Apple: Difficult choices or something

“All indications point to the fact that Apple is trying to roll out one of the most innovative phones during the next cycle, which would be the 10th anniversary of iPhone. This would inevitably lead to a massive spike in bill of materials (BOM) for Apple,” Rohit Chhatwal writes for Seeking Alpha. “According to IHS, the recently launched Samsung Galaxy S8 also saw an increase in BOM from $264.16 for Galaxy S7 to $307.50. However, it is doubtful if Apple will be able to push the envelope when it comes to selling price.”

“There is hardly any doubt that Apple’s management will be pulling out all stops for the next iPhone. Many Wall Street analysts have already increased their estimates for current year sales, believing that the iPhone 8 will deliver substantial sales,” Chhatwal writes. “To deliver blockbuster sales, Apple would need to show more than incremental improvements.”

“After speaking with manufacturers, recent estimates by UBS show a substantial increase in component cost across the board for the new iPhone,” Chhatwal writes. “Last year, iPhone 7 had a BOM of $224.80, which is $36.89 higher than iPhone 6S. The final BOM of the iPhone 8 can very well end up in the range of $325 to $350. This would be a hefty bump in cost for Apple, and it would need to increase its average selling price, ASP, in order to maintain its margins… In the end, Apple might have to settle between lower sales or lower margins. Either of these alternatives would dampen the market sentiment and reduce the probability of a bull run on the stock.”

Read more in the full article here.

MacDailyNews Take: This is Apple we’re talking about here, not Oppo.

Apple will post higher YOY sales while maintaining strong margins (that will improve over time).

Apple sells premium products to premium customers at premium prices. They will sell as many iPhone 8 units as they can assemble, box, and ship.

11 Comments

    1. Tell us what a lm frame offers you. Would you know the difference? I would prefer carbon fibre.

      The MDN take is ridiculous. Oppo is the young scrappy innovator taking on established giants. Apple is now the microsoftian gorilla of the mobile computing world and it doesn’t emphasize fast product innovation. Apple is out to maximize profits, that is all.

      Aside from promises of security which keep us all locked to them, what hardware performance does an Apple iPhone offer that cannot be had elsewhere? Every year Apple suppliers roll out their knockoffs using the same tech as Apple. It’s a mature market. That’s why Oppo is a competitor to keep an eye on, and Apple increasing relies on gimmicks like rose gold finishes to attract fashion conscious buyers willing to pay a premium for image.

        1. Name something an A series chip does that competitors chips do not. Most people use their phones for calls, texts, emails, photos, web, apps. If you were handed two phone in identical cases, both ported to run iOS , one with a apple chip and the other from samsung or intel or whatever, you would not spot the difference. Seriously. In fact, since Apple has no chip foundry, there is nothing in the Apple chip that Samsung and others haven’t already reverse engineered.

          Most iOS users have no clue what the speed of Apple chips are. I assure you your belove A chips are designed primarily for battery life, not power. https://browser.primatelabs.com/ios-benchmarks

          Give me a Mac anyday. Arguing over phone capabilities is pointless. The power of the phone is in the app, and all android apps are written by the same companies producing ios apps. Apple squandered its lead a long time ago when it insisted the one size fits all iPhone was good enough for everyone. They corrected that in 2014 but the damage was done. He competition caught up in hardware and apps.

          1. You said it yourself. If two identical phones were both running iOS, could you tell the difference? But of course, two phones CAN’T both be running iOS, unless both phones were from Apple.

            20 years ago, it was foolish to talk about hardware specs when talking about PC vs. Mac, because it wasn’t about the hardware, it was about the user experience. The same holds true today with phones. Even if the components are the same (and really, only some of them are), there’s no comparison.

  1. Apple doesn’t care about 10th anniversary anything. To do so would mean holding back earlier phones. Apple knows what they want to build years in advance and works on new technology all of the time. Their only concern is shipping it when ready.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.