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Apple predicted to build cheaper 'iPhone for the masses'

post #1 of 120
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With the overall smartphone market now outgrowing the iPhone, one prominent analyst believes Apple will be pushed to release a lower-priced device.

Gene Munster with Piper Jaffray believes a so-called "iPhone for the masses" is likely an inevitable device from the company. He noted that the smartphone market grew 45 percent year over year in the third quarter of 2012, while his current iPhone estimates for the holiday quarter call for around 45 million iPhones sales, which would be 23 percent year over year growth.

"We believe the delta between smartphone market growth and iPhone growth will push Apple to release a lower priced device despite comments to the contrary," Munster wrote in a note to investors on Monday. "Looking back historically, Apple always priced Macs as the higher end of the market and ultimately the iPad, and now the iPad mini, became the 'Mac for the masses.'"

In his view, Apple "needs" to develop a low-cost iPhone for the masses that will compete with inexpensive Android devices that are currently finding success in the market.

For Apple to do this, Munster said the company could reduce the price of an existing phone, representing a more aggressive continuation of the company's current strategy. Or, he said, Apple could make small changes, such as a handset without a Retina display and moderate components sold for a $200 price point contract-free.

iPhones


Munster's sentiment expressed on Monday echoes those of another analyst, Ben A. Reitzes of Barclays Capital, who said earlier this month that he too believes Apple will expand its iPhone lineup with a new entry-level model. Reitzes noted that outside of the top six smartphone makers are a plethora of low-end handset makers, many of them from China, which already account for 28 percent of the total industry.

Retizes believes that smaller companies with low-cost handsets will see their sales grow by 70 percent next year, and another 27 percent in 2014. These sales will largely be driven by China, where customers want less expensive smartphones that can be purchased without a contract subsidy.

Apple already continues to sell its two previous-generation handsets alongside the latest flagship model to reach lower price points. Currently, an 8-gigabyte iPhone 4 is available for free with a new two-year service contract, while an unlocked and contract-free iPhone 4 is sold by Apple for $450.

Expectations of a low-price, contract-free iPhone are not new and have lingered for years. Apple has gradually expanded its lineup to offer previous-generation models at lower prices, but market watchers are still dissatisfied with the $450 unsubsidized price of the cheapest iPhone 4.
post #2 of 120
In his view, Apple "needs"

 

Stopped reading.

 

Wanted to stop reading right here:


the iPad, and now the iPad mini, became the 'Mac for the masses.'"

 

Because he apparently has no idea what a Mac is, but the beginning of the next paragraph clinched it.

 

Apple sells a free iPhone. They have zero control over how much plans cost. They have literally done everything that they can possibly do. The ball is in the telecoms' court, both domestically and internationally.

 

The only possible thing that Apple can do in the future is to further lower manufacturing costs to absurd levels, which could potentially (though is not guaranteed to) lower the off-contract purchase price.


Edited by Tallest Skil - 12/17/12 at 12:32pm

Originally Posted by Marvin

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 #3 of 120
Yes, because the fact that the iPhone 4 is out selling the 5 is all the proof that... Oh, wait.
post #4 of 120

I could be wrong but next year, I think we'll see a 5S with evolutionary upgrades, and the continued sell of the iPhone 4 primarily to pre-paid carriers for $349.

 

But I wouldn't be surprised if we see the introduction of a new iPhone Nano with a 3.5 inch screen, smaller bezels, colors, and an iPod Nano-ish form factor. Add in non-retina display and a $249 price point and we'll have iPhones for everyone ranging from $249-$849.

post #5 of 120

They ALREADY make a cheaper iPhone.  The 4s is $99.  The 4 is .99 or free.  How can you get cheaper than that?  Most people are fine with last year's phone, especially if they're new to iOS anyway. 

 

This guy is a fool.

post #6 of 120
Originally Posted by blackbook View Post
But I wouldn't be surprised if we see the introduction of a new iPhone Nano with a 3.5 inch screen, smaller bezels, colors, and an iPod Nano-ish form factor.

 

Wh… 

Originally Posted by Marvin

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 #7 of 120
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Originally Posted by starbird73 View Post

Yes, because the fact that the iPhone 4 is out selling the 5 is all the proof that... Oh, wait.

I've not seen a breakdown of iPhone sales by model. I've seen guesses, and surveys and analyst estimates. Nothing official tho.

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post #8 of 120
Quote:
Originally Posted by starbird73 View Post

Yes, because the fact that the iPhone 4 is out selling the 5 is all the proof that... Oh, wait.

The problem with the current approach of selling outdated handsets for "free" is that the handsets are obviously outdated. A better example would be the fact that the iPad Mini outsells the iPad 2.

 

A new iPhone at a low end price point would outsell the current old iPhones and likely wouldn't cannibalize the premium top tier iPhone.

post #9 of 120
Quote:
Originally Posted by allenbf View Post

They ALREADY make a cheaper iPhone.  The 4s is $99.  The 4 is .99 or free.  How can you get cheaper than that?  Most people are fine with last year's phone, especially if they're new to iOS anyway. 

 

This guy is a fool.

People that don't live in the US or buy their phone outright don't want to pay $450+ for a 3 year old cell phone...

post #10 of 120

Aaah, it's almost Christmas, time to bring out the old chestnuts.

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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 #11 of 120
Right, because Apple needs all the help it can get to keep from going bankrupt with its flawed business model that has failed this past decade and caused investors great pain.
post #12 of 120
It's the $80 per month that keeps people away form the iphone, not the hardware cost. The subsidized $99 4S is dirt cheap...
post #13 of 120
Quote:
Originally Posted by blackbook View Post

The problem with the current approach of selling outdated handsets for "free" is that the handsets are obviously outdated. A better example would be the fact that the iPad Mini outsells the iPad 2.

 

A new iPhone at a low end price point would outsell the current old iPhones and likely wouldn't cannibalize the premium top tier iPhone.


I think I'd have to see the specs on this "new, for the masses" iPhone before passing judgement. Why would I buy the more expensive one if I could get everything in the cheaper one?

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post #14 of 120
Quote:
Originally Posted by blackbook View Post

People that don't live in the US or buy their phone outright don't want to pay $450+ for a 3 year old cell phone...

 

I don't live in the US and didn't buy my iPhone outright, it was included as part of my plan, although for this two year stint I paid a little extra for the 64GB model.

 

I've been "buying" phones this way in Australia for nineteen years.

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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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 #15 of 120
Unfortunately Munster has not exactly been the best predicter when it comes to Apple. This is evidenced by his earnings calls, Apple TV call etc. his accuracy rating is somewhere in the mid 40% percentile. He's actually manipulated the stock more than anything else Think about it.
post #16 of 120
Originally Posted by hill60 View Post
I don't live in the US and didn't buy my iPhone outright, it was included as part of my plan, although for this two year stint I paid a little extra for the 64GB model.

 

I've been "buying" phones this way in Australia for nineteen years.

 

See, you don't matter because you're still first world.

 

Apple MUST create a $100 off-contract phone for the third world (so that they can then go pay $70 a month for forced data), otherwise they will fail.

Originally Posted by Marvin

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 120
Quote:
Originally Posted by island hermit View Post


Why would I buy the more expensive one if I could get everything in the cheaper one?

 

Same argument can be made for the iPad Mini...

post #18 of 120
Quote:
Originally Posted by Tallest Skil View Post

 

See, you don't matter because you're still first world.

 

Apple MUST create a $100 off-contract phone for the third world (so that they can then go pay $70 a month for forced data), otherwise they will fail.

Even if they did and a third world person bought the damn thing they would get so frustrated wit the thing they would have taken it to a pawn shop and sold it for $25.00 walking out frustrated and therefor splurging at Mc Donald's for the whole family on the dollar menu.  Third world people have no concept of technology.  Oops did I say that?

An Apple man since 1977
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An Apple man since 1977
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post #19 of 120

Following the iPod (Nano) tradition?

 

Not sure how well that would translate. But just maybe . . .

post #20 of 120
Quote:
Originally Posted by blackbook View Post

The problem with the current approach of selling outdated handsets for "free" is that the handsets are obviously outdated. A better example would be the fact that the iPad Mini outsells the iPad 2.

 

A new iPhone at a low end price point would outsell the current old iPhones and likely wouldn't cannibalize the premium top tier iPhone.

I agree with this. Having last year's model sold at a discount is good for Apple, but I think it is an interim measure for them. The iPad Mini is, indeed, a good example.

 

Most car companies don't keep an old model around (e.g., Corvette) while introducing a new and improved Corvette. They expand the product line to try and make you "buy up." with value added crap. Like bigger engines and plastic fake air intakes and stupid looking spoilers and front air dams. To the point where you pull up to a stop light and the girl in the next car asks, "...how old are you...Nine?"

 

 

Apart from the Retina display...I can't really think where they could make it cheaper, though. What features would they give up? 

 

My biggest hope would be Apple would find a way to circumvent the big Telecom providers! :)

post #21 of 120
Quote:
Originally Posted by johnmcboston View Post

It's the $80 per month that keeps people away form the iphone, not the hardware cost. The subsidized $99 4S is dirt cheap...

DITTO

+1

post #22 of 120
Apple needs a cheap iPhone like it needs an entry in the NetBook market. Just like it needs to license OS X and iOS.
post #23 of 120
Quote:
Originally Posted by blackbook View Post

People that don't live in the US or buy their phone outright don't want to pay $450+ for a 3 year old cell phone...

This.

 

The rest of the world lives on prepaid phones.  Contracts and subsidies are not the norm.   A $200 off contract phone would be killer.   I don't think it will happen if it's not Siri Enabled, or not 4" retina  (the new std size).   8GB, nonLTE would be possible, but the interface std is set.

post #24 of 120
I remember this prediction, these predictions showed up before they offered the previous year's model at a lower price.
post #25 of 120
By that time , the analysts will say margin drop aapl will drop too .
post #26 of 120
Quote:
Originally Posted by blackbook View Post

 

Same argument can be made for the iPad Mini...

 

So you have given me the first spec... the screen size will be 3.5".

 

Anything else?

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post #27 of 120
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Originally Posted by johnmcboston View Post

It's the $80 per month that keeps people away form the iphone, not the hardware cost. The subsidized $99 4S is dirt cheap...

Sure, but as you note it's a subsidy price which means that you are in a contract and potentially have to pay for more services than you want or need simply to have that product. I think the $99 iPhone has a retail price of $450.

Also note that the US has over half the cellphone users on smartphones so that's already pretty saturated. I assume this rumour is geared more for developing nations. I wonder if a device closer to the iPod Touch but with 2G/3G talk capabilities, 2G data, and some 3G data (bit not the highest 3GPP release) could keep the cost down. With the iPod Touch at $299 it's still pricey unless they drop the minimum capacity from 32GB to 8GB or 16GB. Still, It's hard to imagine Apple would sell an iPhone for any less than $300 retail and I wonder if it has to.

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #28 of 120
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Originally Posted by Tallest Skil View Post

 

See, you don't matter because you're still first world.

 

Apple MUST create a $100 off-contract phone for the third world (so that they can then go pay $70 a month for forced data), otherwise they will fail.

 

Maybe we are defacto American, "all the way with LBJ" and all that.

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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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 #29 of 120
Quote:
Originally Posted by allenbf View Post

They ALREADY make a cheaper iPhone.  The 4s is $99.  The 4 is .99 or free.  How can you get cheaper than that?  Most people are fine with last year's phone, especially if they're new to iOS anyway. 

 

This guy is a fool.

That because apple does not sell the phone for that much it is the service providers doing this to draw in a customer for 2 or more yrs so they give the phone away to do so.

 

There is a whole group of people who do to want a 2 yr contract and only want to pay for what they use so the buy the phone outright and go month to month on the service, You ask why month to month, because when the run out of money and decide to pay another bill or maybe buy food that month they turn off the phone. We live in a work where everyone feel that should have everything everyone else has even though they can not afford it. It would be like gas stations giving away Farraris so you keep buy their gas fr the next 10 yrs.

post #30 of 120
Quote:
Originally Posted by johnmcboston View Post

It's the $80 per month that keeps people away form the iphone, not the hardware cost. The subsidized $99 4S is dirt cheap...


Yes, you nailed it.  And the only way to address this is to produce a different format, something like a flip phone or small screen phone that appeals to a totally different audience.  It will be functionally constrained, therefore, data constrained, therefore, offered at much lower data costs.  Email, text, voice, iPod, WiFi, limited camera...but no internet browser or gaming.  Hardware cost: $199.

 

Could they tweak the iPod Nano to make it a phone?...possibly.

 

You'd see parents lined up to buy for their kids.  Or adults that are sick/tired of carrying 4" screens around in their pockets.  And yes, poorer people who get a phone that is fully subsidized and with an inexpensive data plan.

post #31 of 120
I keep reading this statement on different sites but with all things Apple, if their not padding their bottom line with the release it probably won't survive.
post #32 of 120
Quote:
Originally Posted by TheOtherGeoff View Post

 

The rest of the world lives on prepaid phones.

 

Really?

 

The rest of the world?

 

Lives on prepaid phones?

 

(Hint:- see my earlier post.)

 

Telco's like money, phones on contracts are good for making it, pull your head out of your US-centric butt and smell the roses.

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.
Reply
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 #33 of 120
Originally Posted by hill60 View Post
Maybe we are defacto American, "all the way with LBJ" and all that.

 

If you'd like, join the Union. I help with maps in someone's alternate history timeline, and we're working out US state divisions for you guys. 1wink.gif

 

1000

 

Of course, in this timeline, Australia is won from the UK in a war that takes place around 1812, so in 1847 the continent isn't fully settled or stated yet. Heck, you guys still have some territories right now anyway, right?

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #34 of 120

Who cares if Apple has a lower market share, as long as they earn most of the market's profits?! BTW, currently about 3/4!!

post #35 of 120
Apple don't design by price point. Yes a $150 full price so we can use it anywhere and on prepay iPhone might be nice.

But it is highly highly unlikely

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #36 of 120
Quote:
Originally Posted by hill60 View Post

Aaah, it's almost Christmas, time to bring out the old chestnuts.

Yep. They kept saying 'another iPad in the Fall' and it happened so now they figure if they bring back the other rumors those will happen also

A non tech's thoughts on Apple stuff 

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A non tech's thoughts on Apple stuff 

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post #37 of 120
Quote:
Originally Posted by island hermit View Post

 

So you have given me the first spec... the screen size will be 3.5".

 

Anything else?

 

The point of the device would be to hit a lower price point without diluting the iOS experience. They could do that by starting with a 3GS, giving it an A4 chip, and a more attractive form factor. It's not going to be about raw specs but creating an entry level iPhone experience for $200ish.

 

What will differentiate the smaller iPhone from the premium iPhones? Features (Siri), Speed, and Screen (Quality/Size). But in every other way the "Nano" can be an iPhone.

post #38 of 120
Quote:
Originally Posted by drewys808 View Post


Yes, you nailed it.  And the only way to address this is to produce a different format, something like a flip phone or small screen phone that appeals to a totally different audience.  It will be functionally constrained, therefore, data constrained, therefore, offered at much lower data costs.  Email, text, voice, iPod, WiFi, limited camera...but no internet browser or gaming.  Hardware cost: $199.

 

Could they tweak the iPod Nano to make it a phone?...possibly.

 

You'd see parents lined up to buy for their kids.  Or adults that are sick/tired of carrying 4" screens around in their pockets.  And yes, poorer people who get a phone that is fully subsidized and with an inexpensive data plan.

I believe I read that the fastest growing segment is the pre-paid phone. Which is not as profitable for the Telecom businesses as the Contract side. I have entertained chucking my iPhone for a dumb phone and a  $50/mo. expense vs. my Sprint's $93/mo. bill.

 

But I would end up carrying more "gadgets." E.g., a camera, a GPS unit, and an iPad or MBA. For $43, it just doesn't seem worth it to give up the iPhone.

post #39 of 120
Quote:
Originally Posted by blackbook View Post

 

The point of the device would be to hit a lower price point without diluting the iOS experience. They could do that by starting with a 3GS, giving it an A4 chip, and a more attractive form factor. It's not going to be about raw specs but creating an entry level iPhone experience for $200ish.

 

What will differentiate the smaller iPhone from the premium iPhones? Features (Siri), Speed, and Screen (Quality/Size). But in every other way the "Nano" can be an iPhone.

 

"The problem with the current approach of selling outdated handsets for "free" is that the handsets are obviously outdated."  - Blackbook

 

Even with a new form factor wouldn't any iPhone with an A4 chip be considered outdated? By next year they could use an updated 4... that might work.

 

Still not sure how Apple could do it without killing margins... and we all know what will happen to the stock price if there is any mention of lower margins... even if they sell 100 million of them in one quarter.

 

I have to say though, that I think that Cook is more concerned with market share than Jobs... your example, the iPad Mini, is why I think that.

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post #40 of 120
Quote:
Originally Posted by allenbf View Post

They ALREADY make a cheaper iPhone.  The 4s is $99.  The 4 is .99 or free.  How can you get cheaper than that?  Most people are fine with last year's phone, especially if they're new to iOS anyway. 

 

This guy is a fool.

 

 

They mean the unsubsidized price. Currently, Apple's phone price is pricing it away from some prepaid customers. Not sure that matters to Apple, but $649 is a lot of money to hand over for an unlocked phone. 

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