Daniel Alvarez Arribas
macrumors member
One benefit that I have so far not seen mentioned is maximizing economies of scale from a procurement perspective.
From Apple's point of view, broadening the line-up is as much about maximizing units for components procured, as about profit.
If they can add a product to increase their unit sales, say, by 10 million units, that in itself is a benefit that allows them to negotiate better pricing for components, thereby achieving higher margins across the portfolio. Instead of purchasing 150 million units of a component, they now purchase 160 million. Indirectly, every sale of a foldable will help them increase margins for most other iPhones. And this may hold true, even if that additional product by itself does not turn in any profit.
Think procuring SoCs, cameras, sensors, display controllers, USB ports, buttons...
Also, every additional unit sold is a sale taken away from a competitor. So it's a double strike, as it also reduces the competitor's procurement leverage and economies of scale. This is an entire new reason to not let competitors act unopposed, as if they do, you likewise have the same dual drawback leveraged against you.
This key benefit applies to additional iPhone variants (foldable, but also Air, mini) to a larger extent than it did to the Vision Pro. So there will be a higher tolerance as to what is considered failure from a business perspective, as this is weighed in.
Also, there is higher development and production synergy between adding just another phone variant, or an entirely new product category like the Vision Pro. This adds further tolerance. The Vision Pro pretty much had to be expensive. Think getting an entirely different team going, supporting and funding them throughout, onboarding new suppliers, developing a custom R1 chip and sensors, micro OLED tech, straps, lenses, OS and software ecosystem... In comparison, the custom parts to the foldable compared to the Air are relatively minor – it's the hinge and the displays. If the foldable's release did not coincide with the memory crisis at its supposed peak, it would only be super-expensive because Apple wanted it to be, not because it had to be. There is much more room here to turn a profit, and even if it did not, Apple would likely want to keep it, for the above reasons, as long as it did not generate an overall loss or risked becoming a PR issue.
From Apple's point of view, broadening the line-up is as much about maximizing units for components procured, as about profit.
If they can add a product to increase their unit sales, say, by 10 million units, that in itself is a benefit that allows them to negotiate better pricing for components, thereby achieving higher margins across the portfolio. Instead of purchasing 150 million units of a component, they now purchase 160 million. Indirectly, every sale of a foldable will help them increase margins for most other iPhones. And this may hold true, even if that additional product by itself does not turn in any profit.
Think procuring SoCs, cameras, sensors, display controllers, USB ports, buttons...
Also, every additional unit sold is a sale taken away from a competitor. So it's a double strike, as it also reduces the competitor's procurement leverage and economies of scale. This is an entire new reason to not let competitors act unopposed, as if they do, you likewise have the same dual drawback leveraged against you.
This key benefit applies to additional iPhone variants (foldable, but also Air, mini) to a larger extent than it did to the Vision Pro. So there will be a higher tolerance as to what is considered failure from a business perspective, as this is weighed in.
Also, there is higher development and production synergy between adding just another phone variant, or an entirely new product category like the Vision Pro. This adds further tolerance. The Vision Pro pretty much had to be expensive. Think getting an entirely different team going, supporting and funding them throughout, onboarding new suppliers, developing a custom R1 chip and sensors, micro OLED tech, straps, lenses, OS and software ecosystem... In comparison, the custom parts to the foldable compared to the Air are relatively minor – it's the hinge and the displays. If the foldable's release did not coincide with the memory crisis at its supposed peak, it would only be super-expensive because Apple wanted it to be, not because it had to be. There is much more room here to turn a profit, and even if it did not, Apple would likely want to keep it, for the above reasons, as long as it did not generate an overall loss or risked becoming a PR issue.
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