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Tuesday, February 05, 2008, 03:20 pm PT (06:20 pm ET)

iPhone, iPod updates pad Apple margins; Belgian iPhone; more

Apple's new 16GB iPhone is as much a move to restore comfortably high profit margins as to spark sales, according to one report. Also, Belgium's main carrier may support the iPhone this year, and the chief creator of Linux has chastised Apple's approach to Mac OS X.

New iPhone, iPod capacities seen boosting margins

If prices for flash memory have stabilized or dropped since Apple first released the iPhone, the new 16GB model could prove to be a true cash cow for Apple, says a new analysis by Silicon Alley Insider.

The research points to an earlier iSuppli cost breakdown for the iPhone, which revealed that manufacturing costs accounted for only 50 percent of each unit before factoring marketing and sales into the equation. Assuming prices have remained the same for the NAND flash storage in the device — an unlikely situation given Apple's admitted oversupply conditions, the report notes — the 16GB iPhone's retail price would have increased disproportionately to its actual production costs.

An 8GB iPhone would cost $258 to make in October, leaving a 35 percent margin; however, the new model would cost only $40 more at $298. More than 40 percent of the handset's cost would be unaccounted for even before including near-certain price drops, the report makes clear.

The examination makes no attempt to break down prices for the 32GB iPod touch, though an October iSuppli analysis suggested that the $299 8GB model cost just $155 to produce at the time. Adding the $120 at October flash memory prices needed to reach the price of today's 32GB iPod would raise the manufacturing cost to $275, which would leave 45 percent of the new player's cost to other costs as well as profits.

Belgium a candidate for iPhone in 2008

The head of Mobistar, Belgium's second-largest cellular carrier, on Tuesday said a deal may be possible to offer the iPhone through the provider.

Company chief Benoit Scheen didn't estimate a specific timeframe but noted that the opportunity depended largely on Apple. As Belgium isn't the iPhone maker's highest priority, any Belgian release would likely follow only after those of larger countries, the executive said.

Linux creator criticizes Mac OS X

In an interview with Australia's Sydney Morning Herald, Linux founder and namesake Linus Torvalds has taken Apple to task for what he says is a hostile programming environment, even though it may be a stronger operating system than its most obvious alternative.

"I think Leopard is a much better system [than Windows]," Torvalds said. "[However,] OS X in some ways is actually worse than Windows to program for. Their file system is complete and utter crap, which is scary."

Importantly, the developer also attacked the philosophy behind both Mac OS X and Windows in equal measure. The OS is a shell meant to be an "invisible" means of getting to applications, he said. For hardware manufacturers, Linux is said to be a better alternative that is customizable for specific applications or very low-power devices like media players. With most commercial operating systems, however, the need to drive profits often distracts from improving performance or other important but less alluring components of the software.

To Microsoft and Apple [the OS is] a way to control the whole environment... to force people to upgrade their applications and hardware," Torvalds explains.