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Apple working on a smaller, contract-free iPhone to combat Android - report

post #1 of 133
Thread Starter 
Apple is working on a new design and form factor for the iPhone that would allow for a less expensive, contract-free model to take on the competing Google Android platform and bypass wireless carrier contracts, according to Bloomberg.

In a report filed Thursday afternoon, authors Peter Burrows and Greg Bensinger cited anonymous sources in revealing that Apple has allegedly developed a prototype iPhone model that is cheaper and one-third smaller than the current-generation iPhone 4. The report claimed that Apple Chief Executive Steve Jobs "aims to narrow the price gap that has made phones running Android more popular than iPhones" with the new handset targeted for launch in mid-2011.

"Apple has considered selling the new iPhone for about $200, without obligating users to sign a two-year service contract, said the person who has seen it," the report states. It also noted it's possible the project could be delayed or scrapped entirely, as "Apple often works on products that do not later get released."

Bloomberg pinpointed the announcement of the Verizon iPhone announcement in a report filed in June 2010, accurately revealing that the product would become available in early 2011.

Apple's alleged plans, reported on Thursday, would be dependent upon "Universal SIM" technology, which would allow users to switch between GSM networks without having to switch out a SIM card for connectivity to a wireless network.

The Universal SIM would not only cut costs, but would apparently "give Apple an advantage over mobile carriers in influencing customers," Bloomberg's report states. Because the alleged new iPhone model would be available without a carrier subsidy, customers could bypass the terms associated with a two-year contract and phone subsidies, like early termination fees.

"Apple has also worked on redesigned iPhone software that would let customers choose a network and configure their device on their own, without relying on a store clerk or representative of a carrier, according to the person," the report states. To the same end, it also said Apple is working on a dual-mode world phone that would be compatible with both GSM and CDMA networks.

Rumors of an embedded SIM option in future iPhones are not new, surfacing in late 2010 and suggesting that Apple is looking to bypass carriers and contracts, allowing users to select their wireless provider directly from the phone. But it was also rumored that Apple was forced to abandon those plans after carriers allegedly threatened to stop offering subsidies for the iPhone.
post #2 of 133
Will it allow Flash?
post #3 of 133
This follows their iPod strategy of having a model for all price points.

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post #4 of 133
"the report states. It also noted it's possible the project could be delayed or scrapped entirely, as "Apple often works on products that do not later get released."

Lol - nothing like hedging your bets.
post #5 of 133
Quote:
Originally Posted by rdjlexky View Post

"the report states. It also noted it's possible the project could be delayed or scrapped entirely, as "Apple often works on products that do not later get released."

Lol - nothing like hedging your bets.

That line just about says it all.

Not worthy of AI's red-letter font.....

(Notice that the font's gone.... perhaps I imagined it?!)
post #6 of 133
Does the price of the handset really matter anymore? I see the cost of the data plans being the thing that is holding the mainstream buyer back. Apple needs an iPhone you can purchase without a data plan, for the huge number of people who won't pay for data and would be happy to use the phone in WiFi.

I know alot of people will say this is crazy and "who would buy an iPhone without data?", but I think we are in the minority. Compare the number of people who have text plans and the number who have data - huge difference.

I know there is a $15 option at AT&T for a small amount of data, but they need a $0 option - just like the quick messaging phones.

Don't get me wrong, we need our regular iPhone plans too (I have had one since they came out), but I know ALOT of people who just wont pay for the plans.
post #7 of 133
Do the carriers charge you any less when your contract expires? No until they offer a reduced plan for people who own their phone all you are going to save is $200. Everyone know the real cost of having a cell phone is the minutes, data plan and txt, not so much the cost of the phone.

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post #8 of 133
I had wondered when they'd do this.
post #9 of 133
Quote:
Originally Posted by aross99 View Post

Does the price of the handset really matter anymore? I see the cost of the data plans being the thing that is holding the mainstream buyer back. Apple needs an iPhone you can purchase without a data plan, for the huge number of people who won't pay for data and would be happy to use the phone in WiFi.

I know alot of people will say this is crazy and "who would buy an iPhone without data?", but I think we are in the minority. Compare the number of people who have text plans and the number who have data - huge difference.

I know there is a $15 option at AT&T for a small amount of data, but they need a $0 option - just like the quick messaging phones.

Don't get me wrong, we need our regular iPhone plans too (I have had one since they came out), but I know ALOT of people who just wont pay for the plans.

Apple does make an iPhone without a data plan - AT&T just doesn't sell it. I can detach my data plan from my Telus iPhone at any time.
post #10 of 133
The iPhone Nano rumor rears it's head again.
post #11 of 133
Quote:
Originally Posted by aross99 View Post

I see the cost of the data plans being the thing that is holding the mainstream buyer back.

I know there is a $15 option at AT&T for a small amount of data, but they need a $0 option - just like the quick messaging phones.

Don't get me wrong, we need our regular iPhone plans too (I have had one since they came out), but I know ALOT of people who just wont pay for the plans.

The cheapest data plan is $15 per month, the cheapest voice plan is $40. Actually, they do have cheaper voice plans, but not for iPhone users. It's hard to see the data plan as the problem when voice is almost three times as expensive.
post #12 of 133
Quote:
Originally Posted by aross99 View Post

Does the price of the handset really matter anymore? I see the cost of the data plans being the thing that is holding the mainstream buyer back. Apple needs an iPhone you can purchase without a data plan, for the huge number of people who won't pay for data and would be happy to use the phone in WiFi.

I know alot of people will say this is crazy and "who would buy an iPhone without data?", but I think we are in the minority. Compare the number of people who have text plans and the number who have data - huge difference.

I know there is a $15 option at AT&T for a small amount of data, but they need a $0 option - just like the quick messaging phones.

The price of the handset matters almost everywhere except in the US where nobody ever sees the true handset price. And the dataplans are only so expensive because they have to pay back the subsidy.
In Europe, the iPhone 4 is sold for around 630/740 Euro (that includes sales tax/VAT and thus it varies a bit from country to country).
In Germany, you can get a 100 MB/month plan for 4 Euro. And for a lot of people, if they pay attention (no podcasts/apps downloading/streaming over 3G), most web services (e-mail, light serving, most apps that just fetch small amounts of data) can be covered by this. And going to 10 Euro/month gets you to 1 GB.
If you have a month-by-month 4 Euro data contract, the difference between 600 Euro and 200 Euro does really matter.
(And these data plans include voice, just with zero minutes.)
post #13 of 133
This isn't gong to happen.
Apple has already proved it didn't need a large Market share to make a big profit with the mac and iPhone so it would feel like a step backwards to aim at a lower end portion of the Market.
And I don't like the iPod analogy it isn't relevant. Just thing about the apps who won't work (or as well) with a new screen size.
They can do some testing for sure but it doesn't mean they'll release it. This is where they are differen from microsoft; they make sure they have a strong strategy and a perfect product. They don't want to damage sales of the more expensive iPhone. Remember the 7inch iPad?
post #14 of 133
Quote:
Originally Posted by mstone View Post

Do the carriers charge you any less when your contract expires? No until they offer a reduced plan for people who own their phone all you are going to save is $200.

Well, in most countries where you have multiple carriers competing with the same technology (ie, GSM/UMTS), you can get plenty of much cheaper plans if you don't need a subsidy (ie, loan) for your handset.
Have a look at this graphic, you can clearly see that the biggest part of the total cost is in the handset price:
post #15 of 133
Quote:
Originally Posted by noirdesir View Post

The price of the handset matters almost everywhere except in the US where nobody ever sees the true handset price. And the dataplans are only so expensive because they have to pay back the subsidy. ...

The data plans are so expensive because U.S. carriers don't compete on price. It doesn't have anything to do with "the subsidy".
post #16 of 133
AND THE IPHONE NANO NONSENSE RETURNS.

What did you expect? The Verizon iPhone exists. The iPhone nano is OBVIOUSLY going to happen. Simultaneous release with the xMac.

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The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #17 of 133
So Apple wants to be a volume manufacturer now like Nokia, Samsung, Motorola, etc. for the sake of marketshare? Jeez Apple you rake in 51% of all mobile phone profits despite a 4% marketshare. I thought you'd rather take that stats over marketshare.
post #18 of 133
Quote:
Originally Posted by anonymouse View Post

The data plans are so expensive because U.S. carriers don't compete on price. It doesn't have anything to do with "the subsidy".

But if they had to compete on price, they also would have to compete on the amount of subsidy they pay. As long as they can charge what they want, they have no real pressure to reduce the subsidy.
post #19 of 133
Quote:
Originally Posted by aross99 View Post

Does the price of the handset really matter anymore? I see the cost of the data plans being the thing that is holding the mainstream buyer back. Apple needs an iPhone you can purchase without a data plan, for the huge number of people who won't pay for data and would be happy to use the phone in WiFi.

I know alot of people will say this is crazy and "who would buy an iPhone without data?", but I think we are in the minority. Compare the number of people who have text plans and the number who have data - huge difference.

I know there is a $15 option at AT&T for a small amount of data, but they need a $0 option - just like the quick messaging phones.

Don't get me wrong, we need our regular iPhone plans too (I have had one since they came out), but I know ALOT of people who just wont pay for the plans.

I agree. I don't want to pay $360/yr. for a data plan. I don't want an iPhone -- I want a WiPhone. And maybe, like the iPad, give me the option of a month-to-month data plan (in case I'm on the road for an extended period).
post #20 of 133
Makes sense to me. It is a small step to add phone capability to the iPod Touch and sell them at the same prices as they do now. A contract free phone, even if it uses a MVNO set up by Apple on Sprint or T-Mobile could fill a niche and spur sales of iPod Touches even further.
post #21 of 133
If there were a wifi only iPhone me and my wife would already have them. The $30-$60 extra in data is something we just haven't accepted. We need phones, but we do not need internet everywhere we go. wifi is pretty much everywhere, and would be good enough for me.

So for me we've been using the shittiest dumb phone's we could find supplemented with itouch's
post #22 of 133
Yes you can, you can either buy a used iPhone or pay the full $700 price for a new out of contract iPhone and use it without a data plan.

Quote:
Originally Posted by aross99 View Post

Does the price of the handset really matter anymore? I see the cost of the data plans being the thing that is holding the mainstream buyer back. Apple needs an iPhone you can purchase without a data plan, for the huge number of people who won't pay for data and would be happy to use the phone in WiFi.
post #23 of 133
Once they switch to LTE, data and voice will be the same thing. So its likely we will only be paying for a tiered data plan.

Quote:
Originally Posted by cpr1 View Post

I agree. I don't want to pay $360/yr. for a data plan. I don't want an iPhone -- I want a WiPhone. And maybe, like the iPad, give me the option of a month-to-month data plan (in case I'm on the road for an extended period).
post #24 of 133
Quote:
Originally Posted by bcahill009 View Post

If there were a wifi only iPhone me and my wife would already have them. The $30-$60 extra in data is something we just haven't accepted. We need phones, but we do not need internet everywhere we go. wifi is pretty much everywhere, and would be good enough for me.

Get a used, unlocked iPhone and just use it with a voice plan only. Presto, you have your WiFi phone.
post #25 of 133
Quote:
Originally Posted by mstone View Post

Do the carriers charge you any less when your contract expires? No until they offer a reduced plan for people who own their phone all you are going to save is $200. Everyone know the real cost of having a cell phone is the minutes, data plan and txt, not so much the cost of the phone.

Some carriers do, although it is usually left to the customer to ask to change the plan to something that suits their needs.

eg Vodafone Australia offers SIM only plans, similar to the contract plans $20 ~= $29, $35 ~=$49 and $55 ~= $79, with slight variations in the amount of data, calls etc.
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Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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post #26 of 133
I'm sure Apple is experimenting with many ideas and strategies to stay ahead of competitors. Its good for them to develop ideas like this in case they need to put it into action.

But the reality is that Android is a mess that will be stunted under its own weight.

Apple won't need to go contract free to compete directly against Android.
post #27 of 133
Surely a smaller screen would mean a whole new UI? You couldn't keep the current UI controls with a smaller screen. What about 3rd party app compatibility?
post #28 of 133
Just take the iPod nano and turn it into a flip-phone. But base it on the previous generation nano with the larger screen, address book, calendar, and camera that the current generation removed.

I still think there is a market for non-smart phones that Apple could clean up in with a phone that let's you easily sync your contacts, events, and media (all the content the previous nano could handle). It's the syncing part that all of today's non-smart phone's suck at, forcing you to use the carrier's crap tools or enter all your contacts manually. Apple already knows how to do that via iTunes for iPods and iPhones.

Some people just want a nice, small, easy to use phone.

BONUS: Add in wi-fi hot spot sharing to allow me to choose if my "data device" is an iPod touch, iPad, laptop, etc. That way I can just take the phone if that's all I want to carry. Or I can also take whatever data device is appropriate for what I want to accomplish while I'm out and about. So basically, an iPhone nano with a built-in mifi option. That would be my ideal device. And it would be a good way for Apple to lock the low-end phone users into the Apple ecosystem with the potential to later upgrade them to a tethered iOS device and/or the full-fledged iPhone.
post #29 of 133
apple going for the jugular, I like it! so this is that cheaper world phone we were hearing so many rumors about last year. it makes sense.. like a smaller version of the 3GS without the retina display, along with an improved UI that moves things out of the way that aren't necessary. I think it will be great for cash strapped people, third world nations, and girls who don't care much about the apps or performance but still want a great (slim) phone. I have a feeling it will be 'delayed' at least a couple months from the iPhone 5 launch though
post #30 of 133
The way this most makes sense to me is if Apple is pursuing an Apple MVNO business. They could offer this as a $0 subsidized phone in return for a contract. Like most MVNOs, they make their money of the difference between the price they pay for minutes and what they charge their customers.
post #31 of 133
This doesn't make any sense. What happens to the scaling of the icons, game graphics, etc. The new screen would have to be an extreme retina display, otherwise all the graphics would be pixelated...
post #32 of 133
I think an MVNO business would make more sense when most of the worlds major markets have launched LTE. At that point everything will be consolidated.

Right now everything is in a messy transition.

Quote:
Originally Posted by penchanted View Post

The way this most makes sense to me is if Apple is pursuing an Apple MVNO business. They could offer this as a $0 subsidized phone in return for a contract. Like most MVNOs, they make their money of the difference between the price they pay for minutes and what they charge their customers.
post #33 of 133
Quote:
Originally Posted by noirdesir View Post

But if they had to compete on price, they also would have to compete on the amount of subsidy they pay. As long as they can charge what they want, they have no real pressure to reduce the subsidy.

Doesn't it make more sense that if they were competing, "on the amount of subsidy they pay," that the subsidy would go up? Maybe you can explain why you think competition (i.e., more than none) would drive the subsidy amount down.
post #34 of 133
If there's any company out there that can shake up telecommunications any further with a contract-free phone, it's Apple. I could be interested in an iPhone that has the basics: phone, contacts, iCal. And if Safari is added, maybe some kind of limited data plan could be in the works. Speaking of which, wonder what Apple is really doing with that massive data center in North Carolina. Apple iPhone nano, anyone?
post #35 of 133
Quote:
Originally Posted by anonymouse View Post

The data plans are so expensive because U.S. carriers don't compete on price. It doesn't have anything to do with "the subsidy".

It is still a lot better than most other countries --- where the carriers don't compete at all.

What are you going to do in Norway --- they have 2 carriers. France --- 3 carriers.

What are you going to do in Japan --- where docomo owns more than 50% of their wireless market. What are you going to do in Korea --- where SK Telecom owns more than 50% of their wireless market.
post #36 of 133
This makes little sense. Make that no sense.

Why would Apple care whether their customers were signing a two year contract? Apple gets $600 per phone as a result. The alternative situation, proposed by this article, is that Apple would rather sell a $200 iPhone that customers can keep when going from one carrier to another rather than selling a $600 iPhone that must be scrapped (or resold) when they want to move from CDMA to GSM. How does this help Apple? Apple is not a cell provider, so what does Apple care if it has "more control" over customers?
post #37 of 133
Quote:
Originally Posted by mstone View Post

Do the carriers charge you any less when your contract expires? No until they offer a reduced plan for people who own their phone all you are going to save is $200. Everyone know the real cost of having a cell phone is the minutes, data plan and txt, not so much the cost of the phone.

Come here to the UK, got your own phone, check out "Sim Only" plans, £10-15 for a package thats roughly equivalent to those twice that when a handset is supplied.
post #38 of 133
Quote:
Originally Posted by bcahill009 View Post

If there were a wifi only iPhone me and my wife would already have them. The $30-$60 extra in data is something we just haven't accepted. We need phones, but we do not need internet everywhere we go. wifi is pretty much everywhere, and would be good enough for me.

So for me we've been using the shittiest dumb phone's we could find supplemented with itouch's

I went the shitty dumb phone (plus iTouch) route for a couple of years. Then I got an iPhone and I realized I was blowing smoke up my own ass. You can't compare so just save yourself the aggravation. First of all, shitty phones are an aggravation onto themselves. The gift that gives on giving.

And think about it. $15/month for 3G everywhere you go is not bad. You don't have wifi in your car, or on a bus, or most places on the street. Even when you do find it, more and more want to charge you than they used to. Also, when you are somewhere without wifi, or your cable internet is down, you have a back up. Comcast has been working in our neighborhood for the last 2 months and our wired internet has been down for hours at a time on quite a few days. It's nice to still be able to get email, check the web, etc. (my wife and I work from home so it's more than a luxury). $15 doesn't buy much nowadays so it works for me. YMMV
post #39 of 133
Quote:
Originally Posted by aross99 View Post

I know alot of people will say this is crazy and "who would buy an iPhone without data?", but I think we are in the minority. Compare the number of people who have text plans and the number who have data - huge difference.

Terrible logic. Most of those feature phone users had their feature phone before there was an option for something better. Back when gasoline powered cars came out someone could have said "who needs a car without a horse? Compare the number of stagecoaches out there with the small number of cars!"

The fact is an iPhone without data is like the car in Borat's home town - pulled by a horse, you lose the critical element that makes it useful.
post #40 of 133
Quote:
Originally Posted by bcahill009 View Post

If there were a wifi only iPhone me and my wife would already have them. The $30-$60 extra in data is something we just haven't accepted. We need phones, but we do not need internet everywhere we go. wifi is pretty much everywhere, and would be good enough for me.

So for me we've been using the shittiest dumb phone's we could find supplemented with itouch's

I don't understand. Why don't you just buy an iPhone at retail (or secondhand for $400) and slide in a SIM card without a data plan? You know you can do this, right? Something tells me you don't want to pay $700 for an iPhone. You want a $200 iPhone AND not have to pay ATT back for the subsidy.

Prove me wrong.
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