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WSJ: Apple to build cheaper iPhone as smartphone dominance slips - Page 3

post #81 of 123
1/9/13 at 12:08am
Quote:
Originally Posted by Alfiejr View Post

are you kidding? the future of small device iOS is plainly 16:9. the 2012 iPhone 5 and iPod touch made that move already. it's a done deal. it's plainly irrevocable. all new apps are being optimized for that screen aspect, and old ones updated for it. (while the iPads remain at 4:3).

and the whole point of a new iPhone lite or whatever it's called would be Apple would cease selling the older iPhones entirely. instead it would always have a "brand new" product to offer at that lower price tier (but same profit margin). that obviously is a stronger market position than offering "last year's model at a discount"

I agree with most of everything you said but I don't think they're going to give this low end phone the same 4 inch screen that's on the iPhone 5.

If they did then who would buy an iPhone 5 for twice the price when the iPhone lite you speak of is pretty much the same thing for cheaper.

Although you may not agree, screen size could be a differentiating factor between the cheaper iPhone and the iPhone 5.

Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...

Apple already has a better 3.5 inch screen and 700,000 apps that "just work" with it.
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post #82 of 123
1/9/13 at 12:22am
Quote:
Originally Posted by zoetmb View Post

Agreed. The screen is probably the most expensive component. So how could it be a larger screen AND a cheaper price? Makes no sense.
And why would anyone even want a 5" screen. Apple's already made a big deal about how they purposely didn't increase the width of the screen so it still could be easily held.

Actually 5" is pretty handy and people seem to like them as the Samsung Galaxy Note 2 is a very popular phone now. HTC, Sony, Huawei, so, well pretty much everyone will have a 5" by end of the year . I'm sure if Apple released one as well the lines would be around the block to purchase one. Just because you might not think it a viable solution doesn't mean there aren't those who do, I remember not to long ago a bunch of you were screaming how big 4" was.

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post #83 of 123
1/9/13 at 12:41am
Quote:
Originally Posted by Michael Scrip View Post

To be fair... the iPad mini is a product on its own... with its own prices and margins. And we don't know yet how the iPad mini has affected sales of the bigger iPads.
A product on its own certainly but it is rather already clear that it do cannibalizes the bigger iPad sales, which is logical when you diversify your product line. My point was that they did lowered their product profit margin for market share, launching an iPad mini -against initial claimed wishes/"dogma" ^^p- to counter what was seen as the rising threat of part of the tablet market share left to the nexus 7 and other kindle fire.
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post #84 of 123
1/9/13 at 12:48am
Quote:
Originally Posted by SolipsismX View Post
I don't know but I keep hearing about how the Asian markets love the size of the Galaxy Note and other such devices because they can have a decent tablet that is still easy to travel with and doubles as a phone.

 

Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory (no the carriers in China don't subsidize, the Chinese have to pay full bulk). I don't have the facts, but generally prices in China are a little more than in U.S. so take that into consideration. It was like that for electronics I was looking for when I was in China in 08, generally about 10% more expensive.

 

I don't have any info on the Apple App store in China. U.S. devs focus on the U.S. market. How many Angry Birds games have been translated into Chinese? Yes there are 700k+apps in the App Store but they are all in english.

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post #85 of 123
1/9/13 at 12:52am
Quote:
Originally Posted by Sensi View Post

A product on its own certainly but it is rather already clear that it do cannibalizes the bigger iPad sales, which is logical when you diversify your product line. My point was that they did lowered their product profit margin for market share, launching an iPad mini -against initial claimed wishes/"dogma" ^^p- to counter what was seen as the rising threat of part of the tablet market share left to the nexus 7 and other kindle fire.

I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.

 

People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?

 

Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.


Edited by White Lotus - 1/9/13 at 1:02am
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post #86 of 123
1/9/13 at 2:18am

It seems to me that a mini iPhone is much more likely.

In this way Apple adds a useful new product category no one has at the moment (remember small and ultra small was all the craze just before the start of the smartphone) and is able to reduce the price.

It will make the extra large sPhones look extremely ridiculous, like the walkie-talkie phones of the '70s.

 

J.

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post #87 of 123
1/9/13 at 3:07am
Makes sense. People here in Asia are ditching the iphone in droves for the larger screen Samsungs. It's their attempt to stop that happening.
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post #88 of 123
1/9/13 at 4:29am
Quote:
Originally Posted by blackbook View Post

Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...

 

Those low end models are also far more affordable by being in the ~ $125 range.

 

Quote:
Originally Posted by White Lotus View Post

Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory ...

 

Good point.   Apple charges a huge premium for more storage.  With other phones, the user can often pop in an additional 32GB for under $30.

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post #89 of 123
1/9/13 at 4:40am
Quote:
Originally Posted by Lerxt View Post

Makes sense. People here in Asia are ditching the iphone in droves for the larger screen Samsungs. It's their attempt to stop that happening.
And yet Apple sold over 2.1 million iPhones in China in one weekend...
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post #90 of 123
1/9/13 at 4:51am
I'll believe this if/when I see it. As others have pointed out Apple doesn't do things because they feel threatened by others. If they did we'd have a 5" iPhone and a $199 plastic mini. I don't think Cook and Co. can completely ignore market share, especially in emerging markets. But I don't think building a cheap plastic phone is the way to do it. That's basically throwing Apple's brand right out the window.

I don't think it's Cuppertino freaking out about Samsung or anyone else. I think it's the nervous nellies on Wall Street that are. They're the ones pushing this idea that Apple has to do a cheap iPhone. But lets not forget they're also the ones who said Apple had to do a cheap tablet and thought the mini was too expensive. My guess is in two weeks they'll have to est their words on the one.

Again I'll believe this if/when I see it. This isn't the first time the WJS has pushed this rumor.
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post #91 of 123
1/9/13 at 4:51am
Quote:
Originally Posted by Mazda 3s View Post

I don't understand this. We have the iPhone 5 as the current generation, and Apple sells the iPhone 4S and iPhone 4 if you want cheaper alternatives. It seems to work well.
Why reinvent the wheel?

Because the high end market has saturated. Growth is in the low to mid range now. Of course of you dont care about Apple growth you wont understand. And 450$ for a 8g iphone 4 is very very expensive.

Personnaly i hate that Apple only has one phone. With 70% of its profit coming out of the iphone, if they mess up an upgrade it could cut the sotck price in half in s heartbeat. And Apple is losing its shine, its not adapting to new market needs.
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post #92 of 123
1/9/13 at 5:09am
Quote:
Originally Posted by White Lotus View Post

I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.

 

People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?

 

Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.

 

 

Nonsense. In the absence of any 7 inch tablet competition there is no way that Apple would have introduced a 7 inch tablet. They reacted to competition there. Clearly. They don't have to match prices initially, but they will fall over time. 

 

Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.

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post #93 of 123
1/9/13 at 5:14am
Quote:
Originally Posted by zippy2shoes View Post

Quite true but Android is gaining more market share (worldwide) year over year and and Apple needs to react.  You can already see it as they are speeding up their release cycle for their phones/tablets because they will not be able to keep up if they only release a new product ever 12 months.  They also realize that they are ignoring a pretty big (but not as profitable) segment of the market.  The mid-low end.  Granted, they take care of the mid range with their 4 and 4S offerings but those phones are quite small and while it appears there are quite a few people on this site that think the 3.5" screens are perfect (or were until they got their hands on a 4" screen), there are a lot of people who have been enjoying 4" + screens for over 3 years now.

Apple needs to go after the lower end market because someday, the people who are buying the lower end phones are going to graduate into something bigger and if that person likes the eco-system that they were brought up on, chances are they may not change.

I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over.  We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think.  When you get that big, things falls through the cracks.  It is inevitable.  I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions. 

Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)

Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.

I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.

You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.

I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.

And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.

So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?

I dunno. That seems like a bad gamble.
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post #94 of 123
1/9/13 at 5:34am
Quote:
Originally Posted by Michael Scrip View Post


Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)
Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.
I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.
And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.
So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?
I dunno. That seems like a bad gamble.

 

It isn't. Lets forensically analyze this:

 

Disadvantages of cheap iPhone:

 

1) It reduces margins.

 

Advantages of cheaper iPhones

 

1) It probably won't reduce over all profit as volume will compensate for margins.

2) It increases the market share of what is in fact a platform - iOS. 

3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.

4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.

5) It reduces the risk of a bad, or mediocre,  upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)

6) It increases the number of people with 2 or more devices - which makes them much stickier see Seeking Alpha here. ( http://seekingalpha.com/article/1099961-apple-margin-pricing-and-product-strategy) [1]

7) It locks people into the system early and gets them for life ( at the cost of reduced margins now) - increasing Apples monetization of apps, videos and music over time, which is a growing component of Apple's business model ( see here: http://seekingalpha.com/article/1102111-app-monetization-drives-revenue-growth-for-apple).[2]

 

Since the disadvantage is in fact eliminated by the first advantage, there are really no dis-advantages.

 

 

[1] An important aspect of this user experience, at least for AAPL's economics, is that it extends over multiple products. The chart below, from a Goldman Sachs survey in May 2012, show the lift to loyalty if customers own multiple devices. Of the customers owning a single device, 62% say they are highly likely to purchase another AAPL device; this figure increases to 75% for customers who already own 2 or more devices.

 

[2]  This huge number suggests that Apple is making considerable amount of money ($3 billion) by hosting these 775,000+ growing applications at its app store. This clearly shows a trend towards applications becoming the mainstay of Apple's flexing power. Though many of these apps are free, they feature advertisements, which generate revenue for both Apple and its developers. ( Thats just apps though, they also make money from videos, music, TV and Movies)


Edited by asdasd - 1/9/13 at 5:46am
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post #95 of 123
1/9/13 at 5:38am
Quote:
Originally Posted by zippy2shoes View Post

 

I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over.  We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think.  When you get that big, things falls through the cracks.  It is inevitable.  I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions. 

 

The people on here - myself included - are generally All Apple. My phone, tablet and every computer I ever owned is Apple. Its a small market, and we don't matter. You can see comments on here about how Apple did fine selling computers with small market share - that's wanting to be a niche player. Apple, as it happens, nearly died out in the late 90's. Had it not purchased NEXT it would have died out, although the brand might have survived, probably producing Windows devices.

 

But the subset of people on here who liked that small market are a tiny fraction of Apple's existing market, and a tinier percentage of their potential market. 

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post #96 of 123
1/9/13 at 5:39am
We have previous versions of the iphone for $99. How cheap do you want? It's the phone plans that are killing us, not the cost of the phone. (Curious what the Tmobile plan will be with their unsubsidized iphone plans...)
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post #97 of 123
1/9/13 at 5:43am
Quote:
Originally Posted by Michael Scrip View Post

You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.

 

You know there are some of us who don't live in a third world country that find Android to be the better platform. I realize this is an Apple forum and a certain militant attitude towards the competition is warranted but the negative adjectives get old after a while.

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post #98 of 123
1/9/13 at 5:44am
Quote:
Originally Posted by asdasd View Post

Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.

I think Apple has already proven that you can have a tiny percentage of market share... and still make crazy profits.

Why? Because Apple sells hardware. And for the time being... rather expensive hardware. That's where profits come from.

Android has 75% smartphone market share right now... but I have yet to see much good come from that.

There are so many Android phones out in the world. With all that market share... developers should be making more money from Android than iOS. And the Google music store should be selling more songs than iTunes. And Google should be making more money from ads on Android.

But they're not.

Again... I haven't seen the result of Android having all that market share. The platform isn't doing as well as you think it is... other than having that larger number on the market share chart. (which is really a false trophy)

Some say Android is "winning" the platform war.... but I have yet to see it.
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post #99 of 123
1/9/13 at 5:47am
Quote:
Originally Posted by johnmcboston View Post

We have previous versions of the iphone for $99. How cheap do you want? It's the phone plans that are killing us, not the cost of the phone. (Curious what the Tmobile plan will be with their unsubsidized iphone plans...)

 

Another American who doesn't understand the real price of the iPhone.

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post #100 of 123
1/9/13 at 5:47am
Quote:
Originally Posted by Michael Scrip View Post


I think Apple has already proven that you can have a tiny percentage of market share... and still make crazy profits.
Why? Because Apple sells hardware. And for the time being... rather expensive hardware. That's where profits come from.
Android has 75% smartphone market share right now... but I have yet to see much good come from that.
There are so many Android phones out in the world. With all that market share... developers should be making more money from Android than iOS. And the Google music store should be selling more songs than iTunes. And Google should be making more money from ads on Android.
But they're not.
Again... I haven't seen the result of Android having all that market share. The platform isn't doing as well as you think it is... other than having that larger number on the market share chart. (which is really a false trophy)
Some say Android is "winning" the platform war.... but I have yet to see it.

You haven't seen it yet, you will when they are 90% and rising. 

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post #101 of 123
1/9/13 at 5:50am
Quote:
Originally Posted by asdasd View Post

It isn't. Lets forensically analyze this:

Disadvantages of cheap iPhone:

1) It reduces margins.

Advantages of cheaper iPhones

1) It probably won't reduce over all profit as volume will compensate for margins.
2) It increases the market share of what is in fact a platform - iOS. 
3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.
4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.
5) It reduces the risk of a bad, or mediocre,  upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)
6) It increases the number of people with 2 or more devices - which makes them much stickier see Seeking Alpha here. ( http://seekingalpha.com/article/1099961-apple-margin-pricing-and-product-strategy) [1]
7) It locks people into the system early and gets them for life ( at the cost of reduced margins now) - increasing Apples monetization of apps, videos and music over time, which is a growing component of Apple's business model ( see here: http://seekingalpha.com/article/1102111-app-monetization-drives-revenue-growth-for-apple).

Since the disadvantage is in fact eliminated by the first advantage, there are really no dis-advantages.

[1] An important aspect of this user experience, at least for AAPL's economics, is that it extends over multiple products. The chart below, from a Goldman Sachs survey in May 2012, show the lift to loyalty if customers own multiple devices. Of the customers owning a single device, 62% say they are highly likely to purchase another AAPL device; this figure increases to 75% for customers who already own 2 or more devices.

Those are all great points... but Apple's not exactly hurting because they are in 2nd place with 15% market share to Android's 75%.

It's not an "apples to apples" comparison anyway. Android is an OS... Apple sells hardware.
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post #102 of 123
1/9/13 at 6:22am
Quote:
Originally Posted by asdasd View Post

You haven't seen it yet, you will when they are 90% and rising. 

Oh really? Android already has 5 TIMES the market share of the iPhone. That's a huge disparity.

But like I said... Android's numbers look great on paper... but they aren't the clear winner by any means.
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post #103 of 123
1/9/13 at 6:28am
Quote:
Originally Posted by Relic View Post

You know there are some of us who don't live in a third world country that find Android to be the better platform. I realize this is an Apple forum and a certain militant attitude towards the competition is warranted but the negative adjectives get old after a while.

No doubt... and I meant no harm against people or Android as a platform.

But these are reports of Apple building a cheaper phone for developing markets... areas that are primarily served by $100 unlocked phones. Let's be honest... those aren't spectacular devices.
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post #104 of 123
1/9/13 at 6:53am
Quote:
Originally Posted by asdasd View Post

 

 

Nonsense. In the absence of any 7 inch tablet competition there is no way that Apple would have introduced a 7 inch tablet. They reacted to competition there. Clearly. They don't have to match prices initially, but they will fall over time. 

 

Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.


I would bet that Apple doesn't have to drop its profits anywhere close to what the others do in order to sell more units.

 

Apple is winning by the way and you have to remember, if Tim Cook actually decides to chase a bit of market share then its my belief he could gut Samsung's sales in very little time. The caveat... it has to be done soon or Samsung will become too firmly entrenched.

 

[by the way... just as everyone is talking about the possibility of Apple introducing a cheap 5 inch phone, Sony brings out the Xperia Z... a 5 inch phone... true... but cheap... I sincerely doubt it.]


Edited by island hermit - 1/9/13 at 7:12am
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post #105 of 123
1/9/13 at 6:55am
Quote:
Originally Posted by Tallest Skil View Post

 

So leave the iPhone 4, free, with a Dock Connector, and replace the iPhone 4S, $99.

Uh, why keep the iP4 and replace the 4S with a new less expensive iPhone?  That makes no sense.

If Apple releases a "less expensive" iPhone, it will replace the 4 and the 4S.

I guess you're suggesting the same scenario as the iPad Mini, keeping the iPad 2 around at a lower price?

But do we have hard data suggesting the iPhone 4 is the best selling iPhone?  Not that I can recall reading.

 

Quote:
Has to be under $200 or it's a failure¡

People said the same thing when the iPad mini came out...

"if it's not under $199 for an iPad mini it's a FAIL".

Well, look what happened there.

 

Look what happened with the iPod Mini at first.

"who would by a iPod with significantly less storage and only $50 cheaper (than the standard iPod) that's much lighter and smaller?"

It became (after the Nano was released) the best selling iPod model to date.

 

I'm at the point where I hardly use my iPhone for anything more than quick glances and replies.  I check email, reply to texts, I play games while waiting for a train or in transit, I listen to podcasts(no music), I check the weather, look at Maps for getting my bearings or look up movie times.  That's about it.  If i want to do something more complex, it's there, but I rarely use it.  And I have my iPad for that.  I don't really even use the phone all that much.  Maybe 40min/mo. on average but I need a phone number for phone's sake.  More like a feature-phone.

 

That's the real question.  With Hardware advances being what they are, and Apple's strategies in quality and design...I don't see hardware being the differentiating factor between the iPhone and a rumored "less expensive" model.  And if you make iOS less feature-rich, you're not saving any more money than just keeping the full iOS.  So how would they make it "less expensive"?  Carbon fiber or polycarbonate uni-body...maybe save a little, but not $200.  Drop GPS, gyroscope, less expensive camera?  That wouldn't go over well.  Go back to the iP 3GS screen?  At this point, i doubt it...perhaps a cut-down retina iPad screen.

 

All I know is I would actually welcome a "less expensive" iPhone since I would clearly be the target demo for it.  Someone who just needs a phone for phone's sake, and few extra features that keeps it competitive with other lower priced feature phones.  Almost like the Gen 1 iPhone but with today's tech.

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post #106 of 123
1/9/13 at 6:57am
Quote:
Originally Posted by asdasd View Post

 

It isn't. Lets forensically analyze this:

 

Disadvantages of cheap iPhone:

 

1) It reduces margins.

 

Advantages of cheaper iPhones

 

1) It probably won't reduce over all profit as volume will compensate for margins.

2) It increases the market share of what is in fact a platform - iOS. 

3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.

4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.

5) It reduces the risk of a bad, or mediocre,  upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)

6) It increases the number of people with 2 or more devices - which makes them much stickier see Seeking Alpha here. ( http://seekingalpha.com/article/1099961-apple-margin-pricing-and-product-strategy) [1]

7) It locks people into the system early and gets them for life ( at the cost of reduced margins now) - increasing Apples monetization of apps, videos and music over time, which is a growing component of Apple's business model ( see here: http://seekingalpha.com/article/1102111-app-monetization-drives-revenue-growth-for-apple).[2]

 

Since the disadvantage is in fact eliminated by the first advantage, there are really no dis-advantages.

 

 

[1] An important aspect of this user experience, at least for AAPL's economics, is that it extends over multiple products. The chart below, from a Goldman Sachs survey in May 2012, show the lift to loyalty if customers own multiple devices. Of the customers owning a single device, 62% say they are highly likely to purchase another AAPL device; this figure increases to 75% for customers who already own 2 or more devices.

 

[2]  This huge number suggests that Apple is making considerable amount of money ($3 billion) by hosting these 775,000+ growing applications at its app store. This clearly shows a trend towards applications becoming the mainstay of Apple's flexing power. Though many of these apps are free, they feature advertisements, which generate revenue for both Apple and its developers. ( Thats just apps though, they also make money from videos, music, TV and Movies)

 

Great points, and many are likely the same that led Apple to diversify the iPod lineup nearly 10 years ago.

 

I don't think it's an "if" point anymore but a when and how, will they do it for the iPhone.

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post #107 of 123
1/9/13 at 7:06am
Quote:
Originally Posted by antkm1 View Post

People said the same thing when the iPad mini came out...

"if it's not under $199 for an iPad mini it's a FAIL".

Well, look what happened there.

 

Look what happened with the iPod Mini at first.

"who would by a iPod with significantly less storage and only $50 cheaper (than the standard iPod) that's much lighter and smaller?"

It became (after the Nano was released) the best selling iPod model to date.

 

 

Great points. That's why I don't think we're going to see plastic or low grade materials in the smaller iPhone. Apple will keep it premium and people will be willing to pay the premium price.

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post #108 of 123
1/9/13 at 7:16am
Quote:
Originally Posted by antkm1 View Post

Uh, why keep the iP4 and replace the 4S with a new less expensive iPhone?  That makes no sense.

If Apple releases a "less expensive" iPhone, it will replace the 4 and the 4S.

I guess you're suggesting the same scenario as the iPad Mini, keeping the iPad 2 around at a lower price?

But do we have hard data suggesting the iPhone 4 is the best selling iPhone?  Not that I can recall reading.

 

People said the same thing when the iPad mini came out...

"if it's not under $199 for an iPad mini it's a FAIL".

Well, look what happened there.

 

Look what happened with the iPod Mini at first.

"who would by a iPod with significantly less storage and only $50 cheaper (than the standard iPod) that's much lighter and smaller?"

It became (after the Nano was released) the best selling iPod model to date.

 

I'm at the point where I hardly use my iPhone for anything more than quick glances and replies.  I check email, reply to texts, I play games while waiting for a train or in transit, I listen to podcasts(no music), I check the weather, look at Maps for getting my bearings or look up movie times.  That's about it.  If i want to do something more complex, it's there, but I rarely use it.  And I have my iPad for that.  I don't really even use the phone all that much.  Maybe 40min/mo. on average but I need a phone number for phone's sake.  More like a feature-phone.

 

That's the real question.  With Hardware advances being what they are, and Apple's strategies in quality and design...I don't see hardware being the differentiating factor between the iPhone and a rumored "less expensive" model.  And if you make iOS less feature-rich, you're not saving any more money than just keeping the full iOS.  So how would they make it "less expensive"?  Carbon fiber or polycarbonate uni-body...maybe save a little, but not $200.  Drop GPS, gyroscope, less expensive camera?  That wouldn't go over well.  Go back to the iP 3GS screen?  At this point, i doubt it...perhaps a cut-down retina iPad screen.

 

All I know is I would actually welcome a "less expensive" iPhone since I would clearly be the target demo for it.  Someone who just needs a phone for phone's sake, and few extra features that keeps it competitive with other lower priced feature phones.  Almost like the Gen 1 iPhone but with today's tech.

It would defiantly be a hard sale if they would hinder the OS, there really isn't much to take away feature wise anyway. I'm with you, I use my tablet a lot more then my phone, I would love to see the Mini get a GSM. The 3G model technically can be a phone it would just take some hacking. Asus has such a model the EeePad Memo, interesting idea, good luck finding one though. It has a second piece for phone calls and listening to music.

 

I've seen things you little people wouldn't believe. Attack ships on fire off the shoulder of Orion bright as magnesium. I rode on the back decks of a blinker and watched c-beams glitter in the...
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I've seen things you little people wouldn't believe. Attack ships on fire off the shoulder of Orion bright as magnesium. I rode on the back decks of a blinker and watched c-beams glitter in the...
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post #109 of 123
1/9/13 at 7:24am
cheaper bigger screen, now they are copying Samsung
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post #110 of 123
1/9/13 at 7:40am

Next up:  A cheaper Retina MacBook with a 17" display!

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post #111 of 123
1/9/13 at 7:44am

The most likely scenario IF Apple decides to go after the emerging markets with a lost cost phone is to use the 3GS.  They wouldn't need to do much to it to make it a $200 unsubsidized phone AND get great margins doing it.  The phone probably costs around $100-$125 to produce now. No need for extra design time, testing, sourcing parts, manufacturing tooling, ramping etc…all of which costs money. Just make a few tweaks and it's good to go.

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post #112 of 123
1/9/13 at 7:48am
It's a response to market saturation
 
The smartphone market is quickly moving toward market saturation (particularly in the U.S. and parts of Europe). Many people who want a smartphone (and can afford the phone and monthly cost of the plan contract) already have one. It's not quite there yet, but it is coming quickly. 

As the smartphone market reaches saturation, sales will not be able to keep pace with where they are at today. Apple can always continue to sell the latest iPhone model to current smartphone customers and try to convince users of other smartphone devices to switch, but the kind of sales expansion that has taken place to date will begin to dwindle.

Apple is likely looking for ways to keep the sales momentum going with a new product category -- expanding to people who would not buy the full iPhone (or could not afford the typical phone+contract plan monthly cost). This includes those in developing countries who typically purchase a phone at full cost (i.e., not subsidized by phone carrier). And hopefully those people once hooked will continue to buy other Apple products.

However, while they will address a different part of the phone market, my guess is they will still do it in a way that is completely Apple -- that will uphold their overall brand and will avoid cannibalizing their other products as much as possible.

Apple has to have a forward-looking approach for products or they will not be able to sustain the growth they have been experiencing in recent years. Shareholders expect it -- and the health of their future business depends on it. They know market saturation is coming and need to be a step ahead of it by expanding into other categories.

Edited by huffcw - 1/9/13 at 8:16am
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post #113 of 123
1/9/13 at 8:08am
Businessweek is speculating that this phone could be $99 or $149. If there's any truth to that seems to me this would be a nano like phone with basic capabilities and probably no App Store. Seems a bit underwhelming to be honest.
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post #114 of 123
1/9/13 at 8:30am

Apple has made most of its money on the strength of its brand,i know people who have never used a iphone and assoicate it with quality, iv never drove a audi but i know its a quality car, once apple gets into the cheap phones games they are going to be in the same boat as samsung

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post #115 of 123
1/9/13 at 8:43am

If gaining market share is really that important, a better idea would be to knock off profit margin from the 4 and the 4S.

 

But the fact that the rumour says that Apple will create a cheaper phone with a larger display doesn't stack up quite well. It would mean making it out of Android-phone materials, which sounds unbelievable in the case of Apple.

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post #116 of 123
1/9/13 at 8:59am
Quote:
Originally Posted by Rogifan View Post

Businessweek is speculating that this phone could be $99 or $149. If there's any truth to that seems to me this would be a nano like phone with basic capabilities and probably no App Store. Seems a bit underwhelming to be honest.
After looking at the article I think they meant subsidized price. There's no way Apple could make a phone that price. Even good flip phones cost $200+.

Anyway if that's the subsidized price that means the phone would still cost $550-600 assuming Apple retains their $450 subsidy.

But if its subsidized voice only, meaning it doesn't require a data plan, the actual price would be somewhere between $350-$400 (assuming a $250 subsidy) which I think would be more believable.
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post #117 of 123
1/9/13 at 9:08am
If Apple went with a Non-Retina display, it could easily attain larger/cheaper. Not sure about this rumor -- but I'd do it just to grow market share. Sure the premium profits are nice -- but you've got to keep mindshare and we all know that the iTouch was a gateway device for other iDevices. So by using the prior years state of the art (whatever surplus is on hand) and a plastic case, Apple can definitely have a cheaper larger phone. I don't think this would ruin the brand as long as it was sturdy.
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post #118 of 123
1/9/13 at 9:41am
Quote:
Originally Posted by asdasd View Post

Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.
Actually it's a content war, of which platform is a part.

iTunes currently accounts for twice the profits of the entire iPod division, and will only continue to grow. If Apple sells less hardware (no matter the profit), they will sell less content, and that's the ultimate prize.

Apple goes out of its way to make sure customers can do whatever they need as easily as possible so that they retain their customers and tie them into their content service. They may not accept lower profit margins in general, but arguably they are subsidizing their software and services. If they charged a fair price for both hardware and software it would probably work out about the same as it does now.

But if Apple cannot attract new customers to the platform, then they can't lock them into their content and thus profits will eventually fall. I maintain that Android is catching up to Apple so quickly, especially if their UI patents keep getting thrown out, that Apple will eventually lose market share from less affluent users who chose cheaper Android phones in the beginning, and thus become invested in Android's content and ultimately see little difference between Android and Apple -- at least not enough to sacrifice their content investments, even when they can afford Apple's higher end products. If Apple isn't worried about this, then the investors are right to worry.
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post #119 of 123
1/9/13 at 10:15am
Quote:
Originally Posted by asdasd View Post
Advantages of cheaper iPhones

 

1) It probably won't reduce over all profit as volume will compensate for margins.

2) It increases the market share of what is in fact a platform - iOS. 

3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.

4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.

5) It reduces the risk of a bad, or mediocre,  upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)

6) It increases the number of people with 2 or more devices - which makes them much stickier see Seeking Alpha here. ( http://seekingalpha.com/article/1099961-apple-margin-pricing-and-product-strategy) [1]

7) It locks people into the system early and gets them for life ( at the cost of reduced margins now) - increasing Apples monetization of apps, videos and music over time, which is a growing component of Apple's business model ( see here: http://seekingalpha.com/article/1102111-app-monetization-drives-revenue-growth-for-apple).[2]

These are all great thoughts.

I think that's what many here don't realize as well.  Since the iOS Platform is locked into only running on Apple devices, and their overall market share is declining (even though it is actually been increasing in total adoption, just not as much comparatively to Android)  The only way to gain more adoption of the "platform" is to  have a more diversified portfolio of products in all price ranges.

 

I think at this point in the Smartphone market, there will be little NEW adoption from other devices.  People that have smartphones are probably already married to that platform, and those who don't own smartphones are probably not going to adopt or upgrade simply because they have no use for it.  We're not there yet but it's closing in on the crest.  and since Android is an "open" platform, they have a much easier chance to gain traction than Apple.  So the only thing Apple can do at this point (since even smartphone tech is pretty much at the tipping point too) is to release a model in the only remaining segment left in the smartphone market....the low end.

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post #120 of 123
1/9/13 at 10:21am
Why not? Pre-retina screen, A5X, about 5", no LTE shouldn't be expensive. On the other hand I wouldn't expect Nexus's $350 price tag on greed.inc branded product, but 450 is possible. Maybe it also will run on T-Mobile. Inexpensive phone on expensive network doesn't make sense, but T-Mobile with their value plans just fine.
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