- 6,009
- Austin, Texas
- D-Nitrate / GTP_DNitrate
As the creator of the iPhone, the most highly anticipated piece of consumer-electronics equipment in a decade or more, Apple (AAPL) certainly has much riding on the device's success. So too, in turn, do Apple's many, mostly anonymous suppliers.
Apple, always secretive and tight-lipped about its supply-chain and manufacturing arrangements, almost never says anything in public about its suppliers, not even to disclose names. The exceptions are Intel (INTC), the chipmaker that supplies the microprocessors for Apple's Macintosh computers, and NVIDA (NVDA) and ATI (AMD), which supply the graphics chips for those same computers.
So it's left to teardown firms such as Austin-based Portelligent, to sleuth out not only who supplies all the parts but what it costs to make a device. And David Carey, Portelligent's CEO, did something that few others in the country did after buying an iPhone: He took it apart.
A Hearty Margin
Portelligent estimates that the cost of the materials used in the iPhone add up to about $200 for the 4-gigabyte version, which sells for $499 and about $220 for the 8-gigabyte version, which sells for $599. Their estimate doesn't include costs of final assembly, but it does give some insight into the gross margin on the device. Historically Apple's gross margins have run ball park of 50% plus or minus a few points. "We had taken a speculative stab at what the costs would be back in January, when the phone was first announced and we were pretty close to the mark," Carey says (see BusinessWeek.com, 9/20/06, "The Skinny on Apple's New nanos").
The most expensive component on the phone, Carey says, is the touch screen, for which Apple tapped a little-known German concern called Balda (see BusinessWeek.com, 4/5/07, "Balda: The iPhone's German Accent"). The estimated cost of $60 per unit is mostly an educated guess. "This screen is like nothing I've ever seen before," says Carey.
Even the fact that Balda made it, is in fact, an educated guess. Carey told BusinessWeek that his analysis found no apparent markings that identified the screen's origin. But Balda's role in the screen has been something of an open secret in the wireless industry since the iPhone was first announced by Apple CEO Steve Jobs in January. Even so, Apple apparently took steps to make the source of the screen hard to identity.
How the Chips Fall
Another big winner is Samsung, which supplied the main microprocessor chip. It was stamped with an Apple logo, but with a serial number that matches closely a chip that Samsung sells. Samsung also supplied the NAND-type flash memory that stores data on the phone, including songs, video, and pictures.
Samsung's microprocessor chip, interestingly, is based on a core design that is owned by the British chip technology licensing firm ARM Holdings (ARMHY), which is another big winner among the iPhone suppliers. Instead of selling chips, ARM licenses its patented designs for "cores," or the central working brain of a chip. Customers take those core designs and then build their own chips around them. At least one other ARM-based chip, from NXP Semiconductor, the former chip division of Royal Philips Electronics (PHG), shows up in the iPhone. Other chips might have some ARM technology on them as well, Carey says Apple recently announced that it had improved the talk time on the iPhone's battery to eight hours. At least some of this improvement was accomplished by paying close attention to power management. Three chips are involved in that function: one from Philips, one from Texas Instruments (TXN), and one from Linear Technology (LLTC).
Handling various aspects of the wireless communications on the iPhone, from connection of AT&T's (T) wireless voice and data network to local Wi-Fi networks, are components from Infineon (IFX), Skyworks (SWKS), RF Micro Devices (RFMD), and Marvell Technology Group (MRVL). Cambridge Silicon Radio supplied chips that connect the iPhone to wireless headsets.
An accelerometera chip that senses motionfrom STMicroelectronics (STM) helps the iPhone sense when its orientation has changed, which causes the orientation of pictures and video being displayed on the screen to change accordingly. Also handling various aspects of the display are chips from National Semiconductor (NSM), Broadcom (BRCM), and NXP. Idaho-based Micron Technology (MU) supplied the imaging chip that is central to the camera.
Mysterious Maker
Carey points out that the chip-packed iPhone offers "a very calm and serene user experience" that belies its internal complexity. "A great deal went into the internal mechanics and how it all came together," he observes. "There are lots of tiny nooks and crannies where things have to be very precisely tucked in to make it all fit together."
The complex design calls for equally complex manufacturing, which dictated that the iPhone be made outside of the U.S. "You have to build something like this in a place where labor is inexpensive," says Carey, which in this case means China. But Carey says it's unclear who manufactured the iPhone: "There are no markings indicating exactly who built it."
Apple's iPods have been built by Hon Hai Precision Industry and its Foxconn operating unit. BusinessWeek reported in January that Hon Hai had won the contract to manufacture the iPhone (see BusinessWeek.com, 1/10/07, "Apple iPhone: Sweet Ring Tone for Hon Hai"). But last month Samuel Chin, CEO of Foxconn, told investors that the company would not be making the iPhone. "Previous devices that Foxconn had made for Apple had their markings stamped all over the place," Carey says. "We just don't know who's making this one yet."
Apple had come under fire in 2006 for doing business with Hon Hai after allegations emerged in a British newspaper that its employees worked under sweatshop conditions (see BusinessWeek.com, 6/29/06, "Fixing Apple's 'Sweatshop' Woes"). Subsequent Apple investigations found some problems that it insisted be fixed and were fixed (see BusinessWeek.com, 8/21/06, "Hon Hai: Vindicated by Apple Report?").
It lacks the simplest features that are often not even thought about.. No MMS? No custom ringers? No voice dialing?
I don't use MMS or Voice Dialing on my phone, but it's better to have those available if I need it eventually. And it's not something new either so it's a bit surprising the iPhone doesn't feature those.How often do you honestly send pictures? And I'm thrilled about the lack of custom ringers, as much as I love class being interrupted by obnoxious midi file of "Fergilicious" coming from a girl's purse.
Another great day for Apple. Their stock shot up to over $131 this morning, adding an additional $3 billion dollars to their market capital! I bet another stock split is in the mix. 👍Apple is having a VERY nice day today!
*snip*
In response to these reports on the iPhone's costs & sales, in just the first three hours of trading this morning, Apple's stock rose above $127 per share, a $6 increase... That's $5 billion dollars in just three hours... and has been holding steady between $126 and $127 throughout the day.👍
So why are you in this thread then?I don't like touch screen phones and I don't like the fact you cant put your own ring tones on the phone or even customize it. I'm used to Nokia phones. Highly customizable phones.
So why are you in this thread then?
So why are you in this thread then?
Maddoxmost objective comparison of two cellphones ever made
There is something futile about the way Apple appears to be fighting some of its most ardent fans, those who want to use the full capabilities of the iPhone.
Thursday afternoon, Apple released the scheduled update to the iPhone software. And the gadget blogs confirm that it does, as Apple threatened, wreak havoc on modified iPhones. Some phones have indeed been bricked. In others, unofficial applications have been disabled. And there are worries that hacking the updated phone will be harder.
The result: Serious hackers will keep finding new ways to break in. Less technically inclined may well find themselves chastened into technological submission, assuming they can get their pricey toys to work at all. Will Apple really refuse to help people with iBricks?
Speaking in London last week, Steve Jobs, Apples chief executive, said the company is in a cat and mouse game with hackers.
People will try to break in, and its our job to stop them breaking in, he said.
David Pogue, our technology reviewer, received a cautionary message Wednesday night from a person familiar with Apples plans after he posted a video showing some unofficial, but entertaining, applications that can be installed on the iPhone. Take those applications off your phones now, David was warned, or a software update scheduled for Thursday afternoon could turn your phone into a brick.
[David takes a closer look at the iPhone update here.]
On Monday, Apple had issued a press release warning of irreparable damage to iPhones that have been modified or unlocked from the AT&T network. It also threatened users that the permanent inability to use an iPhone due to installing unlocking software is not covered under the iPhones warranty.
This caused a scurry by hackers to develop software that will relock iPhones before software updates. Its like kids at the slumber party turning out the lights and jumping under the covers each time mom thumps up the stairs.
Apple may well be justified using tough tactics against people who modify their phones so they no longer use the AT&T network. Apple stands to receive several hundred dollars for each phone over the course of two years from AT&Ts service fees.
Some peopleactually a lot of peopledont much like AT&T. Or they dont want to pay AT&Ts roaming fees overseas and would rather use a local cellular company. And these people will always be looking for ways to defeat Apples locking system. The simple way to defuse this fight, of course, would simply be for Apple to sell an unlocked iPhone for, say, $300 more than the locked version.
But this gets at Apples propensity for control. The phone is, in some ways, a better experience on AT&T because of its links to voice mail and so on. But does that mean if Apples way is better it should always prevent people from using its products in some less optimal way?
Since the iPhone is a very sleek, capable handheld computer, people are going to want to run programs on it. They are going to want to hack and see what they can build. Its a law of nature. And Apple might as well be fighting gravity.
Many other cell phones are locked down, of course. But few other phones capture the imagination of programmers the way the iPhone does.
Apple did allow for some application development inside its Safari browser. But it is not supporting Java or Flash, the two environments that allow the most flexible applications. And there is no official way to write applications that run on the phones operating system. Apple has said that it is worried that some applications could cause trouble for the AT&T network. But its hard to imagine that there isnt a way to wall off and limit network usage without preventing people from developing well-mannered programs.
Apple essentially has two choices. Either it exposes most of the iPhones capabilities to developers. Or it will have to gird for an ever escalating war in which it will have to send ever more electronic brick-bombs to its best customers who dont follow its strict rules.
Around the country iPhone owners continue to confront the effects of the software update Apple introduced yesterday. The lucky ones see a new icon for a wireless iTunes Music Store and a host of tweaks to the user interface. The unlucky ones own a shiny black piece of glass.
Many iPhone owners who unlocked their phones so they could use them with a wireless carrier other than AT&T, as well as those who simply installed application programs that were not authorized by apple, have found their phones unusable. (One maker of iPhone unlocking software, iPhone SimFree, says that the upgrade doesnt fully disable iPhones that have used its product. But they can no longer be used on networks other than that of AT&T.)
There have even been reports that some phones have been disabled that had no unauthorized software on them.
It is not clear what can be done for those with what have been called iBricks. Apple has said its warranty does not cover phones that have been modified. Still, The Unofficial Apple Weblog, reports that some iPhone users have found that the geniusescustomer service representatives at Apple storeshave fixed some peoples blocked iPhones. But some people commenting on that blog report that other Apple stores refused to help iPhone owners with frozen phones, even though they had not made any modifications.
Engadget summarizes the state of things so far for iPhone owners. Simply put there is a choice: Do things Apples way, not installing rouge software, and upgrading to get the latest features. Or, dont upgrade your phone and use whatever hacks have been created so far. The iPhone hackers are trying diligently to create programs to unlock the upgraded phones and install new software, but they have yet to report any success.
Huh?Apple = Epic Fail.
Why and when?Of course, they are going to lose, horribly in the long run.