04-15-15 10:28 AM
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  1. JeepBB's Avatar
    I thought that Foxconn has the where with all to build higher end phones at a reasonable price.
    Foxconn build as efficiently as they can but it's the component costs that will always be a large percentage of the handset cost to manufacture. The component supplier will offer discounts if the manufacturer (Foxconn) buys a ton of parts, and typically much bigger discounts as the order size increases.

    I believe Birdman's point was that BB will provide such a small order to Foxconn (anything under 1M handsets is small I reckon), that Foxconn won't be able to negotiate a significant discounts on screens, chips, etc from the component supplier. So the cost of the screen that goes into a BB handset, even if it was identical to the screen going into an Android handset, would cost BB/Foxconn more... and that additional cost would normally get passed onto the end-consumer. The Android customer would be able to take advantage of the bigger discounts the component supplier gave in return for the much larger order size.

    And it really does make a difference. The Z3 came out at $200. Similarly spec'ed Android handsets were closer to $100. As has been said many times on these forums, BB can't compete on price because otherwise they'd be selling below cost.

    So, nothing to do with Foxconn's where-with-all, everything to do with quantity discounts.
    mornhavon and LuvULongTime like this.
    02-21-15 10:23 AM
  2. mornhavon's Avatar
    Foxconn build as efficiently as they can but it's the component costs that will always be a large percentage of the handset cost to manufacture...
    I think that's a key factor, though it could be lessened if BB would be willing to use some of the same components that Foxconn is ordering for some of their other clients (not all of their clients use Foxconn to order their components, Apple doesn't, but some of their other clients do). For example, they would likely combine their buying power with others for the SoC. But if BB only wants to release unique all-touch devices going forward, unique will mean pricey as they won't be able to group-buy some of those components to reduce their costs.

    Another factor is that with Foxconn taking on the unsold inventory risk, they are producing smaller runs at one time (increased costs per unit) and undoubtedly require a significantly higher share of the profits.

    That's why I don't think the often-quoted "10 million units/year" level should be treated as gospel. I highly doubt BlackBerry keeps a consistent $/device profit across all of their portfolio. 5 million units of one type of device may earn them more than 20 million of another.
    LuvULongTime likes this.
    02-21-15 11:19 AM
  3. LuvULongTime's Avatar
    Based on the demand and market realities, it's reasonable to assume BlackBerry already has a high end touch prototype. The challenge is manufacturing one that has the same specs & performance as today's current high ends at a reasonable price. They don't move enough units to source low cost components. Then they need to convince carriers to order healthy amounts of stock. It would be difficult for them to offer a $900 BlackBerry touchscreen when there's such low demand for the line.

    Management realizes this, and Chen himself has said they will not build a touchscreen unless it's distinctively different. That's why the only high end touch we'll likely see in the future is a Passport sequel with no keyboard.
    Riddle me this... how did they manufacture so little Passports and manage to sell them off contract for $599 USD, and now $199 USD on a 2 year contract? When released, the Passport was thought to have the latest and greatest specs. I cannot comprehend why this same scenario would not be possible with an all touch phone with similar specs to the Passport?

    In terms of pricing to specs, I believe the real issue is that BlackBerry thinks/thought people are/were willing to pay a premium for their brand. And not that they can't source components cheaply enough. I'm hoping it is the past tense and they have realized their brand is worth zilch now and they need to spec and price competitively.
    02-21-15 11:22 AM
  4. abwan11's Avatar
    Apples influence was a paradigm shift for more than just RIM. Nokia, Microsoft, Palm, Motorola, HP,etc. , to name a few. Not to mention the entire music industry, including Paul McCartney, the founder of Apple the brand. They all fell victims to Apples sue nami. Is it anyone's fault? I don't think so. Most of the company's had the resources and the time to launch an early assault and failed to act effectively. Know one had the crystal ball that everyone claims to have today.

    RIM was in the best position to contend and failed to act quickly for sure. They have been strung up for it ,and then some, along with their employees and shareholders. Smeared and degraded for trying to stand up and fight for what they believe is theirs.
    I'm a sucker for the underdog, (big mistake for me in life ), I can't stand to see anyone's mistreatment, and I've been around long enough to be able to clearly identify it when it does happen.

    Posted via CB10
    02-21-15 11:32 AM
  5. LuvULongTime's Avatar
    Foxconn build as efficiently as they can but it's the component costs that will always be a large percentage of the handset cost to manufacture. The component supplier will offer discounts if the manufacturer (Foxconn) buys a ton of parts, and typically much bigger discounts as the order size increases.

    I believe Birdman's point was that BB will provide such a small order to Foxconn (anything under 1M handsets is small I reckon), that Foxconn won't be able to negotiate a significant discounts on screens, chips, etc from the component supplier. So the cost of the screen that goes into a BB handset, even if it was identical to the screen going into an Android handset, would cost BB/Foxconn more... and that additional cost would normally get passed onto the end-consumer. The Android customer would be able to take advantage of the bigger discounts the component supplier gave in return for the much larger order size.

    And it really does make a difference. The Z3 came out at $200. Similarly spec'ed Android handsets were closer to $100. As has been said many times on these forums, BB can't compete on price because otherwise they'd be selling below cost.

    So, nothing to do with Foxconn's where-with-all, everything to do with quantity discounts.
    Great post and no disagreement here. Here is a question for everyone. Is the Foxconn deal a help or hindrance to BlackBerry? The initial idea, and one that Chen promoted, was that Foxconn had greater economies of scale and could produce phones at a better price. But can they? Considering BB is ordering small volumes of devices AND they need to share any profits with Foxconn, what is the point? I think the real reason for the Foxconn deal was to save BlackBerry from their own stupidity WRT inventory management. They struck out three times with the PB, Z10, and Q10. Maybe Heins gave up and signed the Foxconn deal to save BB from themselves? Now that Chen seems to have a handle on how to produce inventory in house (Passport being a good example), maybe they apply these new philosophies to any new HW they produce moving forward. Make small batches and keep all ALL the profit.
    02-21-15 11:34 AM
  6. Bbnivende's Avatar
    We do not know BlackBerry's cost to make handsets nor are we subject manner experts. ( Troy might be ?? but I am certainly not)
    This is what one smartphone maker said:

    This Is How Xiaomi Keeps The Cost Of Its Smartphones So Low | TechCrunch

    It is possible to rationalize your product line to reduce the cost of your component parts. The trouble is that you want to be ahead of the curve so that your device does have a decent shelf life.
    02-21-15 12:10 PM
  7. Troy Tiscareno's Avatar
    Make small batches and keep all ALL the profit.
    BB hasn't ever produced a significant amount of their phones themselves - they did have their own production facilities, but they were relatively small. The vast majority of phones were and are made by third-party contractors. Jabil Circuit of Florida was the biggest contractor, and have manufacturing plants in Asia, Eastern Europe, and South America. They were the manufacturers of the majority of BBOS phones, as well as the first 4 BB10 phones: Z10, Q10, Q5, Z30.

    All of those phones were designed by BB's own in-house design staff, which still exists but is now much smaller. BB no longer has any production facilities of its own (they were closed and sold off in 2013) beyond perhaps the ability to make small batches of prototypes. Besides Foxconn, it seems they have another manufacturer, but I've not seen anything publicly about who that might be - it could all be Foxconn, with the difference being that the Z3 was completely a Foxconn hardware project (design, manufacture, and inventory management), whereas others are just manufactured by Foxconn. Either way, manufacturing is outsourced for all devices.
    LuvULongTime and mornhavon like this.
    02-21-15 01:27 PM
  8. mornhavon's Avatar
    ...it could all be Foxconn, with the difference being that the Z3 was completely a Foxconn hardware project (design, manufacture, and inventory management), whereas others are just manufactured by Foxconn...
    Interesting. I was under the impression that the Passport wasn't manufactured by Foxconn, but since Foxconn seems to have a facility in Mexico, and since the specific manufacturer doesn't seem to be known, it looks like it could be Foxconn all around (just with different arrangements regarding design and inventory control, as Troy suggested).
    02-21-15 01:58 PM
  9. LuvULongTime's Avatar
    BB hasn't ever produced a significant amount of their phones themselves - they did have their own production facilities, but they were relatively small. The vast majority of phones were and are made by third-party contractors. Jabil Circuit of Florida was the biggest contractor, and have manufacturing plants in Asia, Eastern Europe, and South America. They were the manufacturers of the majority of BBOS phones, as well as the first 4 BB10 phones: Z10, Q10, Q5, Z30.

    All of those phones were designed by BB's own in-house design staff, which still exists but is now much smaller. BB no longer has any production facilities of its own (they were closed and sold off in 2013) beyond perhaps the ability to make small batches of prototypes. Besides Foxconn, it seems they have another manufacturer, but I've not seen anything publicly about who that might be - it could all be Foxconn, with the difference being that the Z3 was completely a Foxconn hardware project (design, manufacture, and inventory management), whereas others are just manufactured by Foxconn. Either way, manufacturing is outsourced for all devices.
    Thank you. Good information to know. If we are to surmise that Foxconn is making all of their devices (as mornhavon has alluded) I can only wonder how the profit sharing differs by device, if at all? Hmmm...
    02-21-15 02:51 PM
  10. Tre Lawrence's Avatar
    A www circ f2f ct ft
    02-21-15 03:18 PM
  11. lnichols's Avatar
    Great post and no disagreement here. Here is a question for everyone. Is the Foxconn deal a help or hindrance to BlackBerry? The initial idea, and one that Chen promoted, was that Foxconn had greater economies of scale and could produce phones at a better price. But can they? Considering BB is ordering small volumes of devices AND they need to share any profits with Foxconn, what is the point? I think the real reason for the Foxconn deal was to save BlackBerry from their own stupidity WRT inventory management. They struck out three times with the PB, Z10, and Q10. Maybe Heins gave up and signed the Foxconn deal to save BB from themselves? Now that Chen seems to have a handle on how to produce inventory in house (Passport being a good example), maybe they apply these new philosophies to any new HW they produce moving forward. Make small batches and keep all ALL the profit.
    It had to be negotiated by Heins. In fact the only product Chen can take credit for is the Classic. Personally I'd like to know what they can make a Z30 and Passport for just to see where the issue is. Never get this info, but it would give us some insight into how good or bad things are on the manufacturing cost side.

    Posted via CB10
    02-21-15 08:08 PM
  12. Elephant_Canyon's Avatar
    …Apples sue nami.
    Spelling mistake, or brilliant wordplay?
    02-21-15 09:13 PM
  13. abwan11's Avatar
    Spelling mistake, or brilliant wordplay?
    Sue Nami is the calm before the storm.
    Mother Natures messenger. A Harbinger (of things to come.)

    Here's another

    Knit pickers have a very small hook, so you can pick up hard to catch stitches on lace, socks, or even underwear,

    Posted via CB10
    02-21-15 11:29 PM
  14. Troy Tiscareno's Avatar
    Thank you. Good information to know. If we are to surmise that Foxconn is making all of their devices (as mornhavon has alluded)
    We know that the Classic is being manufactured by the Taiwanese company Wistron (formerly the manufacturing arm of Acer, but which was spun off back in 2000). Wistron makes a ton of stuff, including being one of the manufacturers of LNBs (the "nosecone" electronics) for both DirecTV and Dish Network satellite dishes. I still haven't heard who was manufacturing the Passport, but it's likely one of the two (Wistron or Foxconn/Hon Hai).
    04-15-15 10:28 AM
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