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

[jrswizzle]

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.

Except that they have always reported iPhone sales AS A WHOLE and not separately....

Meaning if they can find a way to keep overall iPhone margins high while still introducing a cheaper iPhone alternative, the sheer volume potential of the lower cost iPhone is simply icing on the cake (and the whole reason they'd attempt in the first place).

The way they keep the margins up you ask??.....

A ~5" iPhone that costs $100 more than the regular iPhone.....guarantee there are lots of people who would pay the extra cash for a larger iPhone....and it likely wouldn't cost all that much more to make.....

 

[damir00]

Interesting report. Roughly equivalent to moving to x86 from PPC - no longer competing (or differentiating, really) on hardware platform.

 

[deconstruct60]

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

I suspect Tmobile would more strongly prefer to have more customers. They are trailing by a significant margin. 4G customers are nice. More paying customers is what they need to remain a player.

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.

Compromise on price isn't quite it. It is more that they match price to value. If an Apple product costs more then generally you get more. It is not the quality of what you get but the breadth and scope of the value proposition.

If all you need is a MP3 player to wear while at the gym to play music then a shuffle is a very good needs/value to price match. It isn't that it is "cheap" or there is some "price compromise", it is a better match for the objective.

Some folks are going to want the thinnest , fastest , "something -est that they put high value on" phone out there. Other folks just need a phone that does mainstream stuff current smartphones do. The 'super duper' phone from 1 , 2, or 3 years ago isn't really trying to match the core needs of the latter. Fast enough , thin enough , good enough isn't necessarily last year's iPhone. Affordable enough is matching value to price.

 

[thehustleman]

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.

Wouldn't have to remove anything, just won't have the extremely high profit margins.

The iphone 5 doesn't have any new features that haven't been seen on a phone before but it's one of the highest unsubsidized phones out

 

[iGrip]

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.

Nobody suggested paper thin margins except that little guy who lives in your head. Nice try, tho.

 

[tayhoenes]

The processor price between current gen and previous gen is not that much. I don't think apple would compromise the experience by using an older processor. I would think you would take the 3GS hardware, update to an A6, upgrade ram and maybe the camera and you got a cheaper iPhone that can still keep going.

 

[thehustleman]

*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.

1. I know this. Most people here that buy phones buy them with a contract due to decreasing upfront costs or in this case completely getting rid of them.

2. I know the rest of the world is typically buying phones full price. That's good for them, and in the long run its definitely cheaper, but that just isn't the American way

 

[milo]

It is more that they match price to value. If an Apple product costs more then generally you get more.

Except there are many examples where Apple does not do that. Pay more, get less.

 

[Michael Goff]

1. I know this. Most people here that buy phones buy them with a contract due to decreasing upfront costs or in this case completely getting rid of them.

2. I know the rest of the world is typically buying phones full price. That's good for them, and in the long run its definitely cheaper, but that just isn't the American way

And since Apple makes phones for more than America, it doesn't really matter what the "American way" is when it comes to their pricing...

 

[tdtran1025]

There might be some truth in this. Google is penetrating all market segments with their Android. Apple is not laying down without taking it to them by supplanting the same hardware set up with iOS. Man, this will be an interesting scenario where one can practically intsall iOS on any device out there. Revenge!
I myself am an ardent user of OS X on compatible Intel platform; then why not iOS on Qualcomm run-of-the-mill? Lol, no more lawsuit then. It will be the battle between Google and iOS. Wasn't what Jobs wanted? To kill off Google? I like this fantasy.

 

[WilliamLondon]

I find the characterisation of this new phone to be simplistic. Apple will *never* sell a phone with its main feature being "cheaper". If they have a phone in production that ends up being cheaper, it will have been designed to be something entirely different than merely "cheaper" because Apple doesn't do products merely to be "cheaper," that's what everyone else does. It's as idiotic as claiming that the iPad mini is the cheaper iPad - yes, it's cheaper, any moron could figure that out.

 

[MagnusVonMagnum]

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.

Gee, I thought this was a RUMORS based site. How DARE they put a fracking RUMOR on it!!?!?

 

[blucable]

Low-cost iphone??... I think I would be sticking to my iphone5, not buying a crappy phone for sure, heck no! I prefer paying the price for a good phone than risking my money for a crappy phone, sorry apple but it looks like I won't be upgrading from a high quality phone to a crappy one...

Apple does this and Android is going to take over...

 

[AppleScruff1]

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.

But if they sell 50 million of them a year maybe it won't be idiotic. If they do this I think that they have analysed it in every way to insure that it will do what is most important to them, add to their profits.

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Low-cost iphone??... I think I would be sticking to my iphone5, not buying a crappy phone for sure, heck no! I prefer paying the price for a good phone than risking my money for a crappy phone, sorry apple but it looks like I won't be upgrading from a high quality phone to a crappy one...

Apple does this and Android is going to take over...

Android already took over. That is why Apple will do this.

 

[xofruitcake]

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.

Those are low price iPhone not low cost. Tech product don't work like normal manufacturing. Cost of a particular component drop as for a year or two, then it start to go up as industry move to new technology and older tech component has less volume and hence higher per unit cost. Anyone think the wifi chip used in IPhone 4 two years ago is the most cost effective wifi chip to use today is pretty ignorant on how tech industry progress.

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This rumor doesn't make any sense to me. It's not Apple-like. Why feed the competition, when Apple wants to promote their own A-Series chips as being far superior?

An iPhone with a Snapdragon chip would be perceived as just another smartphone.

except it run IOS and has Apple brand. apple has a fab capacity problem. They are moving away from Samsung to TSMC this year and if they launch a new mid priced IPhone, the number of CPU they need can exceed TSMC capacity that are dedicated to Apple. a while back there were an article about both Qcom and Apple are bidding for exclusive use of TSMC fab capacity and TSMC make them share the capacity. If Apple priced the low cost IPhone at $350 or so, they may be looking for an additional sales of 15-20m unit a q. And they need a CPU on every one of those phone.. Snapdragon is better than no mid-priced IPhone this year. And next year they can roll to A processor if the capacity is available from either TSMC or Intel if they can come to term.

 

[firewood]

Low-cost iphone??... I think I would be sticking to my iphone5, not buying a crappy phone for sure, heck no! I prefer paying the price for a good phone than risking my money for a crappy phone...

What makes you think this product is for you?

It's not. It for the person who would never buy a new recent iPhone because of the price. It's for a person who might not even have good enough credit for a contract. Maybe they scrimped enough cash for a trash android or feature phone, but Apple thinks some percentage of them can get moved just a bit more upscale.

It will have to be a bit ugly and slow though. Better than the cheapest android cruft, but bad enough to convince everybody who can afford the more profitable faster nicer-looking new iPhone to buy that instead.

It's called market segmentation, and like it or not, it works great.

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

Not even close to as cheap to manufacture as the lowest-end bottom-feeder android models. That's Apple's competition for market expansion, and Apple can win it with a cheaper to make and better product than some of that android stuff.

Also, a newer chip might be faster than the A4 as well as smaller and cheaper.

 

[Mr Fusion]

Gee, I thought this was a RUMORS based site. How DARE they put a fracking RUMOR on it!!?!?

This "rumor" as you call it is as believable as Apple opening up a chain of fried chicken restaurants or donating their cash pile to charity.

Rumors have to be believable. This one isn't.

 

[ipedro]

Do you find the current iPhone 5 slow? I don't think the A6 in a plastic case would be compromised experience at all even when the A7 is released. Apple has already put a last generation chip into the iPad mini and sales are just fine.

Some version of an "iMessage Voice" would be great--but I really doubt the carriers would allow such a device soon.

Phone 5 was designed to run on iOS 6. iPhone 5s will be designed to run on iOS 7.

Have you used an old iPhone on a new iOS? When you bought a previous iPhone, it was fast and smooth to use. A couple of generations of iOS later and it's frustratingly slow. My iPhone3G was completely unusable on iOS4.

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Current iPods lack the hardware needed for phone-style voice calls. Microphone and speaker placement, proximity sensor etc. Besides, how useful would this be for children and parents? They wouldn't be able to make emergency calls, and would have to be within a wifi network in order to call home.

Nobody said current iPods would become the cheap iPhone. The next generation of iPods built for iOS7 with iMessenger voice would include a microphone and a 3G or LTE radio with a SIM slot for data.

 

[mapledress]

Very good news, hopefully it will be the newer Snapdragon 600 variants rather than the earlier...

The report says that Apple plans to use Taiwanese chipmaker TSMC's 28nm process to build the cheap iPhone's Snapdragon SoC.

 

[szw-mapple fan]

A much far larger group desire the more affordable. In the pre-paid market in countries where the disposable income is much lower a $450 phone is unaffordable.

I meant the latest and greatest at a low price. Many people feel the 4 and 4s is old even if they're great phones. New externals will make them feel "new" to consumers looking for an affordable iPhone.

 

[bumblebritches5]

How could this possibly reduce costs? Apple makes their own chips, so they don't have to pay any kind of overhead (except for R&D), and if they were to somehow save money, won't it increase the cost of the software development?

 

[Sincci]

How could this possibly reduce costs? Apple makes their own chips, so they don't have to pay any kind of overhead (except for R&D), and if they were to somehow save money, won't it increase the cost of the software development?

FYI, Apple only designs their own chips and they currently use Samsung and soon TSMC to actually build them since they don't have their own fabs. In this case, their own Ax chips are just most likely more expensive to build than just using less expensive Snapdragon chips (which in most cases are equally powerful) for cheaper iPhone models.

 

[Coleco]

Made-in-China silicon for a used-in-China phone

If there's any truth to this, I bet part of the cost savings come from it being a chip sourced in China for distribution in China vs. a US-made chip exported to China. Without subsidies, iPhones aren't cheap. The low-cost model isn't planned as a US product, it's being planned for markets like India and China where subsidies often don't exist or cultural preferences lean heavily toward prepaid plans. 3G may be all they need in those markets to capture the low end. The GROWTH in iPhone sales isn't coming from a surge in the US, it's capturing all those people now using cheapo models without the capabilities or cachet that even an iPhone 3Gs might carry.

 

[deconstruct60]

In this case, their own Ax chips are just most likely more expensive to build than just using less expensive Snapdragon chips (which in most cases are equally powerful) for cheaper iPhone models.

That isn't necessarily true. The fact that most of the Android market converged onto using Snapdragon chips this iteration means the run-rate for Qualcomm is up there with what Apple is doing with any one of the Ax series of their own chips. Higher volume means lower SoC package prices. But it is still a bit fragmented. It also wouldn't be surprising if Samsung's yield rates were better than TMSC. ( TMSC's yields whenever they move to a new process consistently are worse than expected. )


Now that Android (+ other ARM SoC users ) is substantially larger than iOS, the parts market dynamics are going to start to change.

The only way a "cheaper" iPhone is going to able to keep up with the "most popular" SoC that Android market is aligned to is to bundle the "cheaper" iPhone SoC to the "top end" iPhone SoC. Only those together generate the volume down to the same levels ( like in the Kuo specs for a "cheaper" version). The iPad and iPhone SoC usage probably will diverge.

That's why Apple should at least have an Snapdragon version in the lab. The Android market may fragment again on this next iteration as to which SoC sits in several of the most popular models. For example, Samsung pushing its Exynos into it very popular phones across more models.
However, if it gets to the point most consistently settle on the same one that will be a major shift in the SoC market. Apple always using one of their own gets questionable if need to lower costs. I suspect that Apple is betting on that alignment not happening due to internal Android competitive forces, but exclusively betting against Qualcomm ( and to some extent also Intel ) is a bad bet. Eventually Android may align on pragmatically two, maybe three, phone oriented SoC vendors and the volumes will be overwhelmingly dominate.

 

[deconstruct60]

Except there are many examples where Apple does not do that. Pay more, get less.

Get less than another Apple product. Or comparing Apple products to other products with different pricing methodologies.

Relation by price

shuffle < mini < iPod touch (old) < iPod touch new

iPad mini < iPad (old and likely to disappear soon ) < iPad

MBA 11" < MBA 13"

(before dropped MacBook ) < MBP 13" < MBP 15" < (now dropped MBP 17" )

iMac variants by screen and part costs.

if refering back to era of

MBP 13" < MBA 13"

where paying for "thinner", not sure that isn't reflective of the value relation. However, it was bit of a mismtach in value. For a while the MBA sold in lower volumes than the Mac Pro . Some of that was Apple objectives being a bit ahead of the available tech. Some of that was just temporary miss marketing by Apple. Once aligned with "get more pay more" the MBA did substantially better in sales growth.