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BW: iPhone Applying Price Pressure on Other Smartphones
Wednesday, October 31st, 2007 at 4:00 PM - by .(JavaScript must be enabled to view this email address)
The advanced graphics of the Apple iPhone is going to put pressure on the other manufacturers who have been typically reducing the cost of their smartphones in the past few years, according to Arik Hesseldahl at BusinessWeek on Thursday.
iPhone rivals are rushing to deliver competitive smartphones, but that’s going to raise the price of their phones in a market that has seen incremental declines in recent years. It’ll be a technological race as well as a challenge to keep prices comfortable for consumers.
Richard Windsor, an analyst with Nomura Securities in London noted that the graphics chip will be a key component and, while upgraded chips are only about US$10 in component cost, the end cost to the user is many times that. "The growth in [this] market has a lot to do with the speed at which you can reduce costs," Mr. Windsor said. "A lot of the cost reductions will be eaten up by feature creep. Apple raised everyone’s expectations about what a smartphone needs to look like."
David Carey, head of Portelligent, a company that specializes in taking electronics apart to estimate their component costs thinks the more likely driver will be the flash memory. "The component content that is most in demand is flash chips. If everyone starts chasing the iPhone, then the costs will go up, but that will be driven more by flash," he said.
In the end "everyone else is going to have to keep up, and that is going to keep costs trickling upwards," Mr. Windsor noted. How the competition juggles those costs and technical challenges to keep up with the Apple design is creating a new sense of urgency in the wireless industry.
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