Both Bloomberg and Forbes reported today that Hon Hai Precision Industry Co., also known as FoxConn, has secured the contract from Apple to build the upcoming iPhone. Both reports say that Apple has ordered 12 million units to be produced. Apple currently sells roughly 45 million iPods each year.

iPhone

This is a mock-up of the Apple iPhone, and most likely not what it will look like once announced. Many of the designs seen around the net are much too complex for what this phone will be. Think about the iPods, a screen and a click wheel. The iPhone should look similar, and be just as easy to function.

In reading all of the reports coming out of China/Taiwan, one of the most interesting things reported is that Apple will not go through existing channels to sell the phone. It had been initially reported a few weeks back that Apple would sell through Cingular, though it appears that will not be the case. Instead, the iPhone will be sold unlocked, and will be available through normal iPod channels. Being unlocked, the iPhone will require that you insert a GSM SIM card in order for it to operate. This plan has some interesting upsides, and some potential problems:

Upside:

Existing cell subscribers can just swap out their SIM card from their existing phone into an iPhone without interrupting their contract.

The phone can be sold and used world wide straight from the factory.

The iPhone can be used as an iPod, without SIM card.

Problems:

Apple will have to forgo any subsidies that cellular companies give to manufacturers to lower the prices of their units. Consumers will most likely have to pay retail price for the iPhone.

One other option for Apple is to become a MVNO and operate their own network like Disney, Boost and Virgin in the US. Don’t be surprised if you see an Apple Cellular iPhone and an unlocked iPhone for sale on the Apple Store side by side.

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