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Fear no lightning: iPhone 5 a new business engine (2)

By Li Qiaoyi (Global Times)

08:31, September 29, 2012

A small, but major change

The new connector has actually raised hardware costs for the new iPhone, which is already pricier than the previous models in terms of hardware budget, Andrew Rassweiler, senior principal analyst of Teardown Service at the US-based IHS iSuppli, told the Global Times on the sidelines of a tech summit in Beijing earlier this month.

The total materials and manufacturing costs for a 16-gigabyte model are estimated to be $207, versus its pricing without contract of $649, according to a preliminary iPhone 5 bill from IHS iSuppli. The bill does not include other expenses such as software, licensing and royalties, the consultancy firm noted.

Without revealing the actual cost of the new connector, Rassweiler said Apple is taking the change seriously. The Lightning port enables much faster data transfers and is expected to greatly enhance user experience. "That's why the always cost-sensitive company has made this change."

Apple could not be reached for comment. But an Apple senior official's recent remarks give hints of the company's motives.

"This is the new connector for many years to come,", an online technology publication wholly owned by Dow Jones reported on September 12, the debut day of the iPhone 5, citing an interview with Phil Schiller, senior vice president of marketing at Apple.

"It simply wasn't possible to build products as thin as the new iPhones and iPods without changing the cord," Schiller said, according to the report.

In addition to an expected elevation in consumer morale after enjoying faster data transfers between the iPhone 5 and other devices, market watchers go further to point out the simple change is likely to stir a whirlwind across the accessories industry.

"Apple users are more open to purchasing accessories for their iPhones, and I think the new connector does mean great business potential for accessory vendors," CK Lu, senior analyst for mobile devices at the US-based market research firm Gartner Inc in Taipei, told the Global Times.

"I don't think buying new accessories would be a burden for me," said Su Weimeng, an employee of a State-owned enterprise in Beijing, who plans to trade in her iPhone 4 that has been used for about two years for the new gadget.

The 28-year-old's passion for the new iPhone still burns brightly, despite her disappointment over the taller design. "I'm set to travel overseas during the week-long National Day holiday, where I may get an iPhone 5 if the gadget is available out there," Su told the Global Times Wednesday.

The Chinese mainland is still not on the list of Apple Inc's prioritized markets, which expect an early release of the new gadget. Hong Kong, however, was among the first batch of markets where sales of the iPhone 5 began on September 21.

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