Apple’s profit margin on iPhones are estimated to be around 60%, and the average selling price of the iPhone is $625. That’s $375 net profit per phone, and $250 in costs. Considering the BOM is $187.50, that leaves $62.50 in other cost factors (licensing, R&D, pack, ship, reseller’s cut, etc.).
If they were to release a $200 phone, those ‘other factors’ likely wouldn’t decrease much, if at all; so even if they got the BOM down to $100 (near impossible), and they knocked $12.50 off the ‘other factors’ costs, the actual total cost of the phone would still be $150, leaving them with a mere $50 net profit (25% profit margin). They would have to sell 7.5 times MORE iPhone Nanos to make the same profit they’re making on the current $625 (average) iPhone. They sold 47.5m iPhones in 2010; so just to make the SAME profit, they would have to sell 356.2m iPhone Nanos in a year. Even for Apple, that’s a big jump. Read the rest of this entry »
Slayer Silver Wolf writes with this excerpt from TorrentFreak:
“‘On October 26 the remaining LimeWire developers were forced to shut down the company’s servers and modify remote settings in the filesharing client to try to harm the Gnutella network. They were then laid off. Shortly after, a horde of piratical monkeys climbed aboard the abandoned ship, mended its sails, polished its cannons, and released it free to the community.’ And so, LimeWire Pirate Edition (LPE) was born. Based on the LimeWire 5.6 beta that was briefly released earlier this year and then withdrawn when Lime Wire LLC lost its lawsuit, LPE is now in the wild. In many ways, it is better than the version killed by the RIAA.”
It just goes to show you, no matter how many lawsuits, no matter how much the industry heavyweights try to shut it down, there is no plugging the hole that is online filesharing. The only way to compete is to actually compete by offering a compelling service at a reasonable price. It’s a new generation of media distribution, and until the providers realize that, they’re going to continue to see their customers flee to alternate sources – many of which won’t get any royalties back to the creators.
Apple ‘got’ the right combination of simplicity (interface) & complexity (apps) long before the rest of the smartphone market – including Google. Now, while Apple is still dipping its feet into the TV market with the new $99 streaming Apple TV set top box, it’s Google who is pushing ahead when it comes to delivering internet video to our TV’s. But don’t count Apple out just yet.
This recent ABC’s Nightline shows off the soon-to-be-released Google TV, a device Google hopes will find as much success under and inside your TV, as Android is finding on phones. Take a look:
While Apple is trying to press you to use iTunes for most of your content (Netflix is the only other video source available on the new Apple TV), Google is going for the whole internet’s library of video. There are built in apps for Netflix, Hulu, and Amazon Unbox, and new apps will surely come out quickly after the product is officially released. The killer feature is Google’s specialty – you can search for a show, and whatever video source is available online will come up in the search results. Select one, and you’re off to watching.
While this doesn’t immediately fix the problem of content providers clinging to their archaic “content bundle” cash cow, it will be a huge step in educating consumers about what TV could be. DVR was a small step – allowing people to time-shift their shows, to watch at their convenience. But the future of TV is this ‘library’ concept, where you don’t have to preemptively choose a show to ‘record;’ instead, you’ll just hop on your TV and pull up whatever show you missed, instantly from somewhere online. When consumers get a taste, they’ll start thinking, “why am I paying for all these channels, when all I really want to watch is X & Y?” And when enough consumers start asking that question, it’ll be the end of ‘cable tv’ as we know it.
But what about the content owners, you’re wondering? Why would they put their content up on the internet, if it means more people will cut the cord to their cable bundle? It will be very similar to how the music industry eventually caved in after Napster, and started to offer their music for sale digitally – if you don’t give the people what they want, at a reasonable price, they’re going to go somewhere else to get it; often times that means ‘pirating.’ While the content providers might want to think they can kill piracy through lawsuits, the only real way to reduce it is to give in, and offer a compelling product that makes piracy less appealing than just coughing up for it. Hulu was a good start in this case.
When Hulu came out, many ‘pirates’ found Hulu to be easier, and the short commercials, not too much of a put-off. So while not collecting the same kind of revenue as they had been used to on their cable networks, the content providers did find a way to curb pirating and collect revenue. By raising the cost from a few commercials, up to a few commercials plus $10/mo for Hulu Plus, suddenly the dynamic had changed once again. If that $10 got *all* of the current episodes for all networks, they’d probably be onto something (also, a ~$30 which also included all the “standard” cable channels might be a good option, too); but since it’s still just a small selection of the overall breadth of shows, it’s going to send the pirates back off to pirating again anyway; and why pay $10 for *some* of your favorite shows, when you’re already off pirating the other ones anyway?
So this is where Google TV has it right: give consumers access to *all* available content, no matter where it’s from. When the content providers see they’re losing viewers and subscribers, they’re going to have to choice but to add their videos to the pool of online content, so they can collect some of the revenue from unplugged viewers. Hopefully, at that point, Apple will come around to offering some kind of subscription TV service, and Apple and Google can both work to do for the TV industry, what they’ve done for the cell phone industry; and we can kiss the cable ‘subscription service’ good riddance.
As expected, Apple released an update to their Apple TV set-top-box. Just about all the rumors & speculators were right – the price dropped to $99, the hard drive is gone in favor of streaming, and TV rentals from iTunes will be $0.99/episode. Unfortunately, the new feature set fails to include one major update that had been widely expected, and whose omission will ensure the device remains squarely in the “hobby” department – the switch to the iOS platform. Had Apple included the iOS in the new device, it may have actually had a descent chance of being their next big success. Instead, with the custom, locked-down interface, it’s just another set-top-box.
Sure, the updated Apple TV streams from iTunes or your iPhone, & it has Netflix streaming built in – but that’s exactly the problem – it’s built in; ie., not expandable. Without the iOS and the App Store that goes with it, you’re stuck with only the applications Apple thinks you need. You prefer Hulu or Amazon On-Demand over Netflix? Get something else. You want to stream Pandora directly to your stereo? Move along. And who knows what will be out next year. The point is, by keeping the OS to a proprietary & non-expandable system, they have greatly limited its appeal, and thus its sales potential.
Had Apple built the new Apple TV on the iOS instead of their baked-in interface, consumers would for the first time really make a connection between the device, and their iPods/iPhones/iPads. As it stands, the Apple TV still *looks* like a hobby. It’s something completely different form any of their other products, and that’s the way people are going to perceive it… and continue to look right past it.
Apple had a chance to change the game when it comes to the living room. No other company has the brand recognition, loyalty, and positive mind-share in the consumer electronics market that Apple has. They could have leveraged that, and made a real run for the living room. They could have taken Apps on your TV mainstream. They could have been the king of the hill as far as set-top-boxes go, and had a huge head-start once they start integrating that box into their own TVs in the (hopefully) near future. Instead, they just came out with an updated version of one of the many set-top-boxes on the market; and if you hadn’t noticed, nobody’s really interested in the current crop of set-top-boxes.
Apple is widely expected to release an updated, streaming version of their iTV (previously “Apple TV”) set top box, with iOS (previously “iPhone OS”… see where I’m going here?) and the iTunes App Store, for $99. They have long said the Apple TV was a hobby, so it’s about time they came around and made it a first-line product; but that won’t be the box that they (will probably) release tomorrow. They will only see success when they release a real Apple TV; I hope to see one tomorrow, but I’m not holding my breath – but the box tomorrow will be a trial run of what they will integrate into a screen within the next 2 years. They already make 30″ LCD’s, so it’s not a big leap; But the real magic will be the first commercially successful App store for the living room – and bring internet TV to the masses for the first time.
The iPhone was the first smartphone to break into the consumer market; and while all the other players are trying their hardest to break through into the digital TV distribution market (Hulu, Netflix, Roku, Boxee, Google, Amazon, Best Buy…) none of them will be as successful as Apple. Just as people didn’t want computers in their phones, they don’t want them in their TVs either; but Apple already has the brand recognition and mainstream mindshare from their recent successes. A TV with Apple Inside might cost a few hundred dollars more than one from Sony or Panasonic, but we’ve already seen people are willing to pay for the brand – and the experience that goes with it. An Apple TV could be an even bigger success than the iPhone.
Besides, what else would you use that that Magic Trackpad for?
“There’s an awful lot of hoopla – around the iphone 4 antenna…”
Personally, I didn’t have any issues with the antenna – even before I got a case for it.
Update: When I first watched this, a few hours after the Apple press conference, it had a few more than 4,000 views. It’s been 3 days now, and is over 600,000. It proves the artist’s theory – if you throw enough ‘stuff’ at the wall, eventually, something’s bound to stick. Here’s to you, Jonathan Mann.
Back before the App store, when I had a jailbroken iPhone, I installed an NES emulator on it. I was able to play pretty much any Nintendo game I wanted. While the interface was clunky (no tactile feel for buttons sucked), it was still cool to be able to play all my old favorites. It made me think about how cool a ‘Virtual Console’ would be on my iPhone. That is, a legit & legal one.
Nintendo owns the IP for most of those games, and they have every right not to license them to any platform but their own. But it sure does limit a lot of potential revenue. If they were to revamp some of their old games to work more intuitively on the iPhone – Marble Madness, for instance, could use the accelerometer instead of a virtual D-pad – they could sell it for anywhere from $0.99 to $4.99 and probably sell a few hundred thousand copies on the iPhone platform alone – if not millions. The same *could* be done for dozens of other games as well, and they could even start a whole new division, developing games exclusively for the iPhone (and Android, I suppose).
But, according to a Gizmodo interview, it doesn’t sound like that’s ever going to happen.
From Cammie Dunaway, Nintendo of America’s executive VP of sales and marketing:
You know, I really can’t. Our intellectual property like Mario like Zelda—those our just our crown jewels.
It’s sad, because that means Nintendo’s portable division will probably never end up in a lot of peoples’ (including my own) pockets. My iPhone is my portable gaming device, and I’m not going to carry around a DSwhatever just to play my favorite Mario games now & then. I think, over time, Nintendo is going to see their portable gaming market share continue to decline, along with Sony’s, unless they go beyond integrating just music & video into the devices – and build a gaming-capable phone themselves. Even then, it will have a tough time competing with the rest of the phones on the market, but the Nintendo library could be quite alluring.
For now, I’ll have to stick to getting my Mario fix at home on my Wii. As long as they keep making games like New SMB, & SM Galaxy, I suppose I can live without Mario in my pocket, too.
True story. I had a speck of dust behind the screen of my nearly 1-year old iPhone 3GS. I had read you can bring in your iPhone (under warranty) for dust under the screen and Apple will take it in the back & either clean the dust out, or replace the whole screen. I gave it a shot, and after looking closely into all the crevices using a little magnifier, the Apple Genius suggested he just replace the phone with a new one instead of just swapping out my screen. He pointed out that there’s lots of dust & ‘gunk’ in the bottom, around the dock port and speakers; he also pointed out a tiny hairline crack I had never noticed before (around 3 or 4mm long- seriously!) on the edge of the dock port, and some scoffs on the case – mostly around the corners. The way he said it, it sounded like he considered them all defects, and not regular wear-and-tear. I guess they’re giving all of their still-under-warranty iPhone customers the kind of service usually only reserved for AppleCare owners. Fine by me! I wish they considered the dings on my MacBook Pro to be defects, too!
So he pulled out a new phone, and I specifically asked him if the phone was refurbished, or new. He didn’t directly answer, but I was intrigued by what he said: the screen, case & battery were all guaranteed to be brand new. Other parts may have been serviced & re-used; So technically, it’s a refurb; but all the parts that really matter are brand-spankin-new, and the phone doesn’t say anything on it about being refurbished. And it comes with a 90 day warranty. My original warranty had 26 days remaining, so that was good news, too!
So when the new iPhone 4 comes out, I should be able to get a premium for my ‘old’ 3GS on eBay, since it’ll be nearly new, and even come with a couple months of Apple warranty remaining. Not bad for a piece of dust behind my screen. The funny thing is, the phone is bright enough that you couldn’t even see the dust speck unless you were really looking for it.
From what I’ve gathered, the new iPhone (iPhone 4) will actually have the screen laminated to the glass – so there will be no way dust will be able to get in there. So I guess I’ll have to find a different ‘defect’ to complain about a year from now, to get a replacement for my ‘old’ iPhone 4 – right before the new iPhone 5 is released… on Verizon. Then I can sell it, and use the money to buy my way out of my AT&T contract, and jump ship to the Verizon contract. I’m the first to say 2-year contracts suck, but when you can resell your phone every year for the cost of buying the new phone, isn’t really not such a bad deal.