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A reasonable estimation is that apple is going to NET about 32 billion dollars in sales of iPhone 5s in its first sales year. Take that $8 surcharge, add an ext

by jpxxx 14y ago

A reasonable estimation is that apple is going to NET about 32 billion dollars in sales of iPhone 5s in its first sales year. Take that $8 surcharge, add an extra adapter at $10 a pop for every one of those customers, and you're talking about an extra 0.5% of net revenue. It's meaningless to them. It really is. Regardless of what reason they ended 30-pin, it cannot be seen as a primarily financial one.

mdonahoe 14y ago
In the past I would agree, but with all the stories of cost cutting lately, I am skeptical that it is meaningless.
- cube13 14y ago
  Factoring in supplier changes and development costs, I would wager that the .5% revenue would result in an overall wash on the accounting sheets. I really don't think it was to sell connectors. Those kinds of things are too low margin for Apple to really care that much.
- jpxxx 14y ago
  Some ill-sourced dirty laundry about Apple Retail does not apply here. If I may engage in some hyperbole: this is the highest-profile product in all of consumer electronics that is at the forefront of almost any discussion regarding the biggest change in how seven billion humans spend their days in a long, long time. And disrupting a decade-old ecosystem of a billion 'things' is not engaged in for cost saving measures.
jellicle 14y ago
I used round numbers for illustration. A microUSB-USB cable costs $2 (delivered!) from dx.com. A cable to do the same thing from Apple will cost $19: http://appleinsider.com/articles/12/09/05/apple_adapters_for_new_9_pin_dock_to_cost_10_cables_will_be_19___report.html http://appleinsider.com/articles/12/09/05/apple_adapters_for... plus taxes, plus shipping if you want it shipped. This part is costing Apple less than $1 to produce and distribute. I see an estimate of 23 million iPhone 5's will be sold in the first quarter of availability. I couldn't say how many extra cables will be sold but if we go with your one-per-phone estimate, we're talking about an extra $400 million, in profit, in the first quarter of sales alone. Just from cables, not counting docks and speakers and whatever else people plug into their iPhones. Counting those other things, maybe a wild-ass guess would be on the order of an extra $5 billion in profit over the next year? I have zero doubt in my mind that Apple's decision to forego both the old dock connector and microUSB was primarily profit-driven. Let's summarize the situation: -- changing connectors has an extremely clear negative impact on users (all your cables and accessories are obsolete) -- changing connectors has an extremely clear and truly enormous profit benefit for Apple (also a negative impact on users) -- Apple has stated that the new connector connects in two orientations, providing a tremendous benefit to users Is that a fair summation of the arguments on both sides?
- jpxxx 14y ago
  Point #2 is arguing with your conclusion, so let's set that aside. You're on the right track but you have to look wider. And now that prices are out, we can play with better guesstimates. Anyone purchasing an iPhone will have a USB wallbrick and a USB-Lightning cable in the box. They can charge their phone from that setup, any computer, and any USB wallbrick Apple or any third-party vendor ever sold. So the "upsell" here, if there is one: - Purchasing extra USB-Lightning cables for convenience ("one for the work PC too...") $19 - Purchasing Lightning-30 adapters for old 30-pin dock speakers and car adapters still in use $29 I'm guessing attachments will be about 10% for the extra cable and 10% for the dock over the life of the product. But let's say 50% for all iphone 5 purchasers. With an estimated global sale of 80M per year, assuming 50% attachment for both, assuming 100% profit margin, that's $50 over 80M units / 2 = 2B dollars in an extremely optimistic interpretation. Apple booked 109B in revenue in 2011, of which 2B would count for 1.83%. They will do a great, great deal more than that by the time 2012 is over. $2B in potentially increased accessory profit is a fart in the wind for this company. And keep in mind they're probably losing a substantial number of 30-pin licensees in this changeover, who already pay real money to get -their- access to Apple's vast platform of 90% margin accessories. We're just trading one proprietary connector for another. Also, considering the obvious and real customer ire breaking compatibility causes, considering the obvious and real costs of redesigning and changing a part they've been ordering by the hundred millions for a decade, and considering the possibility that they might not even re-license any of their 30-pin accessory profiles, it can't simply be for money's sake. The benefit for them moving to a dramatically smaller I/O port with a dramatically smaller set of supporting onboard electronics is in meeting extraordinary engineering pressure for reduced volume and mass in an era where many of their mobile products are nearly the same size as a 30-pin dock connector. It's a new era. Consumer computers are now measured in milligrams and micrometers, and 2002's best effort doesn't cut it anymore.

by jpxxx 14y ago

mdonahoe 14y ago

In the past I would agree, but with all the stories of cost cutting lately, I am skeptical that it is meaningless.

cube13 14y ago
Factoring in supplier changes and development costs, I would wager that the .5% revenue would result in an overall wash on the accounting sheets. I really don't think it was to sell connectors. Those kinds of things are too low margin for Apple to really care that much.
jpxxx 14y ago
Some ill-sourced dirty laundry about Apple Retail does not apply here. If I may engage in some hyperbole: this is the highest-profile product in all of consumer electronics that is at the forefront of almost any discussion regarding the biggest change in how seven billion humans spend their days in a long, long time. And disrupting a decade-old ecosystem of a billion 'things' is not engaged in for cost saving measures.

jellicle 14y ago

I used round numbers for illustration. A microUSB-USB cable costs $2 (delivered!) from dx.com. A cable to do the same thing from Apple will cost $19: http://appleinsider.com/articles/12/09/05/apple_adapters_for_new_9_pin_dock_to_cost_10_cables_will_be_19___report.html http://appleinsider.com/articles/12/09/05/apple_adapters_for... plus taxes, plus shipping if you want it shipped. This part is costing Apple less than $1 to produce and distribute. I see an estimate of 23 million iPhone 5's will be sold in the first quarter of availability. I couldn't say how many extra cables will be sold but if we go with your one-per-phone estimate, we're talking about an extra $400 million, in profit, in the first quarter of sales alone. Just from cables, not counting docks and speakers and whatever else people plug into their iPhones. Counting those other things, maybe a wild-ass guess would be on the order of an extra $5 billion in profit over the next year? I have zero doubt in my mind that Apple's decision to forego both the old dock connector and microUSB was primarily profit-driven. Let's summarize the situation: -- changing connectors has an extremely clear negative impact on users (all your cables and accessories are obsolete) -- changing connectors has an extremely clear and truly enormous profit benefit for Apple (also a negative impact on users) -- Apple has stated that the new connector connects in two orientations, providing a tremendous benefit to users Is that a fair summation of the arguments on both sides?

jpxxx 14y ago
Point #2 is arguing with your conclusion, so let's set that aside. You're on the right track but you have to look wider. And now that prices are out, we can play with better guesstimates. Anyone purchasing an iPhone will have a USB wallbrick and a USB-Lightning cable in the box. They can charge their phone from that setup, any computer, and any USB wallbrick Apple or any third-party vendor ever sold. So the "upsell" here, if there is one: - Purchasing extra USB-Lightning cables for convenience ("one for the work PC too...") $19 - Purchasing Lightning-30 adapters for old 30-pin dock speakers and car adapters still in use $29 I'm guessing attachments will be about 10% for the extra cable and 10% for the dock over the life of the product. But let's say 50% for all iphone 5 purchasers. With an estimated global sale of 80M per year, assuming 50% attachment for both, assuming 100% profit margin, that's $50 over 80M units / 2 = 2B dollars in an extremely optimistic interpretation. Apple booked 109B in revenue in 2011, of which 2B would count for 1.83%. They will do a great, great deal more than that by the time 2012 is over. $2B in potentially increased accessory profit is a fart in the wind for this company. And keep in mind they're probably losing a substantial number of 30-pin licensees in this changeover, who already pay real money to get -their- access to Apple's vast platform of 90% margin accessories. We're just trading one proprietary connector for another. Also, considering the obvious and real customer ire breaking compatibility causes, considering the obvious and real costs of redesigning and changing a part they've been ordering by the hundred millions for a decade, and considering the possibility that they might not even re-license any of their 30-pin accessory profiles, it can't simply be for money's sake. The benefit for them moving to a dramatically smaller I/O port with a dramatically smaller set of supporting onboard electronics is in meeting extraordinary engineering pressure for reduced volume and mass in an era where many of their mobile products are nearly the same size as a 30-pin dock connector. It's a new era. Consumer computers are now measured in milligrams and micrometers, and 2002's best effort doesn't cut it anymore.