Phil Schiller says Apple would never make a 'cheap' iPhone - Page 5

1) We've all stated these cases many times but yours were not well done IMO. I don't understand why you think a halfassed argument from you should be taken as canon. If you have a case then make it but don't complain that others are dismissive assholes because you failed to make a viable case.

2) Case - an instance of a particular situation; an example of something occurring. Any scenario where you think a company should, would, or could do something based on a set of circumstances is your case.

3) Being an assertion doesn't preclude it from being a thorough argument. It's all debatable.

4) Being more verbose doesn't mean you've thought it through more.

5) Most expensive feature phone ever doesn't mean it's not low profit. You wanting some device that excluding the App Store and is a simply feature phone is making this a low profit device compared with the iPhone. That is not the same as a low margin phone but it's still low profit per unit.

6) I find it tiresome that people focus on one singular desire that they ignore all other hurdles, issues, and corporate philosophies so they can shoehorn a weak concept into some a winning idea. Having ability to do something is not proper reasoning for expecting them to do it.

Don't drag me into this.

 

I sometimes feel the same, but posting and then complaining about it only makes you look like a drive-by shooter.  Fight back with empathetic logic.  It's worth it.

 

iPods in general are in decline.  That includes the touches.  In any case, his statement remains true.

 

 

 

Restating your position is not a rebuttal.  You can say this about every market that Apple has ever entered:

 

 

So why should Apple enter the MP3 market?  Why?  They specifically didn't, and that was for a reason.

 

 

 

 

 

Except it doesn't.  Using your same argument, because the Nokia Lumia only has moderate success Apple should not be in the smartphone market either.

 

It should not be a point of contention on an Apple fan site that Apple can execute better than Nokia can.  If Nokia can manage moderate success it should not be a hard sell that Apple could do better.

 

 

 

 

Which doesn't disprove that a well designed feature phone could not be priced the same as a low end smartphone and still sell well.  The fact that a feature phone costs a lot less to make means the margins on an iPhone Nano will not be anemic like low end smartphones.

 

This is the same model that Apple successfully used against netbooks.  A high quality, far more focused product over a low quality more general product.  On paper a netbook can do everything a laptop can.  In practice the iPad is far better in the narrow feature set it addresses.

 

Likewise a very focused iPhone Nano feature phone could more efficiently and elegantly do the large majority of tasks done with a low end Android smartphone without requiring a data plan.

 

 

A PixoOS SDK exists.  It is possible that Apple could allow general app development for a PixoOS based iPhone Nano.  Or they might keep it limited to specific 3rd party developers.

Except they did all these things you're pretending they didn't do.

 

There's value and profit to be made in the textiles market. Guess Apple's gonna make a line of mock turtlenecks.

 

They already are. With the iPhone.

 

 

See many $99 flip phones these days? No? Huh. How about that.

 

 

High quality, far more general product over a low quality, more focused product. The MacBook Air can do things netbooks can't even dream, and it does it better. 

 

So no app environment, making it desirable to what facet of Apple's audience? No data plan, so iCloud and Siri lose functionality…

 

 

I can't find any information about what this is anywhere. Why would they use anything but their own software?

 

Strawman.  I never asked it should be taken as canon.

 

 

 

Been there, done that but this still isn't a "case".  Just a more wordy opinion.

 

 

 

By definition it does: "a positive statement or declaration, often without support or reason"

 

Simply stating that there is a market for quality feature phones isn't an argument.  It is a premise that he hopes you accept.

 

 

 

 

Exactly.  Neither does shouting or endlessly saying the same thing over and over.

 

 

 

LOL...really, that's your justification?  Of course the profit is lower on a $200-$300 phone than on a $650 one.  That doesn't make it "low profit" any more than the iMac makes the Mac Mini "low profit".

 

If little to no cannibalization occurs then the profit difference between the smart iPhone and the feature iPhone Nano is unimportant because it addresses a completely different market.  A market that is of some strategic importance.

 

 

Again strawman.  First, I don't EXPECT them to do it.  I believe it is PLAUSIBLE that they do it.  

 

Several examples of how a feature phone iPhone Nano fits into corporate philosophy has been provided multiple times by multiple posters.  The most obvious is the iPod product line that has a range of products, form factors and prices.  

 

Another obvious example is Apple using the iPad to address the netbook market vs releasing a cheap notebook.  A rich messaging phone is the same kind of solution to the cheap smartphone.

 

And of course the iPad product line has also been diversified to have a high/low product mix of different sizes.  Many if not all the arguments advanced against a iPhone Nano were advanced against the iPad Mini and yet that product is here.

 

Simply asserting that it is weak does not make it so.

Simply asserting that it is against Apple corporate philosophy does not make it so.

Simply asserting that there are some vague insurmountable hurdles or issues (which you have failed to provide) does not make it so.

 

You are free to hold these opinions and they are quite possibly correct but in no way does that mean that the opinion that a iPhone nano can be released in 2013 is in any way less valid or less supported than your own.

You did when you complained that people opined against your case.

So your magical device is high volume low cost high profit and yet you still have no justification as to why Apple would do this now after 6 years when everything you've mentioned has existed long before the iPhone (they even had the Pixo OS then), why not a larger iPhone first for the markets that are eating up those high priced devices, and why you know what Apple doesn't. All I see is a wishful thinking with no solid foundation for a reasonable product. You could your case work for the JooJoo and we all know what happened to that piece of crap.
Edited by SolipsismX - 1/15/13 at 2:28pm

 

 

There are feature phones the MSRP from $200 to $280.  They get discounted pretty fast and start subsidized down to the $80 level on contract.

 

Go look on Verizon, pick "basic phones" and then switch to "month to month" and you'll see several phones shoot up to $200+.  Samsung and LG have a couple that MSRP above $200.

 

 

 

The audience that likes the Apple ecosystem (iMessage, iTunes, etc) but don't want to pay $50 a month for a data plan.

 

As for Siri:

 

"If you use Siri 2-3 times per day at an average of 63KB per instance, you might expect to use 126KB to 189KB per day, or 3.7 to 5.5MB per month. For 4-6 times a day, that might come out to 252KB to 378KB per day, or 7.4 to 11MB per month. If you use it 10-15 times per day, you might end up using 630KB to 945KB per day, or 18.5 to 27.7MB per month."

 

http://arstechnica.com/apple/2011/11/how-data-heavy-is-siri-on-an-iphone-4s-ars-investigates/

 

Carrier could simply require that you have unlimited texting on your plan which probably covers such low data usage.  For AT&T that's $30 for the whole family...a lot cheaper than a data plan for every kid and offsets iMessage circumventing the texting fees.

 

 

Try searching with a space between Pixo and OS.  It is the OS used by iPods since the beginning and still used on the current iPod except the iPod Touch.  They bought it from Pixo so it is their own software.

 

"Some engineers who worked on the first iPod got scooped up by Apple, which has since taken over iPod's software development."

 

http://www.sfgate.com/default/article/Little-known-startup-was-behind-iPod-s-2733248.php

 

The SDK was never publicly released but certain 3rd party developers had it until it was discontinued on the iTunes store in 2011.  I still have a couple iPod games sitting in my iTunes folder.

 

There's is reportedly very good OpenGL ES support in the Pixo.

 

http://arstechnica.com/apple/2011/01/6g-ipod-nano-hack-just-beginning-of-long-road-to-nano-apps/

 

I think Tim Cook and Apple might be interested in growing their business. The iPod is only heading in one way.

 

It would be really interesting to see a breakdown of iPod sales in more detail than just "iPod Touch accounts for about 50%". But at least with that info, we can assume that the Nano is < 50%. That could mean anywhere between maybe 10 and 15 million in 2012. And falling every year. How long before half of the iPod business is simply not worth it? 

 

I am simply suggesting replacing/adapting a business and moving it into another market. "If one thinks they will go with a high volume, low profit device..." Who said that? Keep the Apple margins..... and just sell comfortably more units than an iPod Nano. That's why I mentioned Asha. Already selling in higher numbers than the Nano.

 

 

 

 

No App Store. No iPhone cannibalization.

Simples!

Low profit doesn't mean low profit margin. If you sell a phone that ranges from $650 to $850 and another that is $200 (iPod Nano price + $50 for cellular radios) you will make less money per device.

There will always be cannibalization. When you introduce a product with a subset of another products features.

These scenarios are never simple. Even to suggest that it's simply shows that it hasn't been ripped apart and laid bare. I am certain Apple has done this many times over many years to determine if such a device would be the right move for them. The only thing here that's simple is that its complex.


PS: If no App Store then no apps. Users would be forced to use web apps which are often inferior, even to Android apps. For $200 in many countries you can get an Android-based phone that allows apps. Why completely ignore a low-cost 3.5" touchscreen or an App Store for 2.5" (or other sized) device?
Edited by SolipsismX - 1/15/13 at 3:02pm

 

So you're saying it's a phone for me? 

 

I refuse to sacrifice apps just to not have to pay a data plan. And since some countries already allow iPhone purchases without data, is this really Apple's problem?

 

And if I don't have a data plan, I can't use it at all. How about that.

 

See, I don't want this. So I still wouldn't buy one. What's the point of having iMessage on the device (because that was one of the apps on the gimped thing that was mentioned to remain) if I'm forced to pay for texting? That question can also be asked the other way.

 

Okay, cool. So why would developers write for a gimped, soon to be completely replaced OS, when they could just make iOS apps?

 

No! They are buying music and video capable phones in the hundreds of millions. And the vast majority are not iPhones.

 

 

Edited by piot - 1/15/13 at 5:18pm

 

 

Nope.

 

 

High volume low cost high profit are all vague.

 

A $199 iPhone Nano that makes more profit than the iPod Touch is what in your scale?  Given that the 6th gen iPod Nano BOM was in the $43 range.  Lets double it to $80 and that still less than the estimated BOM for the 4th gen iPod Touch.  Given the much smaller touch screen, the vastly cheaper CPU, 3G vs LTE radio and so forth around an $80 isn't an unreasonable expectation.

 

Is the iPod Touch low profit in your mind? 

 

Justification?  Saturation of the US Smartphone market (80%) expected in 2014.

 

http://www.asymco.com/2013/01/04/when-will-smartphones-reach-saturation/

 

You might argue that entry into the feature phone market to be counter intuitive given this scenario and I would agree.  Counter intuitive doesn't mean wrong though.  It just means zigging when everyone else is zagging.  

In any case, there are multiple official statements from Apple that the pre-paid market is of great interest to Apple.  One not very well addressed by year old iPhone models.  There's as much justification for a high end feature phone as some new TV related product.  

 

Plausible but far from certain.  Apple has many irons in the fire and only so much focus available.

Sure, and they've done it with the iPhone, too. They have 3 generations ranging from $450 to $850. What you want something substantially less expensive and yet a new design from the ground up which implies additional costs as well no ecosystem lock-in to keep it tied to the App Store. That makes it seem harder for Apple to swallow than simply offering another, older generation iPhone that's less expensive.

Why so many fallacious arguments in this thread? Do you think Apple cares more about the number of people buying phones and how many "activations" Android makes or how much profit they make from the handset market? With a 75% take and no product to compete with the barrel scraping anything I'm going with the latter.

Again, it's possible but I think the most likely avenue is to strengthen their iOS ecosystem not chip away at it. I also think getting in with China Mobile with a proper iPhone is more profitable and therefore more important than the low-cost options presented in this thread. Note: No one has done a cost analysis of this iPhone nano and yet you're all so sure of it.


PS: Why do so many of you choose to use HTML markup instead of BB code? You know you can add HTML in the other editor anytime you'd like, right?

 

An app store is possible but neither the current Nano nor the aTV support apps.  It is also a point of differentiation to segment the two products to reduce cannibalization.  Kinda like not providing a GPU option in the Mac Mini.

 

The advantage of no general app store comes in having very tailored apps that run VERY well on the limited Nano class CPU as opposed to a bunch of apps that run poorly.  That is the problem with $200 Android smartphones. 

You're using an iSuppli BOM to make a case for imaginary product's profitability. :sigh: I give up.

 

Exactly.  

 

The iPad mini is a perfect example.   Because of its lower build cost, it has a higher estimated gross profit margin (40%) than the larger iPad (37%), although it makes less money (~$130 vs ~$200) per device.

 

(When people pay the ridiculous memory upgrade prices that Apple charges, the profit margins skyrocket into the high 50s on both.)

 

How's that possible?

 

Well, the developers aren't losing anything from phones that can't even run apps. And Apple's making 75% of the profits in the industry with only 15% of the sales, so… 

 

… Really.

 

The world isn't the US. Plenty of places already do this. It has nothing to do with Apple.

Gartner as 419 million phones solid in 1Q2012. That's almost 1.7 billion for the year all thing being equal. Even with a decline as people move from less disposable phones 1.5 billion is quite reasonable.

• http://www.gartner.com/it/page.jsp?id=2017015

There are also about 6 billion phones in use according to one site at a ratio 86 out of 100 people on the planet.

Truly insane numbers. 

 

 

 

I really like the idea of an iPhone Nano, with a focus on media and music consumption, and a $200-ish price tag.

 

But I think a slightly larger iPhone Mini with 3 - 3.5 inch running full complete apps is more likely even if such a device would cost $350+.

 

 

It's probably because a lot of American adults have multiple cell phones. Each "disposable" phone drug dealers and cheating husbands/wives buy counts in that number. And of course all the Blackberries companies buy there employees, though the employees all have iPhones and Androids for personal use.

 

 

LOL...classic.  

 

YOU HAVEN'T DONE AN ANALYSIS SO YOU ARE WRONG!

 

YOU CAN'T DO AN ANALYSIS BECAUSE IT DOESN'T EXIST SO YOU ARE WRONG!

 

And you wonder why I don't believe you are arguing in good faith.  

 

Yes, I'm using iSuppli BOM because it give you a rough estimate of component costs relative to other devices.  What else can you use for a cost analysis?

 

The iPhone Nano is conjectured to be a slightly larger 8GB iPod Nano with a 3G radio for $199.  I did a rough back of the envelope top down calculation and got $80.  We can delve into the details for actual component costs for a bottom up estimate.

 

We know the price for the Flash, Application Processor, etc.  We can guestimate based on the iPhone 4 component pricing for the remainder.  The fact that all of these BOM breakdowns are 2+ years old means that the component prices will be conservative.  If the estimated BOM is in the same range as the BOM for iPod Touch 4G then we assert with a reasonable confidence that the iPhone Nano will be about as profitable as the iPod Touch.

 

6th Gen iPod Nano (rounding up to nearest dollar)

 

Memory (Flash and SDRAM) - $15

Touch screen - $12

Application Processor - $5

User Interface - $4

Box, Other Mechanics, Electro-Mechanical Power Management - $10

Battery - $1

Manufacturing - $2

 

Total $47.

 

iPhone 4

 

WiFi/BT - $8

3G Radio - $25

Camera 5MP $10

Camera VGA $1

 

Let us upgrade the screen and battery to 1/2 that of the iPod Touch;

 

Battery - $3

Touchscreen + Display - $20

 

$47 - $13 (touch screen + battery) = $34 + $67 = $101 

 

Estimated iPod Touch 4G BOM was $130-$150.

 

The Nokia Asha 311 retails $115-$120 this is a good sanity check.  3" LCD Gorilla Glass, quad band GSM, WiFi, BT, 1Ghz CPU, 1110 mAh battery. 

 

So top down estimate, bottom up estimate and sanity check all seems to indicate a lower BOM cost than the iPod Touch 4G.

 

Given the above I think it's now on you to show why the iPhone Nano wont be more profitable than the iPod Touch in the current line up.

 

Yep. It's not quite the same strategy as expanding your market by creating the iPod Mini followed by the Nano and the Shuffle. Or by expanding your tablet market by creating the iPad mini... but it seems to be working. Apple have expanded their market from $850 to $450.

 

 Source

 

Hardly any market left then! ;-)

 

 

 

 

Yes 75% is great. It's fantastic! But it's an exaggerated number because Nokia and LG etc are selling hundreds of millions of phones each year, but they seem to have forgotten to make any profit whatsoever. If there is one thing that Apple is good at it's finding the profitable way to do things.

 

What do you think the 7 inch tablet market was like before Apple joined the party?

 

7 inch market growing nicely.

Really low prices. $ 200 ish.

Somewhere between low and zero profits.

Nothing in it for Apple.

 

After iPad Mini.

 

7 (ok and 8) inch market growing rapidly.

Higher ASPs

Substantial profits...

... most of them going to Apple.

 

I know it's not the same as the phone market exactly, but there are similarities.  

 

 

 

 

Yes of course a deal with China Mobile would be huge for the iPhone. There are still plenty of other carriers that have yet to sign up with Apple... and those deals will provide organic growth. However the future growth in 'smartphones' is all going to come from below. iPhone growth YOY in 2011 was over 90%. In 2012 probably 50%. There is a natural ceiling to Apple's current iPhone strategy. 

 

 

 

 

No. I don't "want something" from Apple.

No. "I am not sure of it".

I am putting forward one possible solution that covers both the 'cheap iPhone' rumours and the title of this thread. I am a little surprised by the responses that basically boil down to "Apple ain't interested in those 150,000,000,000 potential customers. Particularly from people who didn't even realise they were there. (That's for you Tallest!)

 

So Sol, with respect, I suggest you dial down your mistaken reading between the lines.

 

Edited by piot - 1/15/13 at 7:52pm

 

Mmm...the iPhone 4S is $450.

 

The iPhone 4 for $350?  Eh...I think that's still a bit high for the Chinese and Indian markets but it's a viable pre-pay price for the US and the EU.

 

I guess if you don't care about the emerging markets at all that would work.

 

Perhaps a 3GS with A5 for $299 non-retina would work in those markets.  The A4 is a little pokey for iOS 6.

 

Edit:  I had added $100 to everything for some reason.  I wonder if the virgin-mobile prices are subsidized a little even though they are no-contract.

Edited by nht - 1/15/13 at 7:54pm

 

I think most people, even those in emerging markets, are willing to pay a premium for Apple devices, hence the success of the iPad Mini and even the iPhone.

 

That being said I don't think Apple has to compete with Android/etc head on with price. If Apple can make a relatively complete phone with most of the bells and whistles people are used to for even $350, I think we'd see their sales grow exponentially in some markets.

 

But a unique feature phone would be an interesting angle for them as well. Strangely though, I feel a feature phone would do better for them here in the US than in emerging markets.

I think most people in emerging markets would rather have at least limited smart phone capabilities if their buying a touch screen Apple product.

 

I would assume people in India and China would rather surf the web and read the news rather than listen to music all day? I could be wrong though.

 

The current iPhone's margins are way higher than the iPod Touches, so I would assume the iPhone Nano's would be more in line with the iPhone's margins. But that's a minor point when the cost of materials you're talking is so low at $80.

A smaller cheaper iPhone is going to happen. Tim Cook is going to make sure of it. A few years ago he said something about making sure Apple had a solution for emerging markets, and with the China Mobile deal happening its all about to unfold.

...and thanks for your subsequent data/info.  That's what I'm talking about.  Truth is that some of us are too lazy or don't have the time (me as a perfect example) to back up every single opinion that we put up on this board.

 

But if some of us throw out a contrasting view that is thought of as being anti-apple culture, the loyalists here often respond with general feelings of "give us data and facts to back it up or shut up and go home".  Maybe some are too used to having to respond to trolls (either direct or in disguise)...and for that, I appreciate calling the trolls out directly, capriciously even.

 

But nowadays, there are many that are more Apple neutral, while still fans of Apple, if that makes any sense.

 

In conclusion, I love the recent posts,  it allows for good meaningful discussion on both sides.  Time will tell who was right and who was wrong.  For now, take pause to listen to the contrasting views... appreciate the good conversation for what it is. :-)

 

Yes, but you can count out those ipod touches and iphones that cant go past 4.2. That drops quite many out of the equation....

1) Why drop them? If a developer has an app that will easily work on that older OS and HW then so be it.

2) Apple has stated many times that sales of the latest device running the latest OS have outsold all previous devices ever sold. That means that going back to a device that can only run a 3 generation old OS means you're going back to 2008. We're talking about no later than the iPhone 3G. How many 1st and 2nd generation iPhones and iPod Touches are still in use? Whatever the number it pales in comparison to all the 3rd, 4th, 5th and 6th generation iPhones, and 3rd, 4th and 5th generation iPod Touches, and 1st, 2nd, 3rd and 4th generation iPads, and 1st generation iPad minis.

Im atleast with you. The Iphones out there now (atleast in europe) the prices are way too high for young people. I am shure that apple doesnt want to alieanate the youngsters to go buy Samesung products just because they dont have money to buy iphone 5 (its like 800 Euros here in Europe).

 

I myself as a parent of two would not buy iphone 4:s for my youngsters. They are just too expensive compared to the alternatives. And the alternatives are just OK, they do what they are supposed to. Its a shame they dont sell the Iphone 3GS anymore as i think that would have been a good choice for youngsters.

 

Its ashame that kids will instead go over to become samesung fans. They get something that isnt top notch (150-250 Euros phones) but it does the tasks that they need and they arent that fuggly anymore. They might never become apple customers, ever. Apple has had its rise. They wont know what hit them if they stay on this road they turned to. Markets change people change. We havent seen any change in IOS user interface. I have 2 ipads and they just throw away the awesome potential that this device has and after a few years it really feels like a big iphone that you just use to browse the internet or play games or watch movies. You cant really do much else with it because of the UI. They have started to stagnate in the IOS department and i would like to have some fu%%ing useability improvments thanks.... With a lot of apps it just sucks to try to navigate this thing. Why cant they bring the open apps navigation (cmd-tab) from os X to touch screen on the ipad. The 4-5 finger apps switching in ios is nice but pointless if you have no idea which way your supposed to navigate.

 

Apple just lacks the wish to change it seems. Apple is getting fatter and fatter and becoming comfortable with itself.

 

I live in app no-mans-land now. Its a hostage situation att the app store. We cant upgrade nor can we downgrade applications.

 

We have two older IOS devices in my household. We have a 2nd gen ipod touch and and a Iphone 3G which are both very well functioning units (kids use them). I cant upgrade our newer iphones without os loosing the ability to use apps on the older devices. I Have stopped upgrading apps almost fully. Some apps dont work on the older devices because I updated on the newer devices. Apple needs to get its head out of its ass on this App versioning problem.

 

I just cant understand why apple cant sell the older versions of apps that worked with those older IOS versions??? Why is this away from someone else except that the app i purchased doesnt work on my device I bought it on?!?! But wouldnt the app sellers equally enjoying the sales of an app that works on 4.2.1 or 3.1.3? No? There arent many business that turn away customers like Apple and the IOS developers. Want to buy an app for that iphone 3G? No we dont sell you. We hade a version of this app a year ago and it ran on your 4.2.1 and it even worked great, but now we dont want to sell you anything.

 

Some developers say that they only support the two newest versions?!? What. They hade an app that worked well on the older IOSes but now they dont want to sell it anymore to those that cant upgrade?!? What retards!! Apple products are known for their value even after they are "obsolete" but apple is just killing old devices value because you cant buy a sinle piece of software for it even if it could run it without a problem. This is going to change quite rapidly if this problem persists (atleast for IOS devices)....

 

This concludes the hostage situation at the Apple app store. Apple, please we are your customers, do something, we dont want to stay hostages here, we want to go home....

Edited by habi - 1/17/13 at 10:30am

1) they did it already. Just look at any forum about apps not working after upgrading them on devices on 4.2.1... If you dont have a backup for example you can only download the newest version of the app that does not function on devices below 4.3. I dont know who to blame on this. It apears that the blame is on both. Apple for not making it optional to install older versions on devices that dont support newer ones after they use the new APIs. OR developers that try to cut support for old versions so they dont get lots of work. Still why would they decide not to sell good functioning software even if bug support ended for it and the quality is as good as it is in general in the app store (I think its always been good on most apps i bought).

 

2) why is this out of somebody elses bag to be able to install that older version of the app that worked well with 4.2.1.  If a device owner that cant upgrade past 4.2.1 wants to buy a new app, ANY app he now CAN NOT! Why because there isnt any apps new versions that work with devices that are below 4.3!!!

Edited by habi - 1/17/13 at 10:49am