Apple execs rethinking iPhone pricing strategy for 2009
While the likelihood of Apple releasing new iPhones this year is all but certain, a discussion between analysts and Apple's top brass has also dropped clues that the iPhone's pricing may not be static this year.
Toni Sacconaghi of Bernstein Research mentions in a research note that a discussion with Apple COO Tim Cook, CFO Petter Oppenheimer and worldwide marketing senior VP Phil Schiller point both to an upgrade to the touchscreen device as well as to the possibility of "different pricing/price points" this year, with Cook "examining iPhone's business model" for possible changes.
Cook and Schiller in particular have teased a "very exciting" 2009 for iPhones.
What these possible price changes would entail isn't divulged by the Apple executives, although Sacconaghi is quick to dampen rumors of an iPhone nano or a similar low-budget cellphone. Without naming any one of the executives as a source, he gathers from his investigations that the company isn't presently chasing such a concept.
Any future iPhone, he says, will probably have at least a web browser and access to the App Store, the latter of which has Cook, Oppenheimer and Schiller particularly "bullish" about the iPhone's success as it gives Apple an advantage over rival smartphone makers.
The firm's leaders are also adamant that iPhones won't come with hardware keyboards. A fixed set of keys reportedly makes it harder to implement different keyboards, such as for different languages, and would also make it harder for third-party developers hoping to use their own custom control schemes. Using the touchscreen as the primary input improves Apple's bottom line by letting it ship what's essentially the same phone across many different regions, the executives say.
No matter the changes to Apple's iPhone pricing structure, such a move wouldn't be uncharacteristic of the Cupertino, Calif. electronics giant. Each year of the iPhone's existence has had at least one major price shakeup: the iPhone's maximum price fell from $599 to $399 in 2007, while the iPhone 3G in 2008 not only reduced this top price to $299 but switched the behind-the-scenes profit model from revenue sharing with carriers to a heavy device subsidy.
But the Apple TV's position is considerably less optimistic, Sacconaghi warns. After his talk with the senior staffers, he understands that Apple views "lots of barriers" for the networkable media hub and doesn't see it as a current business cornerstone like it does iPhones, iPods and Macs.
Not to downplay the company's prospects, though, the Bernstein researcher says the management team is maintaining an "unwavering" level of belief in its guidance for the January-to-March quarter even as it has no intention of cutting prices; the upgraded plastic MacBook is selling well but is still being outsold by its more expensive aluminum cousins, according to the executives, who also see a lot of headroom in computer market share.
While Sacconaghi doesn't make many predictions, he repeats frequent expectations of an iPhone in summer and also believes Apple may update the iMac in March.
Toni Sacconaghi of Bernstein Research mentions in a research note that a discussion with Apple COO Tim Cook, CFO Petter Oppenheimer and worldwide marketing senior VP Phil Schiller point both to an upgrade to the touchscreen device as well as to the possibility of "different pricing/price points" this year, with Cook "examining iPhone's business model" for possible changes.
Cook and Schiller in particular have teased a "very exciting" 2009 for iPhones.
What these possible price changes would entail isn't divulged by the Apple executives, although Sacconaghi is quick to dampen rumors of an iPhone nano or a similar low-budget cellphone. Without naming any one of the executives as a source, he gathers from his investigations that the company isn't presently chasing such a concept.
Any future iPhone, he says, will probably have at least a web browser and access to the App Store, the latter of which has Cook, Oppenheimer and Schiller particularly "bullish" about the iPhone's success as it gives Apple an advantage over rival smartphone makers.
The firm's leaders are also adamant that iPhones won't come with hardware keyboards. A fixed set of keys reportedly makes it harder to implement different keyboards, such as for different languages, and would also make it harder for third-party developers hoping to use their own custom control schemes. Using the touchscreen as the primary input improves Apple's bottom line by letting it ship what's essentially the same phone across many different regions, the executives say.
No matter the changes to Apple's iPhone pricing structure, such a move wouldn't be uncharacteristic of the Cupertino, Calif. electronics giant. Each year of the iPhone's existence has had at least one major price shakeup: the iPhone's maximum price fell from $599 to $399 in 2007, while the iPhone 3G in 2008 not only reduced this top price to $299 but switched the behind-the-scenes profit model from revenue sharing with carriers to a heavy device subsidy.
But the Apple TV's position is considerably less optimistic, Sacconaghi warns. After his talk with the senior staffers, he understands that Apple views "lots of barriers" for the networkable media hub and doesn't see it as a current business cornerstone like it does iPhones, iPods and Macs.
Not to downplay the company's prospects, though, the Bernstein researcher says the management team is maintaining an "unwavering" level of belief in its guidance for the January-to-March quarter even as it has no intention of cutting prices; the upgraded plastic MacBook is selling well but is still being outsold by its more expensive aluminum cousins, according to the executives, who also see a lot of headroom in computer market share.
While Sacconaghi doesn't make many predictions, he repeats frequent expectations of an iPhone in summer and also believes Apple may update the iMac in March.
Comments
1) AppleTV is bleh. A PS3 serves a much better function than a AppleTV with the ability to play Blu-ray movies, stream music, play downloaded HDTV shows (both legal and torrented), as well as games. It's simply not that useful when any Blu-ray player + Netflix is cheaper in the long run!
2) New iPhones pretty much have to come out in June because people who signed their original 2-year iPhone contracts in 2007 will be up. I doubt they'd really want them to go elsewhere!
3) An iPhone will always include: 480x320 res screen and 3.5" touchscreen simply because of the App Store. Messing with either one will cause WAY too many problems when you've got thousands of applications and millions of iPhones/iPod Touches to support.
4) Because of point two, there will NEVER be an iPhone nano. It simply does not make sense, when the App Store is a cash cow in an of itself. Remember that Apple sells software mainly to sell hardware (similar to iTunes/iPod model). Doesn't make sense to cut off that revenue stream.
Anyway, a likely scenario is keeping the iPhone 3G as a "base" model and then updating with a more expensive model. This gives the appearance of the iPhone getting cheaper without hurting Apple's bottom line too much.
An interesting idea, but look at how they separated the iPod games store from the iPhone store. They can't stick with 480 x 320 forever, and surely they must have realised that beforehand?
How does the internal workings of the iPhone affect resolution? If ever there was an argument for resolution independence, the transition between different generations of devices is it...
How does the internal workings of the iPhone affect resolution?
The same code for resizable windows is there like in Cocoa on the desktop. However, due to there being only one screen size available now, I bet many developers ignore/don't use it.
Amorya
Did this article actually say anything?
Nope!
How does the internal workings of the iPhone affect resolution? If ever there was an argument for resolution independence, the transition between different generations of devices is it...
I'm pretty sure that a drop in resolution or screen size is not in the cards. I don't see much justification for higher resolution at the existing screen size, but there is space to make the screen longer in the current form factor. Existing fixed resolution applications would run fine in a "compatibility box" within that screen, while those applications that have vertical scrolling (lists, documents, Web pages) would simply use the additional room and require no changes.
A 568 x 320 display would be 16:9. A 512 x 320 display would be 16:10. A 568 x 320 display would have a 4" diagonal and can be made to fit the existing form factor by modifying slightly the home button and moving the speaker close to the edge. It would fit an additional row of icons.
Possibly, a new design with a 568 x 320 display would be a bit longer, so it could also be made slightly narrower (yet hold a battery with the same volume). For the sake of simplicity, the actual resolution could end up being rounded to 560 x 320 and achieve essentially the same effect.
If this "widescreen" iPhone were sold at the high end, the current "standard" format would be the low end, especially if they take 3G away. You would get two phones, clearly separated, but both good and app-store compatible. Meanwhile, Apple will probably ax the classic iPod 5G, so overall product count would remain the same.
The "At least a browser..." part scares me. AT LEAST. I'd hope since I'm forking out more than $80 a month for PHONE service it comes with AT LEAST a browser.
They mess with the device like this, come out with cheaper less capable units and it puts a hurt on the image.
I'd like to see a more sturdy unit like the original. Everyone I know who owns a 3G model (say maybe 2 doz) have broken it in some form. And this is why I don't have one anymore (sold the 1st gen to buy the 2nd, but fell in love with the reception from the good old Motorola I was using in between).
AppleTV is more of a "stake in the ground" than anything else at this point IMO. We're still some years off from where video delivery over the Internet will supplant physical media, and there are many pieces that still need to fall into place for that to happen: more widespread and faster broadband connections, more agreeable licensing terms from the big studios, more content available, higher quality (1080p), &c.
The place where iPhone can go "lower-end" is on the service plans. I don't see Apple trying to hit a $100 subsidized price point for the iPhone, and the vast majority of the expense for the consumer is the price of their ATT contract with unlimited data over two years. I guess ATT could offer a measured or limited data plan for less money per month, but of course people would then complain when they go over their plan's bandwidth limits and incur massive overage fees.
I think iPhone can go higher resolution without too much trouble. I haven't poked much into the iPhone SDK, but aren't iPhone's graphical elements resolution-independent like most of Mac OS X's?
The consistency of development for the iPhone platform so far is a huge advantage. Try developing for all the different versions of the Blackberry out there, and all the potential different variations of the Android (Does the device have a physical keyboard? Does it have a touch screen?). Apple would do well to protect that consistency at all costs and only build on top of that where it offers a clear path forward towards advancing the product and the platform.
I think iPhone can go higher resolution without too much trouble. I haven't poked much into the iPhone SDK, but aren't iPhone's graphical elements resolution-independent like most of Mac OS X's?
You can write resolution independent apps, but you can also write resolution dependent ones. Overall I'd say that raising resolution is not a huge problem. But a lower resolution iPhone would be a bad, bad idea, which is why I'd be surprised if they ever introduce an iPhone nano with a smaller screen.
a) people can finally stop talking about an iPhone "nano." Why on EARTH would apple ever create such a product? When have they ever catered to a stripped down, featureless market? They can only reiterate this fact so many times, yet the "analysts" even as recently as a few weeks ago continue to spew rumors of a "3G-less" version, or some other ridiculous idea.
b) apple will probably reduce prices for the iPhone this summer. If not an explicit price decrease (ie, 8GB model costs $99, for example), then more likely they'll drop the 16gb to $199 and introduce a new 32GB model at $299 (better yet, they'll upgrade the processor as well as some software upgrade for all users). THIS is how apple works. Look at every single ipod revision and many routine computer upgrades. Bring the "a" model down to "b" prices, and introduce a new A model.
all of this, of course, IMHO
When have they ever catered to a stripped down, featureless market? They can only reiterate this fact so many times, yet the "analysts" even as recently as a few weeks ago continue to spew rumors of a "3G-less" version, or some other ridiculous idea.
When? Well, with the iPod nano, for one. Apple can sell cheap things, when they make sense. The problem with the iPhone nano concept is that it would have broken the hugely successful App store model.
That said, I wouldn't call "3G-less" stripped down. I have the original Edge model and it's a bit slower, but good enough for what I need when away from WiFi. Edge also uses less power, so it even has a non-trivial advantage.
3G is probably the best place to cut costs for a lower end model. You sure as heck can't shrink the screen, lose the touch interface, or put in a slower processor.
In fact a 3G-less model would be just like your new A, old B gets cheaper routine, except slightly retroactively. The cheap model would basically be the original iPhone, except with 2.x firmware. Parts for that phone are much cheaper now than two years ago.
Min memory old processor mid level old processor more men
Then high end processor high memory
Good better best
i think this article said plenty -
a) people can finally stop talking about an iPhone "nano." Why on EARTH would apple ever create such a product? When have they ever catered to a stripped down, featureless market? They can only reiterate this fact so many times, yet the "analysts" even as recently as a few weeks ago continue to spew rumors of a "3G-less" version, or some other ridiculous idea.
b) apple will probably reduce prices for the iPhone this summer. If not an explicit price decrease (ie, 8GB model costs $99, for example), then more likely they'll drop the 16gb to $199 and introduce a new 32GB model at $299 (better yet, they'll upgrade the processor as well as some software upgrade for all users). THIS is how apple works. Look at every single ipod revision and many routine computer upgrades. Bring the "a" model down to "b" prices, and introduce a new A model.
all of this, of course, IMHO
The iPods got simpler which each new product category. I can see an iPhone Nano being just a phone and PMP, but only after the current market for full featured iPhones is saturated.
I'm pretty sure that a drop in resolution or screen size is not in the cards. I don't see much justification for higher resolution at the existing screen size, but there is space to make the screen longer in the current form factor. Existing fixed resolution applications would run fine in a "compatibility box" within that screen, while those applications that have vertical scrolling (lists, documents, Web pages) would simply use the additional room and require no changes.
A 568 x 320 display would be 16:9. A 512 x 320 display would be 16:10. A 568 x 320 display would have a 4" diagonal and can be made to fit the existing form factor by modifying slightly the home button and moving the speaker close to the edge. It would fit an additional row of icons.
Possibly, a new design with a 568 x 320 display would be a bit longer, so it could also be made slightly narrower (yet hold a battery with the same volume). For the sake of simplicity, the actual resolution could end up being rounded to 560 x 320 and achieve essentially the same effect.
If this "widescreen" iPhone were sold at the high end, the current "standard" format would be the low end, especially if they take 3G away. You would get two phones, clearly separated, but both good and app-store compatible. Meanwhile, Apple will probably ax the classic iPod 5G, so overall product count would remain the same.
I Agree. There is plenty room for more screen real estate in the current form factor, but will/can they take advantage of it is the question.
b) apple will probably reduce prices for the iPhone this summer. If not an explicit price decrease (ie, 8GB model costs $99, for example), then more likely they'll drop the 16gb to $199 and introduce a new 32GB model at $299 (better yet, they'll upgrade the processor as well as some software upgrade for all users). THIS is how apple works. Look at every single ipod revision and many routine computer upgrades. Bring the "a" model down to "b" prices, and introduce a new A model.
all of this, of course, IMHO
I agree with this as well. Current 8gb model will be the $99 model. New, Upgraded version released with 16gb ($199) and a 32gb ($299).
Long-time Lurker. First time poster. Glad to be a part of AI now.
The iPods got simpler which each new product category. I can see an iPhone Nano being just a phone and PMP, but only after the current market for full featured iPhones is saturated."]
Yea actualy that seems very likely. When the regular iPhone becomes a regular commodity like the ipod is it will expand its reach into the markets the regular iPhone doesnt cover. This doesnt in anyway mean that it will be a cheap product just a different ball park right