I was listening to a podcast with Myke Hurley this week in which he asked “what possible benefit arises from removing the power port from the iPhone?”. He and his fellow hosts couldn’t think of a single good thing. It’s not to make the iPhone waterproof since many phones with ports are already waterproof. And it can’t be to free up space because Apple didn’t do anything with the space that they gained from removing the headphone jack.
In a way, I agree with Myke. I can’t really think of any benefit to me as the consumer on not having a power port. But from the viewpoint of the manufacturer, I can definitely see the driving force to remove the power port.
The discussion reminded me of my days working at Gateway Computers where I analyzed laptop profitability models. One of the biggest offenders to gross margin was ports. For different reasons.
The biggest problem with ports was that they made up a disproportionate amount of the warranty claims. People were constantly damaging their ports. They exerted too much force, shoved the PC against a wall, or something got in that shouldn’t have. Or they damaged their device because the wire in the port pulled the device off of a table. In which case, the customer played dumb and claimed the damaged hard drive or screen must be a manufacturing defect because “nothing happened”.
There is one axiom in the computer hardware world. The more ports the device has, the higher the future warranty support costs will be. But the problem with ports isn’t limited to just warranty work.
People forget that a great deal, if not most, of the cost that goes into hardware has nothing to do with specific material components. After material costs, a huge percentage of the device cost is overhead. And that includes depreciation for all of the robots and machinery. So what do overhead costs have to do with ports? Glad you asked.
Overhead costs are allocated to every unit that is shipped. The more you ship, the lower the allocated amount to each unit. Anything that slows down the flow of units shipped increases the overall cost of that unit. That’s because the same amount of overhead costs are spread over fewer units.
Anything that slows down the flow of production makes the unit more expensive. So when you eliminate a port, you speed up production in multiple areas. There are no additional holes that need to be drilled. There are no connections on the circuit board that need to be made. There are no tiny screws which need to be fastened. And so on, it all adds up to significant increase in speed which means lower overhead costs allocated to each unit.
Most hardware manufacturing companies have ongoing cost reduction projects that will attack either reducing warranty costs or production costs. But a project that can reduce both simultaneously is the holy grail. That becomes a top priority project.
From a cost perspective, removing ports is a no-brainer. The big question that arises is “will doing so hurt unit sales?”. It doesn’t do any good to speed up production only to see that you lose 20% of your sales. Now you’re in a worse position than before.
I’m guessing that Apple financial analysts have been lusting for a portless iPhone for years. And the leadership team in conjunction with engineering have been using the Apple Watch as their guinea pig to work out the kinks. And thus far, I’d have to say that it’s working out pretty good.
It used to be back in the early days of the Apple Watch you used to hear about people having to send their watch back to Apple to be replaced because of a glitch in the operating system update. But not so much in the past couple of years. I think Apple has pretty much solved that issue.
I completely see the appeal for Apple in removing the Lightning port. And I think it’s a good bet that if not this fall, that next year we’ll start buying iPhones without Lightning ports.
The discussion reminded me of my days working at Gateway Computers where I analyzed laptop profitability models. One of the biggest offenders to gross margin was ports. For different reasons.
The biggest problem with ports was that they made up a disproportionate amount of the warranty claims. People were constantly damaging their ports. They exerted too much force, shoved the PC against a wall, or something got in that shouldn’t have. Or they damaged their device because the wire in the port pulled the device off of a table. In which case, the customer played dumb and claimed the damaged hard drive or screen must be a manufacturing defect because “nothing happened”.
There is one axiom in the computer hardware world. The more ports the device has, the higher the future warranty support costs will be. But the problem with ports isn’t limited to just warranty work.
People forget that a great deal, if not most, of the cost that goes into hardware has nothing to do with specific material components. After material costs, a huge percentage of the device cost is overhead. And that includes depreciation for all of the robots and machinery. So what do overhead costs have to do with ports? Glad you asked.
Overhead costs are allocated to every unit that is shipped. The more you ship, the lower the allocated amount to each unit. Anything that slows down the flow of units shipped increases the overall cost of that unit. That’s because the same amount of overhead costs are spread over fewer units.
Anything that slows down the flow of production makes the unit more expensive. So when you eliminate a port, you speed up production in multiple areas. There are no additional holes that need to be drilled. There are no connections on the circuit board that need to be made. There are no tiny screws which need to be fastened. And so on, it all adds up to significant increase in speed which means lower overhead costs allocated to each unit.
Most hardware manufacturing companies have ongoing cost reduction projects that will attack either reducing warranty costs or production costs. But a project that can reduce both simultaneously is the holy grail. That becomes a top priority project.
From a cost perspective, removing ports is a no-brainer. The big question that arises is “will doing so hurt unit sales?”. It doesn’t do any good to speed up production only to see that you lose 20% of your sales. Now you’re in a worse position than before.
I’m guessing that Apple financial analysts have been lusting for a portless iPhone for years. And the leadership team in conjunction with engineering have been using the Apple Watch as their guinea pig to work out the kinks. And thus far, I’d have to say that it’s working out pretty good.
It used to be back in the early days of the Apple Watch you used to hear about people having to send their watch back to Apple to be replaced because of a glitch in the operating system update. But not so much in the past couple of years. I think Apple has pretty much solved that issue.
I completely see the appeal for Apple in removing the Lightning port. And I think it’s a good bet that if not this fall, that next year we’ll start buying iPhones without Lightning ports.
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