or Connect
AppleInsider › Forums › Mobile › iPhone › Smartphone upgrades slowing as Apple is rumored to be prepping low-cost iPhone
New Posts  All Forums:Forum Nav:

Smartphone upgrades slowing as Apple is rumored to be prepping low-cost iPhone

post #1 of 59
Thread Starter 
Evidence continues to mount that the market for high-end smartphones in the U.S. may have reached a saturation point, meaning that a mid-range iPhone offering from Apple could be the best way for the Cupertino company to ensure future growth.

Render


The latest and greatest smartphone models aren't spurring as many consumers to upgrade as they have in the past, according to analysts at UBS AG. Last year saw 68 million people upgrading their phones in the U.S., down more than nine percent from the year previous.

This trend could prove troubling for both smartphone manufacturers and wireless carriers. The carriers could find themselves on the hook for billions due to sales agreements with manufacturers and the need to continue having customers re-up their contracts. Phone upgrades typically go along with service upgrades, and the carriers continually try to herd customers into higher-cost arrangements in order to grow revenue.

Apple and Samsung, the two largest smartphone manufacturers, have been seeing the effects of smartphone saturation as well. Samsung's most recent flagship model, the Galaxy S4, received solid reviews but was generally regarded as an iterative, evolutionary device and not a true game changer. That same charge was leveled at Apple's iPhone 5 by some critics around the time of its release.

For Samsung, the lack of a wow factor translated into slower-than-expected sales for the Galaxy S4, which in turn led to a stock slide as investors began to fear slowing growth. That turn of events, again, mimicked Apple's own story since August of last year.

Apple, too, has seen the effects of high-end smartphone saturation. In the March quarter, the average sales price for an iPhone fell to $600, lower than some analysts' projections of $625. At Verizon, the largest carrier in the United States, Apple's newest model, the iPhone 5, made up about half of all iPhone sales for that quarter. Older models like the iPhone 4S and the iPhone 4 - both of which are offered at discounted price points - made up the rest of that carrier's iPhone sales.

Slowing growth in the high-end segment could spur Apple on to develop and release a mid-tier model of its bestselling smartphone. Rumors abound that the iPhone maker is working on a less premium build of its best-known device, with a polycarbonate-backed model hitting shelves as early as this fall. Some reports hold that Apple will not make a play for the low-end segment, as the "cheaper" iPhone is said to not be cheap at all.

Others hold that the high-end smartphone slowdown will simply open the door for other devices to come to the fore. Chief among these would be the smart watch segment, an area Apple is widely expected to enter in the next year or so. That segment, according to recent reports, could grow by a factor of ten over the next year as major hardware manufacturers look to capitalize on a burgeoning wearable technology trend.
post #2 of 59
People are waiting for 5S and 6 for the upgrade! New herd will join Apple for the low cost iPhone.
post #3 of 59
I think the entire phone market is saturated. Now that everyone has one, phone sales will slow. It's the same in most electronic markets. People hold onto them for a few years (or longer in the case of tvs) so sales are generally slower.
post #4 of 59
Many people know that American consumers make up ~70% of the American economy.... But not many people realize that the top 10% of consumers make up 50% of the economy....

Apple does! 1smile.gif
post #5 of 59
Quote:
as major hardware manufacturers look to capitalize on a burgeoning wearable technology trend

 

Huh?  What wearable technology trend?  I see NO one wearing tech, aside from iPods and standard wristwatches.  Lovely that the analysts are now forecasting on phantom trends.

 

Google Glass, you say?  Right... it's the next Segway scooter.  Both users love 'em.

post #6 of 59
Quote:
it's the next Segway scooter.  Both users love 'em.

 

Awww. C'mon. I rode one. Segways are really cool.

post #7 of 59
Quote:
Originally Posted by helicopterben View Post

People are waiting for 5S and 6 for the upgrade! New herd will join Apple for the low cost iPhone.

Hopefully some, but not exactly.

Apple currently has low-cost offerings....the problem is people are not dumb enough to not realize that these offerings are either last year's phone, or older.

Where Apple has the opportunity to WIN is by offering a NEW iPhone (not just last years model, or worse 2 years ago's) that comes it at the same price points, or even slightly cheaper.

As it is reported over and over again, these categories (the $0/w 2 year and $99w/ 2 year) are VERY successful for Apple. During some months of the year, they actually outsell the flagship model.

So what that means is, if Apple can make an iPhone as good as those phones, but NEW, and enter those price points...they have a big opportunity to dominate that market segment.

Apple cannot expect the flagship iPhone to be the best selling iPhone for 12 months. The market has changed. Too many other "New" phones come out during that 12 month period, and whether they are good or not...many of them are "New" and many of them are "Free" with a new 2 year.

Even though an almost 3 year old iPhone 4 may still be better than other "Free" smartphones, it makes little difference to the average buyer...who would rather have something new than something that came out in 2010.
post #8 of 59
One important detail in the older iPhone discussion is that they run the latest iOS6, although th H/W is missing for some features.
post #9 of 59
Quote:
Originally Posted by pmz View Post

Hopefully some, but not exactly.

Apple currently has low-cost offerings....the problem is people are not dumb enough to not realize that these offerings are either last year's phone, or older.

Where Apple has the opportunity to WIN is by offering a NEW iPhone (not just last years model, or worse 2 years ago's) that comes it at the same price points, or even slightly cheaper.

As it is reported over and over again, these categories (the $0/w 2 year and $99w/ 2 year) are VERY successful for Apple. During some months of the year, they actually outsell the flagship model.

So what that means is, if Apple can make an iPhone as good as those phones, but NEW, and enter those price points...they have a big opportunity to dominate that market segment.

Apple cannot expect the flagship iPhone to be the best selling iPhone for 12 months. The market has changed. Too many other "New" phones come out during that 12 month period, and whether they are good or not...many of them are "New" and many of them are "Free" with a new 2 year.

Even though an almost 3 year old iPhone 4 may still be better than other "Free" smartphones, it makes little difference to the average buyer...who would rather have something new than something that came out in 2010.

People are dumb enough to not realize that a less expensive mobile phone ($300 off-contract, for example) are likely not nearly as capable as iPhone 4S ($549 off-contract).



Only two things are infinite, the universe and human stupidity, and I'm not sure about the former.

- Albert Einstein
post #10 of 59

I don't see the point of a low cost iPhone; I wouldn't want to have a customer that can't afford products and services.

post #11 of 59
According to today's post at Asymco.com this is BS. Dediu says that smartphone penetration is about 60% in the US (lower elsewhere) and the rate of switching to smartphones in the US is accelerating. It's currently about 583,000 per week, up from a 41 week average of 572,000.
post #12 of 59
Quote:
…a mid-range iPhone offering from Apple could be the best way for the Cupertino company to ensure future growth.

 

Apple’s most important concern for the future should definitely be growth. They are not nearly big enough, nor do they make enough money.

post #13 of 59
Quote:
Originally Posted by pmz View Post

Hopefully some, but not exactly.

Apple currently has low-cost offerings....the problem is people are not dumb enough to not realize that these offerings are either last year's phone, or older.

Where Apple has the opportunity to WIN is by offering a NEW iPhone (not just last years model, or worse 2 years ago's) that comes it at the same price points, or even slightly cheaper.

As it is reported over and over again, these categories (the $0/w 2 year and $99w/ 2 year) are VERY successful for Apple. During some months of the year, they actually outsell the flagship model.

So what that means is, if Apple can make an iPhone as good as those phones, but NEW, and enter those price points...they have a big opportunity to dominate that market segment.

Apple cannot expect the flagship iPhone to be the best selling iPhone for 12 months. The market has changed. Too many other "New" phones come out during that 12 month period, and whether they are good or not...many of them are "New" and many of them are "Free" with a new 2 year.

Even though an almost 3 year old iPhone 4 may still be better than other "Free" smartphones, it makes little difference to the average buyer...who would rather have something new than something that came out in 2010.

How to differentiate between these new models? Wait the mid range will use last year's components, the low end will use two year old components and the high end will use current components.

Also the 5 is still #1.
post #14 of 59
Quote:
Originally Posted by NormM View Post

According to today's post at Asymco.com this is BS. Dediu says that smartphone penetration is about 60% in the US (lower elsewhere) and the rate of switching to smartphones in the US is accelerating. It's currently about 583,000 per week, up from a 41 week average of 572,000.

there was a peak in early 2012 as well of people buying smartphones

 

point is there are less new potential customers in the US than current owners. A LOT less since not everyone without a smartphone will buy one. and most of them will go low end

post #15 of 59
post #16 of 59
Quote:
Originally Posted by PBRSTREETG View Post

I don't see the point of a low cost iPhone; I wouldn't want to have a customer that can't afford products and services.

I would buy a  $300-ish iphone for my 12,14 yr old kids. It's important for me to be off contract. No way in hell am I giving them a $600 phone each. As far as apple is concerned, that's 2 more numbers in their system, buying occasional music and apps. As presents (xmas/bday) my kids mostly ask for music, I'd say they spend a couple hundred bucks each a year on music. Then there's the ripple effect, next they want iPads and iMacs etc.

This is a huge market potential for Apple IMO. 

post #17 of 59

i read it, but every device sold in the past disagrees with his assessment

 

phase 1 is the early adopters willing to spend $$$. high profits

 

phase 2 is the mass market. lots of money but lowered margins.

 

phase 3 is past the 50% market saturation. the last to adopt almost always goes for the cheapest option. partly because the cheapest option by this time is more than good enough for most customers. and any smart company will have identified the high profit buyers by this time and found ways to sell to them. see how AT&T and other carriers are offering programs to upgrade every year or twice a year.

post #18 of 59
Quote:
Originally Posted by PBRSTREETG View Post

I don't see the point of a low cost iPhone; I wouldn't want to have a customer that can't afford products and services.

What with the $1000 apps

I wanted dsadsa bit it was taken.
Reply
I wanted dsadsa bit it was taken.
Reply
post #19 of 59
Quote:
Originally Posted by jungmark View Post


How to differentiate between these new models? Wait the mid range will use last year's components, the low end will use two year old components and the high end will use current components.

Also the 5 is still #1.

You guys crack me up. You invent strawmen to argue against. A cheaper phone doesnt have to have last years or the year before's cpu - it could just have a cheaper, lower clocked CPU, a cheaper GPU, etc. Like in the PC world. 

I wanted dsadsa bit it was taken.
Reply
I wanted dsadsa bit it was taken.
Reply
post #20 of 59
Quote:
Originally Posted by Cintos View Post

One important detail in the older iPhone discussion is that they run the latest iOS6, although th H/W is missing for some features.

 

Even if they only ran iOS5 I doubt it would change the sales results much. The average consumer [unfortunately] just doesn't think to that level of detail before plopping down their money.
post #21 of 59

Well even if they launch their new iPhone this fall I still think that Apple will do great in sales no matter what.

iTunes Radio - Apple TV with Wifi AC - Gold Anodized Aluminum iPhone - Mac Pro: September - November 2013

 

Reply

iTunes Radio - Apple TV with Wifi AC - Gold Anodized Aluminum iPhone - Mac Pro: September - November 2013

 

Reply
post #22 of 59
Quote:
Originally Posted by Wiggin View Post

 

Even if they only ran iOS5 I doubt it would change the sales results much. The average consumer [unfortunately] just doesn't think to that level of detail before plopping down their money.

I dunno, releasing a new product with software ~2 versions behind current is not a good idea IMO. My kids have a couple of older iPod Touches and are keenly aware of the issues with some apps not working on older software versions. Besides apple is so "fragmentation" conscious I doubt they will want to release a new product that may sell very well and pull down their ios6/7 adoption rate stats. Release with latest software and cheaper hardware/casing with maybe lower margin and get those people into the apple ecosystem, eventually they will upsell them to the higher margin products once they're hooked. This is addiction 101.

post #23 of 59

Don't they already have a range of products?

 

High - iPhone 5 - $199+

Mid - iPhone 4S - $99

Low - iPhone 4 - $.99

 

I know that is with contract but my assumption is that most people, at least in the US, get them on contract.  They can always keep the iPhone 4 to sell off contract overseas for budget minded people.  Why make an inferior model to appease analysts?

post #24 of 59
My thoughts on the reason for a "new low cost iPhone" is to retire the 4S this year, so there will be no new sales of 3.5 in phones.
post #25 of 59
Quote:
Originally Posted by dwarren View Post

My thoughts on the reason for a "new low cost iPhone" is to retire the 4S this year, so there will be no new sales of 3.5 in phones.

They're retiring the 4S this year regardless of the existence of a crap iPhone.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #26 of 59
Quote:
Originally Posted by Timbit View Post

I think the entire phone market is saturated. Now that everyone has one, phone sales will slow. It's the same in most electronic markets. People hold onto them for a few years (or longer in the case of tvs) so sales are generally slower.

Yes... everyone has some sort of phone now... but they will have to replace it eventually.

A person might keep a phone for 2 or 3 years... but people buy phones every day.

There will always be a HUGE market for phones.
post #27 of 59
Quote:
Originally Posted by icoco3 View Post

Don't they already have a range of products?

 

High - iPhone 5 - $199+

Mid - iPhone 4S - $99

Low - iPhone 4 - $.99

 

I know that is with contract but my assumption is that most people, at least in the US, get them on contract.  They can always keep the iPhone 4 to sell off contract overseas for budget minded people.  Why make an inferior model to appease analysts?

It doesn't have to be inferior, just cheaper. I'm not an analyst and I want 2.  It needs to be able to run ios7 and perhaps have similar hardware specs to an IP4S with perhaps a cool design but cheaper housing. That way they can have..

High: IP5S/IP6 

Mid: IP5

Low: IPCheap (new)

 

 

and move a significant bunch of folks up to fully featured IOS7. Time to retire the 4S/4 line.

post #28 of 59
Quote:
Originally Posted by patpatpat View Post

It doesn't have to be inferior, just cheaper. I'm not an analyst and I want 2.  It needs to be able to run ios7 and perhaps have similar hardware specs to an IP4S with perhaps a cool design but cheaper housing. That way they can have..

High: IP5S/IP6 
Mid: IP5
Low: IPCheap (new)

and move a significant bunch of folks up to fully featured IOS7. Time to retire the 4S/4 line.

So what happens next year?

The way Apple has done it before was to design one phone per year and cycle it down the line each year.

But if Apple introduces a brand new phone in the "cheap" spot... what will they do next year?
post #29 of 59
Quote:
Originally Posted by Michael Scrip View Post


So what happens next year?

The way Apple has done it before was to design one phone per year and cycle it down the line each year.

But if Apple introduces a brand new phone in the "cheap" spot... what will they do next year?

I guess we'll find out next year. I'm sure Apple have spent a lot more time than I have, thinking about this.

post #30 of 59
Quote:
Originally Posted by patpatpat View Post

I guess we'll find out next year. I'm sure Apple have spent a lot more time than I have, thinking about this.

So wait... you were able to make a guess in your first comment.... but now you're all out of ideas?

1wink.gif
post #31 of 59
Quote:
Originally Posted by Michael Scrip View Post


So wait... you were able to make a guess in your first comment.... but now you're all out of ideas?

1wink.gif

I'm saying what I want now/this year. I'm a consumer not an investor, so I don't really care what Apple decides to do next year. I would like to be able to get 2 of the new budget iPhones for my kids this September to solve my immediate problem and not have to even think about it again for another 2 years. I don't want an on-contract cheap IP4 or IP4S that doesn't support all the features of IOS7 and have my kids bitching about having old phones for the next 2 years.

post #32 of 59
Quote:
Originally Posted by patpatpat View Post

I'm saying what I want now/this year. I'm a consumer not an investor, so I don't really care what Apple decides to do next year. I would like to be able to get 2 of the new budget iPhones for my kids this September to solve my immediate problem and not have to even think about it again for another 2 years. I don't want an on-contract cheap IP4 or IP4S that doesn't support all the features of IOS7 and have my kids bitching about having old phones for the next 2 years.

I was just kidding around with ya 1biggrin.gif
post #33 of 59
Quote:
Originally Posted by Michael Scrip View Post


So what happens next year?

The way Apple has done it before was to design one phone per year and cycle it down the line each year.

But if Apple introduces a brand new phone in the "cheap" spot... what will they do next year?

A radical proposal. They update the diffrrent models each year, or 18 months or whatever is needed. And they can add a cheaper model. 

I wanted dsadsa bit it was taken.
Reply
I wanted dsadsa bit it was taken.
Reply
post #34 of 59
Quote:
Originally Posted by Michael Scrip View Post


I was just kidding around with ya 1biggrin.gif

I saw the smiley in your comment so I got that :-)  Seriously whatever apple are doing can't come soon enough. I get an earful every day from the kids.

post #35 of 59
Quote:
Originally Posted by asdasd View Post

A radical proposal. They update the diffrrent models each year, or 18 months or whatever is needed. And they can add a cheaper model. 

Nice!
post #36 of 59

Personally I'm going to skip the smart watch I think it's will just be a trade off of usability but still be a sizeable chunk of hand furniture. But if they made a smart ring... now I'm interested. Imaging the convenience, at the end of a restaurant meal while I'm picking my teeth I could be simultaneously paying the bill. While combing my hair I could be remotely opening the garage door and have the car waiting with the engine already warmed. I love the future, it can't come fast enough for me.

post #37 of 59
Quote:
Originally Posted by TeaEarleGreyHot View Post

 

Huh?  What wearable technology trend?  I see NO one wearing tech, aside from iPods and standard wristwatches.  Lovely that the analysts are now forecasting on phantom trends.

 

Google Glass, you say?  Right... it's the next Segway scooter.  Both users love 'em.

No one is wearing tech?

 

I'm not agreeing that the analyst forecasts are accurate (they aren't intended to be). But to say there is no wearable tech market outside of iPods and wristwatches is to wear rather large blinders.

post #38 of 59

Never mind how it looks, I'm way more curious as to what's inside of this cheaper iPhone. Will it always be updated to use last gen chipset, or a separate line of lower performance, cheaper chips (seem unlikely)? Will it be 8GB only, is it more like an ipod touch with phone features, fixed sim card, like the recent video of the buttonless low cost iphone seem unreasonable. Will it be cheaper because the design is easier to assemble?

 

Wasn't there some component shortage rumor recently about touch screen coating affecting 5s production or whatever? Obviously if there were any shortage, the available components will go first to the flagship line up. I recall reading rumors of a low cost iphone way back in the iphone 4 days, possibly as early as 2010. I get the feeling we are just going to hear about it.

post #39 of 59
Quote:
Originally Posted by AnalogJack View Post

Personally I'm going to skip the smart watch I think it's will just be a trade off of usability but still be a sizeable chunk of hand furniture. But if they made a smart ring... now I'm interested. Imaging the convenience, at the end of a restaurant meal while I'm picking my teeth I could be simultaneously paying the bill. While combing my hair I could be remotely opening the garage door and have the car waiting with the engine already warmed. I love the future, it can't come fast enough for me.

Or you might accidentally pay someone's bill while trying to pick your nose.

post #40 of 59
Quote:
Originally Posted by asdasd View Post

A radical proposal. They update the diffrrent models each year, or 18 months or whatever is needed. And they can add a cheaper model. 

And a larger screen.

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPhone
  • Smartphone upgrades slowing as Apple is rumored to be prepping low-cost iPhone
AppleInsider › Forums › Mobile › iPhone › Smartphone upgrades slowing as Apple is rumored to be prepping low-cost iPhone