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Apple seen as 'unlikely' to introduce new, inexpensive iPhone model

post #1 of 31
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With the iPhone 3GS discontinued as of the launch of the iPhone 5, one market watcher believes Apple has signaled that it does not intend to introduce a new, lower-priced iPhone model in the near future.

Charlie Wolf with Needham & Company said in a note to investors on Monday that he believes Apple should introduce an inexpensive iPhone model to address developing markets. But he doesn't think that will happen anytime soon.

Wolf believes Apple could have addressed prepaid markets by keeping the iPhone 3GS available at a lower price. Previously, the smartphone first released in 2009 was available for free with a two-year contract, but the iPhone 3GS was replaced by the iPhone 4 last month.

In the predominantly prepaid markets of developing countries, unlocked phones can start at prices as low as $150. Because prepaid markets are now growing faster than traditional postpaid markets like the U.S., Wolf said it's an "open question" whether the iPhone can continue to gain market share.

Earlier this year, China surpassed the U.S. and became the largest smartphone market in the world. Because China and other developing markets are predominantly prepaid, Wolf believes Apple has "little choice but to target prepaid markets in emerging regions."

China


Under a prepaid plan, the unsubsidized price of the iPhone 4, first released in 2010, is $450. At that price point, Wolf believes it will be difficult for Apple to gain considerable traction.

However, for the time being Apple can still increase its market share through greater carrier penetration, Wolf said. The biggest target is China Mobile, the largest carrier in the world with 688 million subscribers.

Apple has yet to ink a deal with China Mobile because the carrier's proprietary 3G network is not compatible with the iPhone. But China Mobile is in the process of building out a 4G LTE network that should be compatible with the 4G standard, which has led Wolf to believe "it's only a matter of time" before the iPhone debuts with China Mobile.
post #2 of 31
That's good news then. We can finally put that iPhone Mini rumor to rest.
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post #3 of 31
Originally Posted by PhilBoogie View Post
That's good news then. We can finally put that iPhone Mini rumor to rest.

 

You mean iPhone nano. And that was dead in 2008. Why anyone ever thought they'd make a smaller or less capable "new" model of iPhone is beyond me.

post #4 of 31

Oh... really?

 

this deserves an article?

post #5 of 31

It is such a non-news worthy revelation it is crazy.  Apple does have a budget phone- whatever the 2 previous models were.  Why would they deviate from that strategy?

 

Apple doesn't produce budget/cheap versions of products.  As soon as they start, you can bet that is a sign bad things are ahead for Apple.  One reason I am convinced the iPad mini will be $299 or more, not the $199 that some believe. This is pure speculation based on previous history of Apple but for semi-proof...

 

Look at netbooks.  Apple never produced a netbook during that craze and instead produced the Macbook Air.  That kicked off the "ultrabook" craze that is now helping to revive PC sales, while netbooks are dead in the water.

 

Sticking to their guns and only producing high quality products is what keeps Apple customers loyal.

 

EDIT: 

 

Besides, the way the lawsuits are going Apple can just make royalties on all the budget Android phones that are being produced and make money on budget phones without producing one themselves.

post #6 of 31
Quote:
Originally Posted by rednival View Post

It is such a non-news worthy revelation it is crazy.  Apple does have a budget phone- whatever the 2 previous models were.  Why would they deviate from that strategy?

 

Apple doesn't produce budget/cheap versions of products.  As soon as they start, you can bet that is a sign bad things are ahead for Apple.  One reason I am convinced the iPad mini will be $299 or more, not the $199 that some believe. This is pure speculation based on previous history of Apple but for semi-proof...

 

Look at netbooks.  Apple never produced a netbook during that craze and instead produced the Macbook Air.  That kicked off the "ultrabook" craze that is now helping to revive PC sales, while netbooks are dead in the water.

 

Sticking to their guns and only producing high quality products is what keeps Apple customers loyal.

 

EDIT: 

 

Besides, the way the lawsuits are going Apple can just make royalties on all the budget Android phones that are being produced and make money on budget phones without producing one themselves.


Apple makes insane profits on their products. They could still be very rich by selling their phones for less.

 

It seems they prefer to lose market share in developing countries and being overtaken by Android.

post #7 of 31
If there is money in a sub-$450 iPhone I think Apple would do it. Since Only Samsung and Apple are making money in the industry because of high-end models and because the 3GS is gone with the iPhone 4 as the cheapest model at a stated $450 price point it's clear that the only take away is that Apple doesn't think it's worth their time. Not really a big deal since there are plenty of areas Apple chooses not to enter.

I think one of the reasons the 3GS was dropped was because it's using the original resolution and they released a new phone with a new resolution. Apple wants to minimize the number of resolutions it and 3rd-party devs support which will in turn make it a better experience for users. The 3GS has been off the shelves for less than a month and it has iOS 6. That's the end of it. Perhaps not for OS 7 since the newest sold 3GS's will only be just over a year old, but perhaps as early as iOS 8 Apple might remove the 480x360 support from Xcode for submitting to the App Store (I could still see it in there as some wonky internal usage for internal corporate apps and whatnot).

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post #8 of 31
Another moron who has no clue what he talking about, he rather apple seen a million phones and make a $1 verse sell 100K at $100 which amount of cash would you like in your bank account.

Some please send this guy back to Finance 101, selling something at higher margins is always better than selling at lower margins.

I really do not think apple will sell a low cost phone, too many players in the market and it totally cut throat. Plus this people buying phones in this space could care less what they are buying they just want a phone.
post #9 of 31
Munster was pushing the theory of an iPhone Nano a few years ago because he thinks that's the way Apple should go. It only proves that he believes he's smarter than anyone at Apple. It seems Wall Street listens to Munster more than they listen to Tim Cook. Wall Street likes guys like Bezos who are always shooting their mouths off about how great their companies are doing without giving any solid numbers. It seems Wall Street would be very happy with Apple putting out some cheap smartphone only to later complain about Apple's falling margins.
post #10 of 31
Quote:
Originally Posted by pfisher View Post


Apple makes insane profits on their products. They could still be very rich by selling their phones for less.

 

It seems they prefer to lose market share in developing countries and being overtaken by Android.

 

Smart company's know their strength and weaknesses.  Apple is the largest tech company in the world.  Apple sells more (smart) phones than any ONE manufacturer, though all Androids combined add up to more total sales.

 

They are usually the #1 or #2 PC maker, though Windows PC sales add up to more than total Mac sales.

 

I am fairly sure the way Apple and Wall Street see it, because it is true, is that Apple is the number one phone maker and the a top PC maker.  Both are true.  They make more money than any of their competitors, so how they are being "overtaken"?

 

I think being #1 is pretty good.  World domination isn't necessary.  Their Apple.  Not Pinky and Brain.

 

EDIT: 

Amended comment to clarify I meant smart phones, not ALL phones...


Edited by rednival - 10/1/12 at 7:07am
post #11 of 31
Quote:
Originally Posted by pfisher View Post


Apple makes insane profits on their products. They could still be very rich by selling their phones for less.

It seems they prefer to lose market share in developing countries and being overtaken by Android.

It's easy to argue that Apple could turn a decent profit on a low product but you need to consider the man hours, the manufacturing, and the component sourcing, to name a few, that could affect other parts of their more profitable business. If it takes about the same time for a Foxconn assembly line to manufacturer a 3GS as it is to manufacture a 5 then does it do Apple any favours if it needs 10x as many for a greater world audience at a fraction of the iPhone 5 price and that production will have to replace iPhone 5 production which is already too low to meet current demand.

You should also consider brand dilution. Reaching a larger market with a cheaper product doesn't always work out favourably if your "quality" branding becomes synonymous with cheap.

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post #12 of 31
Quote:
Originally Posted by pfisher View Post


Apple makes insane profits on their products. They could still be very rich by selling their phones for less.

 

It seems they prefer to lose market share in developing countries and being overtaken by Android.

It has been working really well for apple and to a lesser extent samsung. All others are on the red. so?

post #13 of 31
Quote:
Originally Posted by rednival View Post

 

  Apple sells more phones than any ONE manufacturer, though all Androids combined add up to more total sales.

 

Where did you get that stat. Last I check in one year Samsung and Nokia still sell more "cell phones" than Apple, and they are not all smart phones.

 

Now Apple makes more money than those companies selling smart phones but that is a different statistic.

 

But our fine MBAs on Well Street measure success on unit volumes not margin dollars, thus the reason this idiot want apple to sell more phones even if they make less for the company.

post #14 of 31
Quote:
Originally Posted by Maestro64 View Post

Where did you get that stat. Last I check in one year Samsung and Nokia still sell more "cell phones" than Apple, and they are not all smart phones.

 

Now Apple makes more money than those companies selling smart phones but that is a different statistic.

 

But our fine MBAs on Well Street measure success on unit volumes not margin dollars, thus the reason this idiot want apple to sell more phones even if they make less for the company.

 

Whoops.  I meant SMART phones.  I was not considering feature phones.  Amended my comment.

 

https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120808/

post #15 of 31

Lower cost that what? Than free? iPhone 4 is free and easily as good as other 'free' phones. In EMEA and other countries where there is actual network competition, even the 4S or 5 can be had for 'free' with certain contracts.
 

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post #16 of 31
Why do the analysts keep wanting Apple to wallow in the pig slop market at the bottom where there is no money to be made?
post #17 of 31
Quote:
Originally Posted by Maestro64 View Post

Another moron who has no clue what he talking about, he rather apple seen a million phones and make a $1 verse sell 100K at $100 which amount of cash would you like in your bank account.
Some please send this guy back to Finance 101, selling something at higher margins is always better than selling at lower margins.

Always? No, not at all.

If you charge too high a margin, your volume can drop to the point that you don't make any money. If you sell at too low a margin, your volume can increase to the point where you can't handle it - and/or your profits may go to zero.

Balancing profits vs selling price is not a trivial exercise - and also has a time element. I believe that Apple's management team is better at it than you OR the person you're responding to.

Quote:
Originally Posted by Zoolook View Post

Lower cost that what? Than free? iPhone 4 is free and easily as good as other 'free' phones. In EMEA and other countries where there is actual network competition, even the 4S or 5 can be had for 'free' with certain contracts.

That's not true, either. The 'free' phone is fairly expensive when you consider the excess amounts you are paying to your carrier. In the U.S., a 'free' phone costs over $1,000 when you figure the carrier subsidies.

Furthermore, in many countries, subsidized phones are not common, so the buyer has to pay for their phone - and no one is giving them away for free under that scenario.
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post #18 of 31

IMO - while perhaps not an iphone nano(im not sure what it brings to the party except it will be sleek, elegent, well built etc), but yes different sizes... I for one like the 3.5 size. Make the 4S LTE and perhaps same thinkness (with no glass back) with a bigger battery and Id be a happy camper. While many poo-poo it here, there is also a definite market for 4.5 size phone... thumbs and 'retina' be damned, d'oh!

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post #19 of 31
Quote:
Originally Posted by Zoolook View Post

Lower cost that what? Than free? iPhone 4 is free and easily as good as other 'free' phones. In EMEA and other countries where there is actual network competition, even the 4S or 5 can be had for 'free' with certain contracts.

That was addressed in the article. In the US carrier subsidies are the norm but in most of the world they pay up front and at $450 (US price) it's a steep purchase which keeps a lot of buyers out.

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post #20 of 31

There will be no iPhone Nano, but more likely an 5" iPhone Grade 

 

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post #21 of 31
Originally Posted by mercury99 View Post
There will be no iPhone Nano, but more likely an 5" iPhone Grade 

 

What sense does that make at all?

post #22 of 31
Tim Cook often talks about no leaving any price umbrellas, so a cheap iPhone will come but only when the existing market is saturated.

As to what it will be, my guess is the iPod touch could add a voice and data (3G) chip, but no GPS chip, no LTE, no NFC if the higher end iPhone ever has that, and as now possibly no speakers, nevertheless you've got a basic smartphone phone. Better than most Android devices. ( Note: you can still get location via triangulation or wifi). The battery life will be impacted on 3G, but will have the same life on all other configurations. What we're waiting for is, maybe, slightly better batteries.

Pretty sure that is what the nano sim is about, long term. Sold off contract, and in stores and outside carrier shops they will sell like hot cakes. Apple will increase their market in the meantime by getting on other carriers. And it will have some other product - some high end - product in the mix to keep margins up overall.
Edited by asdasd - 10/1/12 at 8:45am
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post #23 of 31
Quote:
Originally Posted by Zoolook View Post

Lower cost that what? Than free? iPhone 4 is free and easily as good as other 'free' phones. In EMEA and other countries where there is actual network competition, even the 4S or 5 can be had for 'free' with certain contracts.
 

Another man who doesn't understand contract pricing, despite it being in the article.

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post #24 of 31
Quote:
Originally Posted by asdasd View Post

Tim Cook often talks about no leaving any price umbrellas, so a cheap iPhone will come but only when the existing market is saturated.
As to what it will be, my guess is the iPod touch could add a 3G chip, but no GPS chip, no LTE, no NFC if the higher end iPhone ever has that, and as now possibly no speakers, nevertheless you've got a basic smartphone phone. Better than most Android devices. ( Note: you can still get location via triangulation or wifi). The battery life will be impacted on 3G, but will have the same life on all other configurations. What we're waiting for is, maybe, slightly better batteries.
Pretty sure that is what the nano sim is about, long term. Sold off contract, and in stores and outside carrier shops they will sell like hot cakes. Apple will increase their market in the meantime by getting on other carriers. And it will have some other product - some high end - product in the mix to keep margins up overall.

In as little as 3 years LTE in the iPod Touch with carrier VoIP on LTE could be feasible and very cost effective.

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post #25 of 31

Good for Apple!

 

Apple needs to do what it is best at, making quality products, not making cheap products. There is definitely a race to the bottom taking place amongst many manufacturers, and Apple doesn't need to stoop to that level.

 

Apple doesn't need the Android crowd, the bum crowd and the third world crowd, as those customers don't have any money, and it would be a bad business decision.

post #26 of 31
It's only been five years since the first iPhone launched. Apple is still a relatively new player in the smartphone market, the high end of the cell phone range. They've done extremely well so far but there is still plenty of market share (and plenty of profits) to be had at the high end. No need for them to enter the low end (the less profitable end) of the handset market yet.

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post #27 of 31
Quote:
Originally Posted by boeyc15 View Post

IMO - while perhaps not an iphone nano(im not sure what it brings to the party except it will be sleek, elegent, well built etc), but yes different sizes... I for one like the 3.5 size. Make the 4S LTE and perhaps same thinkness (with no glass back) with a bigger battery and Id be a happy camper. While many poo-poo it here, there is also a definite market for 4.5 size phone... thumbs and 'retina' be damned, d'oh!
personally I do too. I don't care for the iPhone 5. It's just a little too big. I wasn't sure how I'd feel about the original iPhone either, as I was using the Razr flip phone at the time. But I discovered it made up for in thinness what it lacked in length, and the fact it worked seamlessly wi my Mac won me over completely. Portability in a phone is the most important aspect of any mobile phone, "smart" or otherwise. So making a phone bigger seems counter-intuitive, no matter how well designed. Some of the Android models are just ridiculous.

There was a time before the iPhone when I needed a smartphone, so I had the first Sprint Palm Samsung SPH i300. But it was too big to carry to clubs, and the beach, etc. and far too expensive should anything have happened to it. So I also got the Motorola Razr, which slipped right into my pants pocket. The company paid for the Samsung, so yes it was a luxury, but an affordable one, and made having a cell phone on me at all times not such a burden. But despite Palm's Apple-like software, it was clumsy poorly implemented, offered no updates. It did however do one very important thing flawlessly ... It kept my contacts in sync.

So, drawing from that experience, should Apple move exclusively toward the taller form factor of the iPhone 5 and eliminate the 4 series form factor altogether, I will reluctantly buy it as I have chosen to become dependent on the Apple ecosystem, however, I would eagerly welcome a smaller form factor, even if it was not a true smartphone, but something the easily integrated within the Apple ecosystem and offered as little as contacts and calander synchronization, photos, e-mail, and maybe maps and iTunes. This would of course be an entry level phone that would expose customers to the Apple ecosystem in a positive way and make them want more. And I don't think this is unreasonable, since they already do it with the Mac. arguably the iPad is an entry level computer to an iMac or MacBook, but certainly the 11" MacBook Air is. It lacks many of the features of the "pro" series and desktop models, yet Apple still offers it despite it being an "incomplete" experience. There's no reason the same model can't apply to phones. Mainly in that Apple offers computer users a choice, recognizing that Mac users needs are actually different. Leveraging the iPhone technology, I think Apple could produce a highly desirable limited function iPhone to compete effectively against the cheap flip phones, and bar phones, that would ultimately draw users into the Apple ecosystem. But more importantly to offer consumers a choice over a relatively large 4" iPhone and something ore compact that provides essential phone functions, without necessarily offering the full Internet. That's essentially what the pre-paid phone market offers now. And who knows, as Siri becomes less of a major new technology, perhaps Internet queries on a smaller phone could be audio only in much the same way the Shuffle and Nano offer spoken ID.
post #28 of 31
Quote:
Originally Posted by SolipsismX View Post


It's easy to argue that Apple could turn a decent profit on a low product but you need to consider the man hours, the manufacturing, and the component sourcing, to name a few, that could affect other parts of their more profitable business. If it takes about the same time for a Foxconn assembly line to manufacturer a 3GS as it is to manufacture a 5 then does it do Apple any favours if it needs 10x as many for a greater world audience at a fraction of the iPhone 5 price and that production will have to replace iPhone 5 production which is already too low to meet current demand.
You should also consider brand dilution. Reaching a larger market with a cheaper product doesn't always work out favourably if your "quality" branding becomes synonymous with cheap.

 

 

 

There you go being your usual bitter, hostile, arrogant, deviant self.   No matter what the argument you always have to be right¿

 

Apple can do no wrong in your eyes¿

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post #29 of 31

Well DUH!  We already have an inexpensive iPhone.  Its called the iPhone 4 and its free.  The iPhone 4s is 99 dollars and it would be considered the less inexpensive iPhone as well.

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post #30 of 31
Apple doesn't do inexpensive- look what it charges for its cables alone.
post #31 of 31
Quote:
Originally Posted by iSheldon View Post

Apple doesn't do inexpensive- look what it charges for its cables alone.

 

You're right, it tends to weed out those who are unworthy of owning Apple products......in other words, those who buy on price, not value.

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