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How Apple could have built a cheaper iPhone 5C

Gregg Keizer | Sept. 27, 2013
Compromises, ones Apple decided not to make, were necessary to drive down component costs for a $400 smartphone

In fact, IHS created a "straw man" BOM as an exercise, hoping to find out what such an iPhone would have — and have to give up — to meet the $130 limit.

"We were able to make it to $134," said Rassweiler of IHS' speculative BOM for a $400 iPhone. "It would have had the same A6 [system-on-a-chip] as the iPhone 5C, the same display. But they would have had to downgrade the system memory from 1GB to 512MB, reduce the NAND flash to 8GB, [shrink] the battery to 1250 mAh [milliampere-hour], and it would have been 3G only."

By comparison, the iPhone 5C that Apple released sported a minimum of 16GB of NAND flash memory, included a battery rated at 1510 mAh, and supported both 3G and LTE — also called 4G — cellular networks.

Apple could not have stopped there. It also would have had to install a lower-quality rear-facing camera — a 5-megapixel camera — and supported only 2.4GHz Wi-Fi. The actual iPhone 5C boasted an 8-megapixel camera and supported both 2.4GHz and 5GHz Wi-Fi.

"Those were all a far cry from the specs they used in the 5C," noted Rassweiler.

IHS' imaginary lower-priced iPhone would also have been more "plasticky," as Rassweiler put it, and do without the expensive steel frame that firmed up the real device and doubled as its antenna. "We had made the naive assumption that the plastic iPhone would be more plasticky," said Rassweiler. "But under the plastic case is a not-inexpensive metal frame."

Numerous reviewers —including analysts who had hands-on time Sept. 10 — have remarked how solid the iPhone 5C felt, a trait credited to the interior steel framework, which would have had to go to drive the BOM close to $130.

The bottom line, said Rassweiler, is that a $400 iPhone would have felt, looked, and operated a lot cheaper than Apple's usual smartphones. And Apple knew it.

"You definitely don't want to go low end in China," Rassweiler said, citing China- and Asia-based colleagues who were adamant about the danger to the brand and reputation of Apple if it had gone low rent. "Even so, there was a media backlash about how high-priced the iPhone 5C was for China."

Still, Apple could have gone lower, if not to $400, then to a mark midway between that and $549, without damaging its brand. "They could have gone lower, split the difference," said Rassweiler.

"We've seen plenty of phones much lower-priced than the iPhone 5C, but I don't think Apple wants to go there yet," he added. "But it could have been possible."


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