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Apple predicted to introduce lower cost iPhone models in June

post #1 of 82
Thread Starter 
Apple's next update to the blockbuster iPhone handset is expected by one prominent analyst to have a lower total cost of ownership, and to also include new gesture-based functionality.

Katy Huberty with Morgan Stanley maintains that the biggest barrier to greater iPhone adoption is the cost of the hardware, followed by the service plan. The investment in the device has been its biggest issue in both developed markets like the U.S. and emerging ones like China.

But Huberty expects Apple to address that in June, by introducing a new model that will be economically friendly to even more consumers.

"We expect Apple to launch new iPhones in June that offer both a lower total cost of ownership and new functionality, potentially including gesture-based technology," she wrote in a new note to investors Friday.

In 2009, when Apple introduced the new iPhone 3GS, the company also dropped the price of the previous year's iPhone 3G to $99. However, despite the lower price point, the high end iPhone 3GS was still the most popular option for consumers.



In addition to lower cost of ownership for the iPhone, Huberty remains bullish on AAPL stock because of the forthcoming iPad launch in March. Here she is particularly optimistic, projecting shipments of 6 million devices in the 2010 calendar year, versus Wall Street's average projections of 3 million to 4 million.

"We expect Apple to ship its first iPad and announce additional content deals in late March to better than expected demand," Huberty wrote. "We see the iPad targeting the sub-$800 consumer notebook market which equates to 30M annual units just in the US (120M globally."

Morgan Stanley has maintained its "overweight" rating for AAPL stock, with a price target of $250.

In the past, Huberty was notoriously negative on AAPL stock, suggesting the iPhone was too expensive even at a $199 price point. In late 2008, she predicted that iPhone sales would suffer because Apple had priced the product too high.

But last year, Huberty turned positive on Apple, stating that the company had become the "clear leader in the battle over the mobile Internet."
post #2 of 82
Cost is the greatest barrier? Cheapskates can get refurb'd models for sub-$100. Hell, Best Buy had 16GB 3GS phones for $50 this week.

http://slickdeals.net/forums/showthread.php?t=1882030
post #3 of 82
I do agree that the iPad will perform exceptionally well for Apple and expand the 'halo' effect to other Apple product lines
post #4 of 82
Quote:
Originally Posted by Mazda 3s View Post

Cost is the greatest barrier? Cheapskates can get refurb'd models for sub-$100. Hell, Best Buy had 16GB 3GS phones for $50 this week.

http://slickdeals.net/forums/showthread.php?t=1882030

not every person lives in the us

an unsubsidized iphone is very expensive, specially in developing countries
post #5 of 82
These people (analysts) are a joke. The information they report on is equal to gossip magazines for me. Rarely if ever do they have anything worthy to say. Next...

I have not heard, nor seen, one bit of consumer data that suggests people are refusing to buy the iphone bc it is too expensive. I mean the 3G is $99 - give me a break! If people are refusing bc that is too high then maybe they should not have a phone.

Most people I know who won't purchase an iphone don't bc they don't want AT&T or they are waiting for the next release. For the money, it is the best bang for the buck and clearly the best phone available period.

I hope they don't change the pricing at all - but instead give us more for the money.
post #6 of 82
Quote:
Originally Posted by doyourownthing View Post

not every person lives in the us

an unsubsidized iphone is very expensive, specially in developing countries

you are correct. But you have to keep in mind, this is an analyst who is reporting on conditions/opinions related to the iphone, Apple, and stock in the US. She is a market analyst (and a lousy one at that). Her comments were not aimed at the pricing of the iphone in a global market. That would be a different type of report from a more qualified individual.
post #7 of 82
Do analysts really get paid for saying that products sell better when they are cheaper?

I guess more people listen to cheap analysts too?

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post #8 of 82
There's a massive market of young people who can't afford the cost of an iPhone, and more importantly it's contract. These are traditionally a big market for the iPod, so it'd make sense to try to get a phone that could be approaching the iPod Touch's price - hard, but not impossible.
post #9 of 82
"Best Buy had 16GB 3GS phones for $50 this week."

wow, that's a great deal.

I'm going to upgrade to the 3Gs soon.
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post #10 of 82
i would buy an iPhone for my wife and 2 sons if the service plan was not so high. I already pay $142 a month for the family plan i have (no data). If i wanted to add 3 iphones to the mix, it would be well over $200 / month. I do not have any issue with the $199 handset cost. just the monthly service. why can't i buy an iphone w/o the data plan? that is what i really want. i can buy a handset from AT&T that has data capibilties w/o a data plan. just not the iPhone....
post #11 of 82
Translation from analyst-speak to regular language:
"What a gig! I get paid to make stuff up based on nothing more than what I imagine Apple ought to do to make up for their embarrassing fail with the iPhone. Oh wait..."
post #12 of 82
Quote:
Originally Posted by ElmCityWeb View Post

"Best Buy had 16GB 3GS phones for $50 this week."

wow, that's a great deal.

I'm going to upgrade to the 3Gs soon.

I hope it's the iPhone nano. Last year there was a mock up. Looked like the older square nano with glass that doubled as the dialed, invisible when shut so you could browse the web, so it's also touch glass, making touching in two places. Inlobed it but that design sounds pricey what apple should really do is work with att to lower cost.
post #13 of 82
Quote:
Originally Posted by s4mb4 View Post

I do not have any issue with the $199 handset cost. just the monthly service. why can't i buy an iphone w/o the data plan? that is what i really want.

Because $199 is not the handset cost. It's not even the handset price. Instead it's the handset down payment, with the balance coming out of your monthly service plan. That tends to preclude a low cost service plan.
post #14 of 82
I though the biggest barrier to greater iPhone adoption was it's inability to play Flash video or games.
post #15 of 82
I find it quite funny when I see US customers complaining about the iPhone's price. Do you have any idea how much you have to pay for a 32Gb 3GS over here (Portugal)? 700! That's around $950!!! You may eventually get a deal (with a new contract) for about 400, but that's still $550, almost twice as much as in the US.

So don't tell us, in Europe at least, about the iPhone being expensive...
post #16 of 82
Lowering handset price further makes no sense. As mentioned, specials already hit $50. Taking that down to $0 is going to have a limited effect.

What would help, is offering the iPad's 250MB/mo data plan on the iPhone. My guess is AT&T really doesn't want to do that though, as most iPhone owners are going to be under 250MB/mo, so they'd be leaving $15/mo on the table.

But maybe they can be convinced they'd make up for it with iPad plans or a general tethering option (finally).

Offering the iPhone without a data plan would be a huge sales boost for Apple. But I can't see AT&T going for it. And it would detract enough from the 'magical' iPhone experience that I can't see Apple pushing for it.
post #17 of 82
Quote:
Originally Posted by NeilM View Post

Because $199 is not the handset cost. It's not even the handset price. Instead it's the handset down payment, with the balance coming out of your monthly service plan. That tends to preclude a low cost service plan.

This analyst is clueless. The phone price is not the barrier. It's definitely the cost of the monthly plan.

At&t doesn't even offer discounts for data in a family plan.
Why should we pay $30 for unlimited texting and $30 each for unlimited data???

The biggest compliant I've heard from people is about the required monthly data plan.

If Apple offered an unlocked phone for $399 that would work on both At&t and T-mobile, people would jump on it.
post #18 of 82
Quote:
Originally Posted by OnePotato View Post

I though the biggest barrier to greater iPhone adoption was it's inability to play Flash video or games.

Naw. People don't expect the full internet on their phone.

The 'Pad, OTOH...
post #19 of 82
Quote:
Originally Posted by OnePotato View Post

I though the biggest barrier to greater iPhone adoption was it's inability to play Flash video or games.

Shhh. You never want to spoil a good conspiracy theory with actual data.
post #20 of 82
The analyst may or may not be off base, but this is a report of a poll, not just an opinion.

Consumers are notoriously unable to express their true motivations in a poll, but when you see one or two choices coming up in overwhelming numbers it lends credence to those facts.

I know it's silly to choose a non-iPhone because the handset is $50 or $100 less when you're facing several thousand dollars of contract fees, but based on my experience running a cell phone store a few years ago, that's exactly what many many people do.
post #21 of 82
Quote:
Originally Posted by DyingSun View Post

I find it quite funny when I see US customers complaining about the iPhone's price. Do you have any idea how much you have to pay for a 32Gb 3GS over here (Portugal)? 700! That's around $950!!! You may eventually get a deal (with a new contract) for about 400, but that's still $550, almost twice as much as in the US.

So don't tell us, in Europe at least, about the iPhone being expensive...

That's precisely what I was going to mention. In Europe we tend to get the short end of the stick when it comes to pricing. In some of the more expensive stores, an unlocked iPhone 3Gs 32GB costs around 1000 (that's around $1355).
post #22 of 82
I had absolutely no problem paying $300 for my 32GB 3GS. I only wish there was a cheaper voice plan.
post #23 of 82
I have no problem with the hardware cost at all. But I still don't have an iPhone. The reason is because of the service plan costs. I don't use a cell phone enough to justify forking out $70+/mo. to Rogers.
post #24 of 82
Quote:
Originally Posted by eAi View Post

There's a massive market of young people who can't afford the cost of an iPhone, and more importantly it's contract. These are traditionally a big market for the iPod, so it'd make sense to try to get a phone that could be approaching the iPod Touch's price - hard, but not impossible.

Huh? An iPhone (with a contact) is cheaper than in iPod. The problem is the monthly fees.
post #25 of 82
I know we probably don't have any real investment types visiting this forum but I would like to know if analysts like this Huberty suffer any consequences when their predictions and models prove to be wrong. It would seem that investors who make their buy/sell decisions based on analyst's reports would be impacted negatively by bad information. For example, Huberty has turned a 180 on Apple. Now she thinks it's the cat's meow. So what about those Morgan Stanley customers who lost out on Apple's big run up? Do they complain to Huberty's boss or file lawsuits for incompetence?
post #26 of 82
So the 3Gs is the more popular of the two models despite the higher price; therefore Apple should release a cheaper phone. The logic simply doesn't match the data.

I agree it's more about the data plan pricing than anything else, however I thought contracts in countries other than the US were generally allot less expensive comparatively. So obviously she's only talking about the US or is she somehow using US data to extrapolate international pricing?

I agree, this analyst is way off base. A sub $99 phone doesn't seem like a good fit for a premium brand like Apple.

You'd probably sell allot of Mercedes sub $20k too, but you don't see it happening.

Also, I'm tired of people who say flash is a must. I don't even use flash on my desktop or laptop anymore. Why would anyone want it on their mobil? All I can gather is that anyone who cries about flash watches way too much porn. As far as games go; flash games are horrendous, not designed for touch UI's and there are far better games (even at .99) Apple would rather you buy from their store and support their developers.

I suppose lack of flash killed the Nintendo DS and the PSP as well? Please explain to me what flash games and video content are so important, because I can't find anything that I'd want to use that's flash based, let alone a flash based something or other that is a "must". I truly want to know what you guys are talking about because it's beyond me. Perhaps the naysayers would understand your perspective if you told us what you "must have" that you cannot without flash.
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post #27 of 82
Quote:
Originally Posted by lkrupp View Post

I know we probably don't have any real investment types visiting this forum but I would like to know if analysts like this Huberty suffer any consequences when their predictions and models prove to be wrong. It would seem that investors who make their buy/sell decisions based on analyst's reports would be impacted negatively by bad information. For example, Huberty has turned a 180 on Apple. Now she thinks it's the cat's meow. So what about those Morgan Stanley customers who lost out on Apple's big run up? Do they complain to Huberty's boss or file lawsuits for incompetence?

Concerning AAPL, the stock is mostly (over 72%) owned by institutional investors and mutual funds, so the retailer investor's (your Aunt Millie) opinion does not carry much weight.

The market has been very positive about AAPL over the past several years (the short percentage is extremely low, like around a half a point), so clearly most investors are not listening to Huberty.

Hopefully she's good at analyzing other companies, however she has zero credibility about Apple Inc.
post #28 of 82
Quote:
Originally Posted by r u serious View Post

you are correct. But you have to keep in mind, this is an analyst who is reporting on conditions/opinions related to the iphone, Apple, and stock in the US. She is a market analyst (and a lousy one at that). Her comments were not aimed at the pricing of the iphone in a global market. That would be a different type of report from a more qualified individual.

Really? She's surely quoting on Apple as a global company that affects their stock price (listed in the US).

I think you're taking an overly US-centric view on things.

Not that I particularly agree with her analysis...
post #29 of 82
Quote:
Originally Posted by spliff monkey View Post

Please explain to me what flash games and video content are so important, because I can't find anything that I'd want to use that's flash based, let alone a flash based something or other that is a "must". I truly want to know what you guys are talking about because it's beyond me. Perhaps the naysayers would understand your perspective if you told us what you "must have" that you cannot without flash.

I'm disappointed that you are unable to see this yourself, but there are two sites on the Internet that drive the use of Flash: YouTube and FaceBook.

It will be years before HTML5 can pry the cold claws of Flash off the face of the Internet (especially on the desktop), but hopefully the lack of Flash on mobile devices will accelerate this transition.
post #30 of 82
Unless they do something about the $1000 a year ownership costs of the iPhone, then making it cheaper or even free makes not a damn difference in the world.
post #31 of 82
Quote:
Originally Posted by cvaldes1831 View Post

I'm disappointed that you are unable to see this yourself, but there are two sites on the Internet that drive the use of Flash: YouTube and FaceBook.

It will be years before HTML5 can pry the cold claws of Flash off the face of the Internet (especially on the desktop), but hopefully the lack of Flash on mobile devices will accelerate this transition.

Ok don't use facebook and youtube is already available in h264. So what on facebook requires flash. facebook games?
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post #32 of 82
Quote:
Originally Posted by cvaldes1831 View Post

I'm disappointed that you are unable to see this yourself, but there are two sites on the Internet that drive the use of Flash: YouTube and FaceBook.
.

If this is what you're going to offer then stop commenting. Do you really need an explanation as to why these sites are non-factor, non-issue, on the iPhone/iPad?
post #33 of 82
Everyone here is focussing on post pay too much. In much of the world, pre pay (PAYG) is the real driver behind customer numbers. To get an iPhone on PAYG, the price is subsidised very very little, if at all (an 8GB 3G costs £350 on O2 in the UK). Now that the exclusive deals are coming to an end, Apple will probably not be getting a cut of the post pay revenue. So, in order to sell more devices, your need to widen the market.

If Apple can some how repackage much of the 3G (or 3GS) technology (that's pretty much had its R&D paid for) into something new (so that customers don't feel that they're buying last years' model); then they may be onto a winner.

So, pre pay. That's the next area of growth for the iPhone.
post #34 of 82
How can an analyst be so dumb? She quotes a 2008 survey in the US to say that iPhone hardware is expensive??? That would only be the case where the iPhone is sold prepaid at US$499... not in the US, where obviously either its unavailability on different carriers, unavailability as a prepaid option, or the service plan itself are the factors limiting wider adoption.
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post #35 of 82
Quote:
Originally Posted by spliff monkey View Post

Ok don't use facebook and youtube is already available in h264. So what on facebook requires flash. facebook games?

Yes, FaceBook games are enormously popular and some of them are highly profitable. That's why Flash is so important on that site.

For YouTube, yes, I realize that there is h.264 support and the content is accessible in a variety of ways from a variety of hardware and browser platforms, but most desktop computer users are still visiting the site with Internet Explorer on a Windows machine. They will need Flash for a considerable amount of time.
post #36 of 82
Quote:
Originally Posted by pmz View Post

If this is what you're going to offer then stop commenting. Do you really need an explanation as to why these sites are non-factor, non-issue, on the iPhone/iPad?

First of all, no one is accessing these sites on an iPad. It hasn't shipped yet.

While you can access Facebook on an iPhone via a dedicated app, there is still a large number of users accessing the site from Internet Explorer on a Windows box.

My comments are about Flash technology in general, not about Flash on a specific platform or device.
post #37 of 82
Yet another analyst who doesn't follow Apple's core strategies. Sure, dropping price on anything will increase sales, but that is not Apple's strategy and they've said it over and again. They have a strong ethos for pricing discipline and grow features at the same price point rather than aim for the lowest price. Same with desktops and laptops. They have the largest margins of anyone and are selling everything they can make. Wake up, analyst!

What will probably happen is that they will lower their costs through custom silicon (A4 or an iPhone scaled version) while introducing new features which will continue to validate the price point. And they will make a major push in China now they have satisfied initial demand in the US and EU markets.

Oh, and don't go expecting some sort of deal with another US carrier. Apple is a standards-driven company and has zero incentive given worldwide demand for GSM handsets to toy with CDMA or non-standard GSM bands. We are a minority market. They'll wait for LTE.
post #38 of 82
Will the new, less expensive iPhones, have fewer features?
That's what I want to know.
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post #39 of 82
I'll need an unlocked phone for travel to justify replacement; still use my 2g iPhone as it is more permanently unlocked than the 3g and 3gs.

With the ipad meeting this criteria, I might even switch back to a dumb phone as my main cell, if the update doesn't offer a sub-$500 unlocked price.
post #40 of 82
Quote:
Originally Posted by Crowley View Post

Do analysts really get paid for saying that products sell better when they are cheaper?

I guess more people listen to cheap analysts too?

Yeah, I guess it's time for a career change!
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