What was Apple thinking?

[Sun Baked]

BOM doesnt include assembly costs, shipping costs, R&D costs, marketing costs. So BOM is good enough information for comparing 1st gen iPhone to the new 3G iPhone, it does not really tell you the actual money it costs apple to manufacture n sell one iPhone.

And they may not even be right, since they likely didn't have and iPhone 3G to take apart and look at.

Apple may or may not be using the same chipsets as others.

Something must have changed in the price, with the reduction in LCD costs, and memory -- Apple must have had a reason to cut costs in memory.

Or it might be that the 16GB didn't meet the battery life requirements yet.

 

[aristobrat]

Hmm, if the BOM is cheaper then why can't we buy the phone with out a plan?

The BOM being less expensive is only a benefit to Apple.

Even though it's cheaper to manufacturer, Apple's not passing that savings along to AT&T.

Apple sold the original iPhone to people for $399. At least one analyst is saying that Apple is selling the new iPhone 3G to AT&T for the same price.

AT&T requires a data plan to make up some of the $200 that they immediately lose when they charge you $199 for a phone that they had to pay $399 for.

http://apple20.blogs.fortune.cnn.co...-iphone-3g-could-cost-apple-as-little-as-100/

 

[diamond.g]

The BOM being less expensive is only a benefit to Apple.

Even though it's cheaper to manufacturer, Apple's not passing that savings along to AT&T.

Apple sold the original iPhone to people for $399. At least one analyst is saying that Apple is selling the new iPhone 3G to AT&T for the same price.

AT&T requires a data plan to make up some of the $200 that they immediately lose when they charge you $199 for a phone that they had to pay $399 for.

http://apple20.blogs.fortune.cnn.co...-iphone-3g-could-cost-apple-as-little-as-100/

Thanks for that.

 

[rainmanbk]

The way the new iPhone was presented sounded like Apple lowered the price of it. But if it is subsidized, then it isn't lowered. I understand AT&T's data charges...it's the same for any phone. But what is so misleading is the subsidized part. He should have said "the subsidized price of the iPhone will not be more than $199".

Yeah but the problem with that is then people will expect a non-subsidized version. Many will opt for that over one that needs an AT&T contract. Then again I don't know why Apple doesn't just sell it GSM unlocked. I guess the $199 price point is too important for them because of the many more phones they will sell. I think if people didn't think the phone was too expensive, this 3G might have been released at the same price totally unlocked. Then again, there is no other 3G network here in the US so what's the point right?

 

[aristobrat]

Then again, there is no other 3G network here in the US so what's the point right?

FWIW, Sprint, Verizon and Alltel all have 3G networks .. they just use different technology. To your point, AT&T is the only 3G network on which the iPhone 3G will work.

 

[skwoytek]

FWIW, Sprint, Verizon and Alltel all have 3G networks .. they just use different technology. To your point, AT&T is the only 3G network on which the iPhone 3G will work.

T-Mobile has a compatible network.

 

[aristobrat]

T-Mobile has a compatible network.

Yeah, it's 2G network works. T-Mobile's 3G network is not compatible. It uses frequencies that the iPhone 3G doesn't support.

 

[Sweetbike40]

FWIW, Sprint, Verizon and Alltel all have 3G networks .. they just use different technology. To your point, AT&T is the only 3G network on which the iPhone 3G will work.

I just got a 3G phone last week. I have data for a month. I have to say that most of the time i'm only getting an Edge signal. Or it jumps back and forth. It's frustrating a bit. When the 3G is on, it's really fast though.

 

[StingerT125]

The BOM may not be that much cheaper with the new model as it now includes the 3G and GPS receivers as components that the first one didn't have.

 

[iLeoMarc]

App Store

Best answer yet. Expand the platform to sell software. Apple is no Motorola, unlike what many "analyst" say.

 

[rywat]

Apple sold the original iPhone to people for $399. At least one analyst is saying that Apple is selling the new iPhone 3G to AT&T for the same price.

AT&T requires a data plan to make up some of the $200 that they immediately lose when they charge you $199 for a phone that they had to pay $399 for.

http://apple20.blogs.fortune.cnn.co...-iphone-3g-could-cost-apple-as-little-as-100/

Don't be fooled by this argument in defense of the increased data plan cost.

If this statement is true, then why does at$t not require the 30$ data plan with every cell phone they sell, since they are all subsidized about the same amount?

The recoup of subsidy comes from the cost of the voice plan, not the data.

 

[BongoBanger]

Best answer yet. Expand the platform to sell software. Apple is no Motorola, unlike what many "analyst" say.

Not sure about that because:

1) All the other smartphone OS have app stores and most don't tie you to one provider.
2) Most of the good apps can be got for free. It's only things like mobile office, specialist technical apps, games and ringtone packs that people actually pay for.

 

[jrbdmb]

I just got a 3G phone last week. I have data for a month. I have to say that most of the time i'm only getting an Edge signal. Or it jumps back and forth. It's frustrating a bit. When the 3G is on, it's really fast though.

3G iPhone? If so, where can the rest of us get one?

 

[RumMunkey]

It seems this new pricing plan only benefits AT&T. Apple was making $399 per iPhone sold plus a percentage of the monthly cell phone bill. Now Apple is making 199 per iPhone sold and from what I hear, they are not sharing revenue. So Apple stands to make substantially less money per iPhone sold, meanwhile, AT&T is raising prices and just have a blast ripping customers off.

How does that make any sense for Apple?

Apple plan to make money on the App store, and the iTunes mobile store. Plus, they're counting on a number of people who will use iPhones then decide they work really well and then decide to try a Mac (hence maybe buy a Mac, then buy some accessories like an Airport extreme, and another iPod... etc etc.)

 

[skwoytek]

Not sure about that because:

1) All the other smartphone OS have app stores and most don't tie you to one provider.
2) Most of the good apps can be got for free. It's only things like mobile office, specialist technical apps, games and ringtone packs that people actually pay for.

I'm not sure, do most smartphone manufactures get a 30% cut of all third-party application sales?

 

[skwoytek]

Don't be fooled by this argument in defense of the increased data plan cost.

If this statement is true, then why does at$t not require the 30$ data plan with every cell phone they sell, since they are all subsidized about the same amount?

The recoup of subsidy comes from the cost of the voice plan, not the data.

At the same time, what reason does AT&T have to continue offering discounted data rates to iPhone owners when all their other smartphone subscribers have to pay voice + $30 data + SMS per month?

 

[aristobrat]

Don't be fooled by this argument in defense of the increased data plan cost.

If this statement is true, then why does at$t not require the 30$ data plan with every cell phone they sell, since they are all subsidized about the same amount?

The recoup of subsidy comes from the cost of the voice plan, not the data.

Because not every phone AT&T sells makes significant use of the data network that they've had to spend billions on upgrading the last year or three.

For the original iPhone, AT&T gave $0 in equipment subsidy towards the device cost. Instead, they created a special data/SMS package ONLY for iPhones, saving the customer $15/month.

For the 3G iPhone, AT&T is giving $200 in equipment subsidy towards the device cost (like they do with virtually every other smartphone). Like every other smartphone, there is no special data/SMS package for the iPhone 3G.

IMO, they never should have done that special iPhone data/SMS package. They should have charged the same as their other devices all along. Would have skipped this whole fiasco.

On the brighter side, I think this data price change is most likely a one-time thing. When then 2009 iPhone comes out, there shouldn't be any complaining about the iPhone data rate being the same now that the iPhone is being sold in the same manner as every other smartphone out there.