How much can Apple low down the iPhone price

How much can Apple low down the iPhone price?

As I said in July in the Silicon Valley's Churchill Club, and also repeated in my Blog on Aug. 6th, Steve Jobs has no other choice but to cut its iPhone price because it is TOO expensive, and its competitors offered two low price for similar phone. In China and Taiwan, several iPhone-like mobile phone only costs $150 or even $100, though not so shinny, but almost all functions work very well.

I visited an iPhone "development" company in Shanghai, and was told that the 8G iPhone BOM cost is only $137.62 which is surprisingly low. I am not sure whether that is a Chinese version iPhone or US model iPhone, but the fact is, it is an iPhone and works exactly same as the one sold in AT&T, plus everything is unlocked.

iPhone is a symbol of fashion and power, and everything (in the industry) is talking about this angel across the global. The 8G iPhone was $599, but now is $399. Do you think it is a reasonable price?

If the BOM cost is $137.62, the total phone cost should be less than $160. hence, the $399 may still carry 150% profit margin. I am a mobile phone architect for over decade, the GSM phone BOM cost can be low to $13, and the CDMA phone can be at $15 in China. The Chinese designed "iPod" (sold in Shenzhen and Beijing) BOM can be low at $15 as well. So it is really subject to what kind of "iPhone" you are talking about.

After the iPhone hardware and software architectures are uncovered, the phone is very normal except the display components and the application processing modules are quite aggressive. But on the wireless phone side, the BOM is very cheap. Some Taiwanese companies are redesigning the expensive components of the iPhone in order to further low down the iPhone cost to less than $80 in BOM, and less than $100 in total.

When the iPhone goes international, and based on Jobs's strategy, Apple will sell the iPhone to Asia in 2008, how to deal with the low-priced local "iPhone" in many Asian countries becomes the very tough challenge for Apple. As you all know that, IPR enforcement is extremely difficult in some countries, how can you protect your phone from being copied, reverse-engineered, assembled? There are hundreds of Ph.Ds working on iPhone right now, and these people are very smart - believe me!

Personally, I expect Jobs will continue to low down the iPhone price, probably in 4~6 months time frame.