much the 64 Gb iPhone 5 would be.
Is that like months salary there?

 

[iGrip]

iPhone 4 8GB unlocked - $450

iPhone 4S 16GB unlocked - $550

How exactly $150-$200 more than competition (Nexus 4) for a 3-year old phone cheap?

It's not. Those phones, with their slow processors and tiny, antique screens are grossly overpriced compared to what other manufacturers are offering.

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As long as it's Apple, I'll buy it.... as soon as I get more money.

Use your rent money.

 

[pgiguere1]

I wonder how much the 64 Gb iPhone 5 would be.
Is that like months salary there?

According Times of India, the average yearly income in India is 53,331 rupees...

To get a good approximation of how it is to be in the average Indian's shoes, look at my past image again an imagine prices are in USD:

Would you still buy an iPhone?

 

[Mr Fusion]

Are we going through this again? One is 1.5 years old, the other is almost 3 years old.

But many people desire the latest and greatest. Even if internals are a bit old(4 and 4s era chips) it will be more attractive with a new case and a new name, and a "new device that just came out" will certainly be more popular than a 3-year-old phone.

"Analysts" want a cheaper iPhone. They didn't say anything about a new one. And my 4 still works great btw.

Sigh. They're not cheap when you buy outright without carrier subsidy.

iPhone 4 8GB unlocked - $450

iPhone 4S 16GB unlocked - $550

How exactly $150-$200 more than competition (Nexus 4) for a 3-year old phone cheap?

Checking Amazon, the iPhone 4 is roughly £300, ($450). iPhone 4S is going for roughly for £370, ($555).

I wouldn't call those cheap phones.

This analyst is talking about a "lower-cost" iPhone not a "low-cost" one.

3g only would be lame, there are plenty of budget smartphones that have 4g.

Apple commands a premium price over their competitors because of their brand name. Again, "lower-cost" does not necessarily equal "cheap."

The problem is that Apple can't keep playing this game forever...

I don't why you are so threatened by a low cost iPhone. People don't want to spend money on a 1.5 year old phone when they could buy a new one for the same price. Think Different

This again...

You are right about the cheaper iPhone 4 and 4S, but.... There is a need for a cheaper iPhone.

What in the history of Apple / Apple Computer makes you think they want to release a product for the masses with a low profit margin? They don't do this, they never have and they never will. Case-in-point: Netbooks. Apple said they don't know how to build a sub-$500 laptop to the standards they require of themselves. If you asked them today about cheap cell phones, they'd give you the same answer.

Until I see someone from Apple get on a stage and announce they're adopting Costco's model of selling in bulk, this and every other rumor surrounding the unicorn known as "Cheap Apple Products" needs to be brushed aside as fantasy.

 

[thehustleman]

There's already a lower-cost iPhone. It's called the iPhone 4S.

There's an even cheaper option. It's called iPhone 4.

These claims are Page 2 garbage. Stop feeding the troll analysts.

Exactly.

Can't get cheaper than free

 

[iGrip]

You're clearly not smart. If its more expensive for Apple to make a low-cost iPhone than produce the iPhone 4, how could they sell the low-cost iPhone cheaper???

By increasing sales volume.

Thanks Goodness Apple has Tim as a CEO and not some random forum poster.

 

[TEG]

If they do make a low cost 3G phone, that isn't the iPhone 4 or 4S, it won't be on Verizon Wireless, as they won't certify new non-LTE devices for use on their network anymore.

TEG

 

[pgiguere1]

What in the history of Apple / Apple Computer makes you think they want to release a product for the masses with a low profit margin? They don't do this, they never have and they never will. Case-in-point: Netbooks. Apple said they don't know how to build a sub-$500 laptop to the standards they require of themselves. If you asked them today about cheap cell phones, they'd give you the same answer.

Until I see someone from Apple get on a stage and announce they're adopting Costco's model of selling in bulk, this and every other rumor surrounding the unicorn known as "Cheap Apple Products" needs to be brushed aside as fantasy.

I never said it was going to happen. Just wanted to put things in perspective so you understand that what is "cheap" for you isn't necessarily cheap for the rest of the world.

A lot of Americans seemingly don't even know they get carrier subsidies and what prices of smartphones would be like if they paid them all by themselves, like it often happens in other countries.

Just look at thehustleman's post thee posts up ^. This happens all the time.

Exactly.

Can't get cheaper than free

 

[likemyorbs]

I want to vomit every time I hear about this "low cost iPhone". If Apple comes out with a crappy product like this, it truly will be the beginning of the end for them. It makes no sense. To achieve a lower cost, you need to remove features and functions. Since the phone clearly won't be as good as expensive modern smartphones anyway, you may as well just get a 4S or even a 4. What are you gaining by making a low cost modern smartphone as opposed to selling your older model for a lower cost? It's idiotic.

 

[iGrip]

To achieve a lower cost, you need to remove features and functions.

Thank Goodness that Apple has Sir Johnny in charge of design and Tim in charge of supply-chain management. If they didn't, their substitutes might employ the OP's style of thinking.

 

[Mr Fusion]

I never said it was going to happen. Just wanted to put things in perspective so you understand that what is "cheap" for you isn't necessarily cheap for the rest of the world.

A lot of Americans seemingly don't even know they get carrier subsidies and what prices of smartphones would be like if they paid them all by themselves, like it often happens in other countries.

Just look at thehustleman's post thee posts up ^. This happens all the time.

I understand what you're saying, but please don't assume I would think that way.

I personally wish "cheap" meant the same thing for everyone.

 

[brsboarder]

it makes sense. The iphone 4 is not cheap. Its tied to a contract. If this is under 150 without contract, it will be perfect

 

[jrswizzle]

I want to vomit every time I hear about this "low cost iPhone". If Apple comes out with a crappy product like this, it truly will be the beginning of the end for them. It makes no sense. To achieve a lower cost, you need to remove features and functions. Since the phone clearly won't be as good as expensive modern smartphones anyway, you may as well just get a 4S or even a 4. What are you gaining by making a low cost modern smartphone as opposed to selling your older model for a lower cost? It's idiotic.

What's idiotic is not understanding that the smartphone market is very different outside the US.....

What this "cheap iPhone" will likely be is a year-ish behind on processor tech and in a thicker, cheaper body....but instead of costing $450 off contract like the iPhone 4 does (which is what most people outside the US are paying), they could sell it for $299 or $350.....

It's hilarious that every time this debate comes up there are people who don't understand the simple fact that "free on contract" is not the actual price of the phone in most of the rest of the world.

 

[Michael Goff]

Exactly.

Can't get cheaper than free

*faceplam*

The "cheapest" iPhone is not free.

It is free with a 2 yr contract.

"But, sir, I love my 2 yr contract. I think my carrier, the one that charges me 70$ a month for the basic package, is awesome."

"And thus you're spending at least 25 dollars more a month for the honor of having that carrier. Congratulations."

Edit:

Also, as several people have pointed out... not all of the world works like the US.

 

[likemyorbs]

What's idiotic is not understanding that the smartphone market is very different outside the US.....

What this "cheap iPhone" will likely be is a year-ish behind on processor tech and in a thicker, cheaper body....but instead of costing $450 off contract like the iPhone 4 does (which is what most people outside the US are paying), they could sell it for $299 or $350.....

It's hilarious that every time this debate comes up there are people who don't understand the simple fact that "free on contract" is not the actual price of the phone in most of the rest of the world.

So you want Apple, the company of "no sacrifice for cheaper prices", to build an outdated "new" iPhone? Seems a bit out of character, no?

 

[econgeek]

It's sad that so many "journalists" reporting on these issues are ignorant of the basics of the technology they report on.

The idea that it would be cheaper for Apple to spin up a new production of the snapdragon processor at TSMC than to simply use its older chips that are already in volume production reflects a profound lack of understanding of the economics of the integrated circuit industry.

But then that's par for the course... and if they weren't reporting the nonsense said by others, MacRumors wouldn't have nearly as much to write about.

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Would you still buy an iPhone?

Kinda like comparing a cheaper Yugo to a Mercedes that is selling for the price of a Toyota Carolla and asking if I'd still buy the Mercedes.

The answer is yes. But then, I have enough money to use it wisely.

 

[jrswizzle]

So you want Apple, the company of "no sacrifice for cheaper prices", to build an outdated "new" iPhone? Seems a bit out of character, no?

Of course its out of character....while they will likely still make money (even the current iPhones cost less than or right around $200 to make), profit margins would be smaller than they are used to....so the question becomes, do will they sacrifice margins to reach a wider audience??

I think the answer is and should be, "yes". Especially given the way I see the iPhone line shaking out over the next year-year and a half....

-cheap iPhone will go for $299 and $350 for 16 and 32 GB off contract....on-contract, these will be your "free" and $99 iPhones....
-iPhone 4" (the normal iPhone) will continue its current pricing model and likely drop the current name convention in favor of simply "iPhone"
-iPhone + (the bigger iPhone) will be priced at $100 more both on and off contract than the normal iPhone.

The pros here are reaching a wider audience (which both the cheap and bigger iPhones do) while keep overall iPhone margins still very high (higher price on the larger model will help offset the cheaper version).

Aside from the iPad 2 (which is likely gone with the intro of the iPad mini), the iPhone is currently the only Apple line which recycles old models....I've never been a fan of this, though I definitely see why they've done it this way. I think an annual update of each phone will give people both the choice and perceived uptick in refresh cycle they crave, while still maintaining Apple values (great products, high margins).

I for one hope this is the way they decide to do things - essentially we'll see:

-iOS debut in late spring
-iPhone line release in summer (with new iOS) and OSX debut/release
-iPad/iPod release in fall
-Bi-annual updates of their MacBook, iMac, Mac Pro and Mac mini lines (not all updated twice, but two computer "keynotes" a year)

I don't see the iPad coming back to the spring as its more of a "Christmas gift" than the iPhone is....at the same time, it would be tough to get the iPhone out in March/April....unless they did it now with the 5S and decided to "throw" this update in order to get on a different schedule (which I don't see happening).

 

[FSMBP]

By increasing sales volume.

Thanks Goodness Apple has Tim as a CEO and not some random forum poster.

lol...you and you're 7th Grade business logic. One would think someone with such great knowledge wouldn't bother to respond to a random forum poster - but I guess not.

Apple isn't Sony - they won't count on volume with paperthin margins.

 

[milo]

It wouldn't if the phone is primarily being aimed at market with extremely little LTE deployments scheduled for 1-3 years.

That's a possibility, but is that the actual situation with the overseas markets this phone would be aimed at?

Tmobile wouldn't mind since they are moving to more of pre-paid money anyway and their network is 3G GSM oriented.

T-mobile is pushing their 4G capabilities so I suspect they'd prefer a 4G model.

Every iPhone has a fixed cost (R&D/Machines). So, it is cheaper to ride out each generation of iPhone as long as Apple can to make up for the fixed cost.

You're only looking at the R&D and tooling costs and ignoring the costs per unit to actually build it.

The cost of making each phone is the share of the R&D costs plus the cost of actually making that single phone (which includes the costs of components, materials, and labor). Depending on the design, there's the possibility that they could come up with something that wouldn't cost much in terms of fresh R&D and tooling but saves a lot of money on the production per unit (probably not by going to snapdragon, but other ways). Not to mention that Apple sells these in huge quantity, which spreads out the R&D costs. You just can't make the blanket statement that a new design will always cost more than continuing to sell an old model at a lower price.

What in the history of Apple / Apple Computer makes you think they want to release a product for the masses with a low profit margin?

That's the whole point of doing a new design, they could lower prices and still keep a decent profit margin. Of course probably not the huge profit margins they're getting on iPhones now, but a margin similar to many of their other products.

Just look at the iPad mini, it's a bit lower profit margin than the full iPad but they did it anyway because the alternative is losing more and more sales to cheaper competitors. Some people are willing to pay more for Apple, but there's a limit to how much more. People insisted that it would never happen, because "apple doesn't do cheap", and they were wrong. And that's just one example, lots of times Apple has added cheaper products to their product line. $450 just won't cut it for unsubsidized markets.

If Apple comes out with a crappy product like this...

Why would a cheaper phone have to be "crappy"? Take the touch and add phone capability for $250. How would that product be "crappy" (unless you think the touch is crappy, which makes the whole argument moot)?

Apple, the company of "no sacrifice for cheaper prices"

Apple constantly compromises for price, that statement is delusional. Maybe people get confused because Apple makes sacrifices to save money...but then keeps the product price high instead of passing the savings along to the consumer.