The Added Complexity for Apple Inc. With Intel Inside the iPhone 7 – Motley Fool


Apple’s latest iPhones. Image source: Apple. 

Rumors that Intel (NASDAQ:INTC) will certainly gain a modem spot inside the Apple (NASDAQ:AAPL) iPhone 7 have actually gained considerable traction as of late. Even though I still stay highly skeptical that this gain is legitimate, the truth that a lot of high-profile analysts believe that it’s a opportunity — assuming, of course, that they actually have actually sources within the supply chain and that this isn’t simply an example of an echo chamber — lends reputation to the reports.

In this article, I’d love to illustrate the extra complexity and, frankly, the headache that Apple would certainly have actually to deal along with ought to it introduce models that usage Intel modems.

More SKUs
Apple is expected to launch no fewer compared to three brand-new iPhone models this fall: iPhone 7, iPhone 7 Plus, and a dual-lens version of the iPhone 7 Plus that’s referred to as the iPhone Pro. It is most likely that these three phones will certainly share lots of components, along with only a few differences between each.

Even along with lots of shared internals, Apple’s flagship iPhones usually offer consumers choice in the complying with areas:

  • Storage — starting along with the iPhone 6/6 Plus, Apple has actually offered three various storage tiers for its iPhones: 16 gigabyte, 64 gigabyte, and 128 gigabyte. A report a while spine suggested that the larger iPhones will certainly get hold of a variant along with even better storage capacity, 256 gigabytes’ worth.
  • Color — start along with the iPhone 6s/6s Plus, Apple started to offer up its phones in four color choices.
  • Size — in 2014, Apple its flagship iPhones in two sizes: 4.7 inches and 5.5 inches.

In terms of attempting to control the builds of various models, points actually get hold of rather complex. Three model selections (iPhone 7, 7 Plus, Pro), four color selections each, along with three storage tiers for the vanilla iPhone 7 and potentially four for the iPhone 7 Plus/Pro mean potentially 12 various iPhone 7 (four colors multiplied by three storage tiers) SKUs and 32 iPhone 7 Plus/Pro SKUs (two camera choices, four color choices, and four storage tiers).

Interestingly along with the iPhone 6s/6s Plus, there are actually two A lot more selections to be made; one set of iPhone 6s/6s Plus supports LTE band 30 while an additional doesn’t. What’s worth noting is that along with the prior-generation iPhone 6/6 Plus, Apple sold SKUs along with three various wireless configurations: one model devoid of CDMA support, one along with CDMA support however without TD-LTE support, and one along with the 2 CDMA and TD-LTE.

Apple was able to simplify its product stack fairly significantly by moving from three wireless configurations to simply two along with the iPhone 6s/6s Plus.

If Intel were to enter Apple’s supply chain, it would certainly only have the ability to supply a variant of the iPhone 7/7 Plus/Pro targeted at regions/carriers that do not require CDMA.

Where’s the value here?
In my view, Intel has actually the inferior modem (lack of CDMA, reduced peak upload/download speeds, and built on an inferior manufacturing technology), so using an Intel modem wouldn’t delivering any kind of technological value to the iPhone; it would certainly serve to fragment the product line further, buyers stuck along with the Intel models would certainly not have actually the freedom to switch to carriers that require CDMA, and Apple sees extra complexity in its supply chain.

It appears love it would certainly be a mess.

However, there could be some strategic incentive here. In particular, if Apple is to usage Intel for the iPhone 7, after that this would certainly advice to sustain Intel interested and, ultimately, viable in the market for stand-alone modems. It is in Apple’s finest passions to have actually multiple capable suppliers vying for the iDevice maker’s orders — mainly to make certain Apple can easily get hold of good prices and isn’t beholden to a single supplier.

Whether this will certainly ultimately play out or not, we’ll discover out in regarding 6 months as quickly as the initial tear-down reports of the iPhone 7/7 Plus/Pro strike the Web. 

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Ashraf Eassa owns shares of Intel. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Intel. attempt any kind of of our Foolish newsletter services free for 30 days. We Fools might not every one of hold the exact same opinions, however we every one of believe that considering a diverse range of insights makes us much better investors. The Motley Fool has actually a disclosure policy.

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