I’ve been amused at the Apple watchers both praising and castigating Apple for two items which they don’t realize are related. On the one hand, everyone is pleasantly surprised that Apple was able to hold prices on the new iPhones in the US steady. But on the other, many are griping that Apple no longer includes physical SIM card trays in the US. These are two sides of the same coin.
Inflation is everywhere these days and Apple is no less affected by it than any other company. The cost of fuel impacts all of your raw material shipping costs and selling expenses. Higher oil prices also affects the cost of resin which goes into any polymers. And then there is the higher cost of chips in general. To keep prices the same, companies are having to offset the higher raw material costs elsewhere. That usually means giving the customer less or removing high cost features. If you sell a 20 ounce bag of potato chips, you can hold the price steady by giving the customer 17 ounces of chips at the same price. That is essentially what Apple is doing for iPhones sold in the United States.
When I was a young operations analyst at the Herman Miller office furniture company, I remember I had an interesting cost savings project. So I needed to quantify the variable costs specific to a power port we had in an office panel. People don’t realize how relatively expensive it is to add ports to what would otherwise be smooth unbroken material.
First, you have to create a new department which can punch a hole or drill a shape into the material. That means purchasing machinery and hiring people. Then you add minutes to the cycle time because you have to divert all product to that new department. Adding time means overhead costs go up because you’re allocating over fewer units in a given month. You also have to purchase more components to fill out that power port with the parts. Which might mean hiring more people in the purchasing department. Those components need to be stored in a warehouse which means more money. And on and on it goes.
My point is that Apple would’ve had a significant cost savings by removing the physical SIM card and tray from the iPhone. It’s no coincidence that the only country which didn’t raise their prices is the only country which lost the SIM tray. Apple is essentially putting less chips in the bag but keeping the price the same.
Now having said all of that, eSIMS are superior to physical SIMS. I’m shocked that anyone thinks it’s easier “to just go to a vendor and buy a SIM”. Maybe it’s because I’m getting old but I don’t want to “go to a vendor” any more. The Apple Watch has been eSIM only for years now and it’s awesome. You don’t have to get in your car and go anywhere. You simply sign up for service on your iPhone. You can do it early on Sunday morning in your pajamas. And if you want a new SIM, you simply go to a website and get a new one. In what world is getting in your car and visiting a store more convenient than that?
So even though Apple is essentially “decontenting” the iPhone, it doesn’t feel like I’m losing out because physical SIM cards suck anyway. I’m OK with the trade off. I’m just surprised that no one in the tech world seems to make the connection that removing the SIM card is at least partially the reason why prices didn’t go up.
When I was a young operations analyst at the Herman Miller office furniture company, I remember I had an interesting cost savings project. So I needed to quantify the variable costs specific to a power port we had in an office panel. People don’t realize how relatively expensive it is to add ports to what would otherwise be smooth unbroken material.
First, you have to create a new department which can punch a hole or drill a shape into the material. That means purchasing machinery and hiring people. Then you add minutes to the cycle time because you have to divert all product to that new department. Adding time means overhead costs go up because you’re allocating over fewer units in a given month. You also have to purchase more components to fill out that power port with the parts. Which might mean hiring more people in the purchasing department. Those components need to be stored in a warehouse which means more money. And on and on it goes.
My point is that Apple would’ve had a significant cost savings by removing the physical SIM card and tray from the iPhone. It’s no coincidence that the only country which didn’t raise their prices is the only country which lost the SIM tray. Apple is essentially putting less chips in the bag but keeping the price the same.
Now having said all of that, eSIMS are superior to physical SIMS. I’m shocked that anyone thinks it’s easier “to just go to a vendor and buy a SIM”. Maybe it’s because I’m getting old but I don’t want to “go to a vendor” any more. The Apple Watch has been eSIM only for years now and it’s awesome. You don’t have to get in your car and go anywhere. You simply sign up for service on your iPhone. You can do it early on Sunday morning in your pajamas. And if you want a new SIM, you simply go to a website and get a new one. In what world is getting in your car and visiting a store more convenient than that?
So even though Apple is essentially “decontenting” the iPhone, it doesn’t feel like I’m losing out because physical SIM cards suck anyway. I’m OK with the trade off. I’m just surprised that no one in the tech world seems to make the connection that removing the SIM card is at least partially the reason why prices didn’t go up.
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