Insiders "now confident" Apple will launch lower-priced, lightweight iPhone as early as June - Page 3

I'm a bit perplexed, where is there ANY statement attributed to an "insider" in this article as the title would lead one to believe? I don't see one.

Apparently "after discovering several unreleased iPhone prototypes through its research back in December"?! Mwahahahaha wtf does that mean?!

Looks like yet another attempt by Hedge Funds and their Analyst lap dogs to manipulate the stock vie one of those anonymous whispers some vested trading interest made up? Jim Cramer says you can invent those all day because Apple will never deny them.

1) Insiders are super, super, super careful to talk to people at investment firms. It is potentially an SEC violation which can get you thrown in jail.

2) Apple does not compete on price, they never have and never will. Dell did, and we saw what happened to them.

This is BS.

This bears repeating. The iPad maxi to iPad mini strategy is wholly different. The iPad mini is cheaper for the cheaper components, yes, but margins do not suffer greatly. AAPL is not afraid of people buying the mini in lieu of the maxi. Camera and processor are good enough. Exact same OS. Screen is good enough.

 

Also, the iPod strategy is different as well. All the iPods have different OSs and user experiences. The Touch has (essentially) standard iOS. The Nano has a greatly bastardized iOS with no app store. The Classic has the click wheel (no apps). The shuffle has no screen.

 

But these analysts are saying Apple will sell a iPhone with the same iOS for ~$300 unlocked. And why wouldn't that greatly cannibalize the flagship iPhone? The iPad mini and iPad maxi are different form factors and the mini is, in fact, pretty costly with a price difference of only $170 at similar configs. Are people really thinking that a ~$300 off contract iPhone wouldn't deftly kill the flagship ~$650 model with a difference greater than $300? The differences would have to be immense which I don't see Apple doing. Put all the great components in the flagship you want. If it's still essentially the same iPhone user experience in the iPhone mini then people are getting unlocked phones for $300 instead of the on contract phones for $200 and taking the lower plan costs with it. Say goodbye to ~50% margins.

 

There would have to be a way to differentiate between the models enough so that the iPhone mini isn't a grand ASP and gross margin killer. That is the main question which no one has an answer to.To sell this effectively they'd have to do at least four things:

 

1. Limit the "cheaper" iPhone to certain markets.

2. Require AT&T et.al. to disallow a contract price to purchase the iPhone mini for, say ~$50 on contract in the American and Euro markets.

3. Create grand efficiencies on the price of components and build that are vastly below the flagship to keep up their margin.

4. Bastardize iOS on the lower end version. They'd have to remove Siri, remove Passbook, and maybe reserve other implementations for only the flagship model to make it more sought after.

 

If those steps aren't done why wouldn't I, as a consumer, get the cheaper (and newly released) model that looks the same, has the same OS, but just has a weaker processor and not-as-good-but-good-enough camera? These mini talks call for them release two new phones, at the same time, with one being cheaper to make and thus costing less, still keeping their margins, still keeping their "premium" status, while not having the mini cannibalize the flagship and greatly cannibalize their margins.

 

Just looking at the iPhone 4 they've limited the OS, use a "older" processor and not as good camera, and limit the space to 8GB. But that model is still $450 off contract. Where are the other $150 savings coming from on a newly-developed iPhone mini compared to a previous generation iPhone 4?

 

AND..is this phone supposed to be 3.5" or 5"? Thought we wanted developers to move off the 3.5" and on to the 4" resolution. If the iPhone mini proves to be a new 3.5" phone it'd be a new line of products for the forseeable future. Developers would have to plan to accept 3.5" for the next 5+ years?

 

For this to work it would have to become an iPhone Nano/Shuffle with limited features akin to the iPods of the same name. This would all seem like a grand proposition that I don't think Apple is willing to make. Unless someone can show how margins won't be dropped from ~50% to ~25% without doing the aforementioned steps I just don't see it.

My god people, by the logic of many here if Apple was a jeweler you would say that they could only sell diamonds.  

 

Ruby's, Emeralds, Sapphira's, pearls, etc. would just appeal to the scum of the earth type and Apple should not be chasing their filthy dollars......

 

That type of argument is just silly....

Sure Apple competes on price. A base iPhone 5 cost the exact same price at $199 as most competing high end Android phones here in the U.S.. They also offer free and $100 iPhone models as well as paying a bit more for more storage. That is competing on price. Granted that model only works as long as the customer is getting a big subsidy for a new or upgraded phone. At any time the big 4 carriers could easily decide to lower their subsidy amount which would hurt Apple the most since they can cost around $650 or higher unlocked. T-Mobile has already done that to a degree and the other 3 could follow.  Apple needs to be prepared for that possibility and also compete in the rest of the world which offers smaller or no subsidy at all for a phone.

What "insiders" are "confident"? What exactly did the insiders say? The "now confident" quote in the headline never actually appears in the article at all.

 

Topeka Capital is NOT an insider.

 

I call this more of the same pure speculation.

 

Apple is almost certainly pursuing special low-cost iPhone models. Whether they bring them to market or not is another matter, but Apple plans for many eventualities, and designs many products that don't end up on shelves.

 

And Apple certainly COULD put them on shelves. Past patterns don't prove what will make sense in the future. It's true that Apple would be unlikely to release a bad phone, but a plastic shell doesn't mean bad--the 3G/S was a nice design. It means less durable, but not to the point of being junk.

Not really following your logic. Apple is not competing on price the carriers are. Apple gets its $650 either way. Either part comes from the carrier and part from the buyer, or if unlocked all if it comes form the buyer?!

 

Apple is not a discounter, they make Luxury goods, and they act like it. What Luxury good manufacturer EVER discounts, in fact the moment you start is the beginning of the end. It damages the brand and hurts your ability to be one in the future. The philosophy there is if you want "The best" (you might not agree but that's not the point) then you have to pay. Else go get second best and try to pretend it is that "Prada" bag you really wanted. And one could argue that strategy carriers MORE weight in asia which is super name brand aware. Particularly china... where this supposed "cheaper" phone is going.

 

Im not really following this whole "asians need cheaper phones" argument. Thats an argument for people who have never been over there. Go take a look around Shanghai or Hong Kong or Beijing or Macau and tell me if they need cheap phones over there. Your going to see more ferraris, porches, etc there than you will ona any manhattan street on any given day.

I wonder what the real motives of these analysts are?  Apple makeing cheap iPhones without making money so that Google can profit by selling ads on them? 

Since when did an investment analyst become an 'insider'? Way overstated, AI!

If true and this happens, Apple will surely be on the slippery slide downwards.

This is precisely what I am thinking.

Apple may well get their $650 as long as carriers continue to offer an iPhone for $199 where Apple can compete very well. But there are plenty of rumors to suggest that Verizon, AT&T, and Sprint could decide to instead sell that brand new iPhone at $299 or even worse at $350. If that happens and users have to choose between a Samsung Galaxy S4 at $199 or an iPhone 5S or 6 at $350 you will see iPhone sales drop dramatically. Apple can compete very nicely as long as their newest flagship phone costs the same as the competition but how well would it do if the cheapest base model was $150 more? People might pay $100 to $150 more for an iPhone with a 5" screen but not for a iPhone 5S with just a 4" screen. Apple has to have a strategy to answer this possibility. 

The title of this article is ridiculous. These people aren't "insiders" they are merely analysts. Actually insiders work for the company and don't have to make wild guesses as to what it is doing.

Their primary motive seems to be to find a way of convincing investors that Apple has a massive growth opportunity - likely to get the stock price up. As you can see here, Topeka Captial are trying to convince people to buy stock:

http://www.huffingtonpost.com/2012/11/19/aapl-apple-stock_n_2159852.html

"He cites new "blockbuster" products for the holiday season – including the iPad Mini – as reasons for buying the stock... growth opportunities in tablets and new potential areas such as Apple TV."

The 30% or so growth Apple has demonstrated clearly isn't enough so in order for them to go further, they need to call on Apple to make a cheaper phone or cheaper watch or have more colors or bigger screens or a TV, which they see as addressing a much larger audience (which they call emerging markets). They don't seem to care about the margins, which they casually dismiss because really, all they need to fool investors with is growth. That's what they do with Amazon: ignore the profits and just focus on scale.

So any time you hear analysts disclosing inside info or rumours about anything that completely contradicts everything Apple has ever done in the past like compromising quality in favour of price or volume, you can see right through the lies. Key phrases like "unnamed sources" or "people familiar with the matter" or "analysts believe" stand out a mile. They'll get better at it over time as they practise their lies but make no mistake, they are lying.

I miss the days when they just had a blurry picture of a new product or something got published too soon. The whole investment side and motive to manipulate AAPL has just ruined that entirely because they fill the information channels with so much misinformation and pass it off as factual and worse, the blogs spread it like wildfire in exactly the same way as credible information because it gets the clicks. It would be nice if reports from known liars would be blacklisted after a while but it just takes one blog to keep publishing it and they'll get all the traffic.

When whatever they say doesn't happen, they claim it's because Apple is testing loads of products and they just keep pushing the dates further out. The bigger the lie, the bigger the timeframe. Some analyst said it would be within 2 years that Apple would make a cheaper phone but when the time runs out, people will forget. It's a great system really because you can lie to people to get them to buy stock now and then when your claims are found to be false, nobody can remember it because it was so long ago. People have made millions doing this in the stock market and it's fraudulent but everyone who takes part in it is to blame from the liar right down to the buyer.

 

Uh, where? Who on earth is claiming this?

 

Citation needed, but will never be provided.

The argument is whether or not Apple should sell costume jewelry with the diamonds.

As an Apple stockholder and a current generation iPhone owner maybe I just follow the news a lot closer than you. There have been dozens of reports to suggest the big 3 may lower the subsidies to just a flat rate of say $250 to $300 and then the customer pays the retail price minus that. Google it yourself. 

 

 

Indeed.   As you said, this has been all over the news for almost a year now.   Heck, AI itself reported on this last April... "Analyst cuts AAPL rating on iPhone subsidy backlash."

 

The worry that (more) carriers might drop subsidies, is one of the reasons why investors want Apple to be working on a less expensive phone.  They see Apple as very vulnerable in such a situation.

 

It really got started early last year when reports emerged of how much cash US carriers had tied up in iPhone subsidies.  Then it popped up again when Spain's top two carriers dropped iPhone subsidies.  A bit later, one of the Northern Europe carriers did as well (I forget which one).   As would be expected, iPhone sales in those areas dropped pretty quickly.

 

Now T-Mobile has dropped subsidies, and there are hints that Verizon and AT&T would love to as well, or perhaps at least separate out the phone loan from the monthly contract, which would help expose the cost to the customer.   OTOH, some think that they'll never stop subsidies.  We'll have to wait and see.

Edited by KDarling - 2/11/13 at 7:28pm

There are good reasons for a less expensive iPhone rather than selling the older 4/4S models. These include a standard 4 inch display, lightning connector, LTE support, cheaper assembly, and the cachet of being new. It will come in cool colors to attract the kids, and is likely part of a China Mobile deal. My guess is that it will be a 16 GB device, with an A5, or lower clocked A6, and sell for $329, free on contract. They may offer 32 GB for $429. A 32 GB iPod touch sells for $299 so it makes sense. The 5 will take the $99 slot on contract. Very consistent product line and all high quality.

Phil Schiller is an insider.
Jim Cramer is not.

I was wondering if Apple may make a bigger iPhone while still being cheaper model. i.e The Screen Pixel Density is less. But I dont see many other Areas where they could reduce cost without a reduction of quality. Having More space to engineering around things could means a few cost reduction at the expense of operational and material cost.

All these carriers better think about dropping subsidies. No subsidies means no contract. Then they would have to compete for business based on price and service.

that's where i stopped reading.  what does owning the current generation phone have anything to do with closely following the news?

that makes it even worse for the consumer, because you know if that happens, Att, Verizon or sprint won't drop the prices of their plans.  they're still going to charge you $85-$100/mo. for service, despite having not subsidy.

Cutting subsidies is something the CNBC's of the world have been going on about for a least a year now. Every time they interview someone from AT&T or Verizon they try and bait them into saying something about subsidies that will fit their meme that Apple is doomed because of smartphone subsidies being slashed.  What evidence is there that AT&T and Verizon are being hurt in the long run  over smartphone subsidies?

 

A new, cheaper, mass market phone is not a new member in a product family as Apple would do it, or ever has done it. A phone, just as a phone with no internet or camera or retina would be the very last thing Apple would produce. 

 

Apple is having a hard enough time manufacturing enough high end phones, why would they say 'we need to manufacture 10x this amount at lower margins'? (see SS's low phone low margin quarterly report). 

 

At what cost or risk? Again, they are trying as hard as they can just to get enough high end phones out the door. Why gain more at a lower margin? Why do this at the risk of tarnishing your brand? 

 

Just because people want the stock to be $1,000/share? I don't think Apple needs the money, do you? 

 

 

But that is what will happen if Apple starts to manufacture cheap products. That, my guess, is why the plastic Macbook went out; due in part to Apple wanting to remove 'cheaper' products from the lineup. Customers agreed and the Macbook was eventually replaced by the Macbook Air. 

 

Okay, how about this. A similar analogy would be.... 

 

Agree, and I don't see Apple doing this at all. Their manufacturing is a full capacity and they are making money, lots of money. What incentive do they have to cut margin and increase support (cheaper components always creates more support calls, which again tarnishes the brand)? 

While rumors of a cheaper iPhone are on the winds, along comes what may be the most expensive smartphone in the world, the Vertu Ti.  

 

http://www.vertu.com/

 

a 3.7" sapphire crystal display, titanium case and "Bang & Olufsen" sound, with Android 4.x as the OS. Fun fact: Vertu is a spin-off from Nokia just this past October, yet chose to use Google Android rather than Microsoft's OS for it's latest product.

 

....and all for just $11,000.

Vertu claims 323 thousand owners of it's phones so far, many of them in China.

1) Remember the old Vertu phones?



2) If anyone doesn't think China has plenty of people with money with a desire for status symbols then I'll refer them to 323,000 units at $11,000 for a phone that is no more functional than other Android 4.x devices.

3) 3.7"? I thought no one wanted such a small phone¡

 

That's worldwide.  The largest set of Vertu buyers was originally in the Russian and Saudi Arabian regions.  

 

Still, there are a lot of Vertu boutiques now listed in China!

 

I think that most of them don't even have cameras or other common features.  As you already know, they're meant more as jewelry than functional items.  (Yes, I saw your little sarcasm mark - grin)

Thanks. That was definitely poor reading comprehension on my part.

 

No harm, no foul.   We've all done it, at one time or another!