Originally Posted by gwmac
They sell an iPod touch at a profit for $199, why not an iPhone? Reduce memory to 8GB instead of 16GB, smaller screen back down to 3.5" along with a plastic exterior and it could be done. Basically an updated, slimmed down 3GS with lightning connector in multiple colors. I am not saying Apple will or should do this, but I can at least see that it is feasible if they so chose. I think a much more likely price would be $249 to as high as $299 for such a phone. Even in this cheaper market segment Apple would still rather be the premium brand.
There are valid reasons for and against this move but I tend to side with Gene on this one. No reason to completely abandon a $135B market. Many of those people buying cheap phones today will buy flagship models in the future so why not get them into the Apple ecosystem and familiar with iOS now. It would also be popular for children and people without contracts or subsidies in developed countries as well. The shuffle didn't destroy the iPod brand, the mini didn't cause irreparable harm to Macintosh line and neither would a more affordable iPhone.
I agree with most of what you're saying here. but I think the Nano hurt the iPod Classic quite a bit. And it's going to be tough to design and iPhone that is a lot less expensive yet not completely cannibalize the flagship iPhone like the Nano did to the Classic. I know Apple doesn't care about cannibalization from their own line, but the iPhone is the cash cow. The only way they can do this is to rethink the iPhone for the emerging markets. Maybe not by reducing build/material costs, but to rethink it in a way that just not as feature rich. I've argued it your way and the opposite on other thread yet neither argument seems feasible for both an the flagship device to stick around and a less expensive version to emerge.
when I travel to China the most common phones i see in the subways and out are the 4"-5" smartphones, and the older crackberry candy-bar feature phones. And the later is what Apple needs to re-imagine. Not the Smartphones. I don't think it's going to happen by just reducing the build-costs and material costs alone. THe form-factor and features are going to have to be re-thought in order to find a less expensive solution without totally cannibalizing their flagship device. And I DON'T think its going to be an iWatch or any other kind of wearable device.
Addition: I think the reason Apple hasn't come out with a lower cost, feature-light, device yet is even they can't figure out how to make a less expensive iPhone that doesn't take away from the flagship model. I think they are probably spending a LOT of time trying to figure out how to do this, but coming up short. How do you make an iPhone less expensive and give the same iPhone-like experience, but not completely obliterate the flagship device? Ask yourself. If you had the choice of an iPhone experience that was encased in Plastic or some other less expensive material, yet it does everything the flagship model does and is subsidy-free and $700 cheaper, why would you even consider the flagship model? because you like to throw away money on something you'll replace in 1-2 years? No, you'll buy the cheaper one, knowing it didn't cost you anything and it's easier to replace. So then why keep the flagship model around?
It's going to have to be non-retina, smaller SDD, less expensive materials, lesser components. and probably reduce the amount of Apps or even drop the App store all together. But then, why buy it or even build one at that point? So i think that's the problem Apple sees, and that's why I think they are going to have to NOT rethink a cheaper iPhone, but rethink a feature Phone.
I think this strategy could also work in the Western markets too. Because in those markets. Everyone that wants a smartphone has already made their choice. It's saturated. So those people now have moved to the iPad or Mini iPad for their secondary option. THose (like me) now might be thinking: "Well, I used to use my phone for everything, I have my iPad and/or Mini. So no I use my phone for only a few things. I don't need all of what my iPad does when i'm out. I only use phone, sms, email and maps...maybe the occasional web browsing and games on the train...and this damn phone is costing me $90-$120/mo. that's crazy!!!"
There needs to be some very distinguishing factors that clearly separate the flagship iPhone to this rumored less-expensive iPhone. there has to be a compromise without sacrificing user experience. If you simply just make the iPhone less expensive but put the same iOS in it, there will be no reason for anyone to buy the more expensive version. Every Apple product line has clear separations between the models. LIke the Nano to the Classic. Much smaller, lighter, but very limited SDD. The iPad Mini to the Classic, it's lighter, thinner, same experience, but no retina and slightly lesser processor. The same goes with the MBP+r and the MBA. Lighter, slower, no retina. THey could go this way with the iPhone, but then they would have to drop the other iPhone models being sold.
So yes, the argument of keeping the same OS but reducing materials (lighter, thinner, lesser materials, processing power and lower quality components) could work, but in the case of the iPhone, I think it will go the same as the iPod Nano did to the classic. Nobody bought the classic after the Nano came out. the nano was almost the expendable iPod model. If it broke, throw it for a new one. I think it's going to have to be more than just materials and components that are the compromise. At the price points we're talking about (the $99-$199 range) people replace these kinds of phones almost annually, sometimes quicker. And really gives no reason to upgrade to something better. IT's going to have to be like an updated iPhone Gen 1 for $199 vs. the iPhone 5 for $699.
What if...Apple made a phone that took away the traditional voice functionality and re-designed the Phone App to Data-only phone App with a iCloud phone number that could connect just like a voice phone App? Google Voice basically does this already. It works with Phone and SMS. This could change everything. Then there would be no need for the iPod Touch and the iPhone to both co-exist. That might get some major push-back from the Cell industry, but it would be a bold move to the future of phones. All Data. No more Voice/Text. Then, they could drop the Touch line and just have an iPhone line. They could even update the iPod Nano with a mic. and speaker and there's your iPhone Nano.
I think now that more and more Cell companies (in the western world) are dropping the subsidies, the future is looking more an more to the All Data plan.
Edited by antkm1 - 2/19/13 at 11:03pm