we don't see it, we focus on the usual, we will be surprised by "clever"
also apple has huge economies and are tops in design.
what is the high end price for a contract phone......IN CHINA
that's where they want to be as well as europe, india, also big on contract phones
they also have to have enough stuff inside to allow all to use the same os, that way won't be fragmented
3gs might work, but i think that item is too long in the tooth, so i feel it will be startlingly clever
how i don't know, but present nano with phone capabilities would be clever
there has to be ways to use an arm band--
apple wants to be "clever" that means to me, something truly untried
Cook reportedly said that Apple is planning "clever things" to compete in the prepaid handset market. He also stated that Apple is "not ceding any market." He also referenced China, where Apple has found great success of late, and noted that it is a "classic prepaid market."
I don't think it's that crazy to consider that Apple might release a lower-GM phone. There is the App store and iTunes that will continue to earn Apple money for a long time to come. Microsoft and Sony use this model in their video game devices; in fact, they actually lose money on each console they sell, and regain it (hopefully) in the sale of licenses for publishers to sell their games on the hardware. However, I've heard numbers that only 66% of people are using the App Store. I don't think Apple would accept a scenario where they sell the iPhone at a lose, and rely on 66% of customers to pay off the lose made by everyone. Seems like charity. But when things like NFC payments take off, this might become more plausible, as Apple might make a small fee for each transaction (like exists for ATM cards). But it's not like people don't already want the iPhone.
As for these numbers like $188 for the iPhone materials +$100 for other costs. This seems totally wild. I can't imagine a product having a 232% margin. The Macs have about a 20% margin, from what I have heard. I imagine the mark ups are more in mobile, but that much more? And wouldn't we be able to get some idea about the markup from quarterly Apples earnings information? I'm hoping someone can help balance this claim.
That's a consumer's ignorance if they can't discern quality and that quality comes at a price.
Absolutely, but a large part of the iPhone's price is the service, of which you only have one price available since in the USA both Verizon and ATT are about the same on plans (and it sounds like prepaid is preferred method in China). With ATT buying TMobile, that reduces options for carriers, assuming the iPhone would ever get there.
Android or whoever can go prepaid while Apple can't. And while Apple shouldn't be chasing market share, they shouldn't be forced to give up mindshare, or types of wallets available for that matter. Because some folks like prepaid, why not let them do it?
They can build a cheaper iPhone with the old resolution screen (which most or all apps still support) for a cheaper price point than the iPhone 4 or 5, and I think they should. Its necessary that they do for the prepaid market, which shouldn't be overlooked because there's money to be made, and why should Apple care about the carrier's bottom line if they can still profit?
I say a slightly modified 3GS should fit the bill nicely. I have one and it still works very well.
I think they are wrong about there not being a market for a smaller phone. I wouldn't be for me, but I think that Apple would sell a ton of iPhone Lites that didn't require a data plan. People would use them for phone calls, texting, photos, music, and possibly email (over WiFi). Sure, that would exclude a lot of apps, as well as Google Maps, but believe it or not, there are a lot of people out there that want an easy to use phone that isn't a computer.
I think they are wrong about there not being a market for a smaller phone. I wouldn't be for me, but I think that Apple would sell a ton of iPhone Lites that didn't require a data plan. People would use them for phone calls, texting, photos, music, and possibly email (over WiFi). Sure, that would exclude a lot of apps, as well as Google Maps, but believe it or not, there are a lot of people out there that want an easy to use phone that isn't a computer.
I have said this since the iPhone came out, but I think the carriers are the ones who won't ever let this happen. They already require data plans on certain models, and I am sure the iPhone Lite would be included.
Apple absolutely needs to move on this. The prepaid carriers are going to cut the legs out from under the high end market and even the profit margins of those cell providers presuming eternal $30 per month data plans. Virgin Mobile right now is offering the LG Optimus V for $199 OFF CONTRACT and the required plan is $25 a month for 300 anytime minutes and unlimited texting and data.
StraightTalk is offering the Nokia E71 with unlimited everything for $45 a month.
I don't think Apple should do something like lowering their GM because they'd be committing financial suicide.
Any penalising of Apple because of a slightly lower GM is gaming the market - the stock doesnt pay dividends. If the iPhones share of the market starts to decline rapidly ( which will happen as the next batch of smart phone customers are poorer) then the stock will collapse. The market accepts lower GM for market gains - Apple's is very high anyway.
- The iPod shuffle will go away (apple's not making app store money from it)
- The iPod classic will go away (apple's not making app store money from it)
- I bet we'll see "nano gadgets/apps" or something you buy for them.
I'm surprised the Macbook still exists. and it's not just the Pro's and Air.
You're just making crap up here. You know nothing about Apple or their motives, nothing about product design and nothing about the financials of the situation.
What the analyst is completely missing out on is that the market for the cheaper feature phones is made up mostly of people who (by definition), don't need a smartphone. They don't need the ability to run apps, or download movies or most of that stuff. That's why they are currently using a feature phone.
I still think it's do-able for Apple to make a feature phone with just a few standard, built in apps, no app store, and make it smaller (T9 instead of keyboard), and cheaper, (mass produced small memory requirements). It would be a re-imagining of the standard feature/flip phone though, not a dumbed down iPhone.
I just want a phone and iPod (not Touch) in one package so I don't need to carry two devices. I bet there are tens of millions of iPod (not Touch) owners out there who would buy this device in a heartbeat.
tell that to the iPod. where it can Apple tries to increase market share. Also Tim Cook said he wanted a cheap phone.
I don't need to tell that to the iPod because the iPod told me (as a shareholder): the iPod's GMs are very high.
It is worth pointing out that there have been hundreds if not thousands of PMP models from Apple's competitors that were competitively priced that found no traction.
Apple did not come to dominate the PMP market by cost competition. They did it by building a big box online music store and providing a high quality end user experience.
I would think they'll do something like they did with the iPod. Come out with lower price points but have a very interesting interface of them. So I can see and "iPhone" that is essentially an iPod nano which already has a touch screen, so this would not be a full blown iPhone, but it would do itunes and maybe facetime.
Also, what is happening with VOIP? Is it gaining on cell telephone calls? If so, and with Apple's new big data center, maybe the internet becomes the backbone of an Apple telephone system? So one doesn't even need a carrier contract, just a wifi connection. And then the iPod Touch becomes an iPhone....
My vision of the "lite" iPhone would look like this:
A4 processor
Non-retina 3.5" display (similar to the one used in the 3GS)
Front and rear cameras (similar to the ones used in the iT4, not the better ones in the iP4)
8GB flash
A-GPS
Lower-cost materials
Updated styling (thinner?)
Modestly improved battery life (compared to the 3GS)
Wi-fi and GSM 3G-only (no support for CDMA nor 4G)
Key points are the use of the A4 processor and non-retina display. The A4 processor, having been shipped in such large volumes, must be dirt cheap by now. The other reason for using the A4 is the power savings over the "A3" used in the 3GS. Using the old non-retina display will cut costs and also provide differentiation from the premium iPhone. In addition, all existing apps will work (no fragmentation issue).
Some other notes:
-the reason for having a front camera is to promote Facetime
-to cut costs, it will have a plastic back. However, I believe that Apple will have to update the styling, perhaps take some cues from the iP4 (think plastic unibody MacBook). The 3G/3GS looks really dated and cheap now - they can't continue to use this design
-lack of 4G is to cut costs and also for differentation
-lack of CDMA is due to the focus on prepaid markets - most of these users will be on GSM (I could be wrong on this, however)
You're just making crap up here. You know nothing about Apple or their motives, nothing about product design and nothing about the financials of the situation.
Why not just sell a completely unlocked version of the iPhone 3GS?
This way, people could buy it and use it with any prepaid GSM carrier they wish.
On top of this, if they wanted to go postpaid later, they could just sign up with AT&T and get a SIM card.
Hell, they should sell the iPhone 4 unlocked too. I've known of people who are more than willing to pay non-subsidy price for an iPhone 4 if it means not dealing with a contract and being able to go pre-paid. Hell, even I might consider it!
They already do this; in some markets, it is illegal to sell a carrier-locked handset.
However, the price of such an unlocked iPhone is typically $600-700. Apple certainly isn't giving up its margins.
You can buy an unsubsidized iPhone from an Apple Retail Store (US), they don't publicize it though. It's still carrier-locked to AT&T. You can jailbreak it to use on T-Mobile USA's network, but due to network standard differences, there is no 3G data if you use T-Mobile USA's network. You just get voice and 2.5G EDGE data.
International consumers are more used to buying unsubsidized handsets, and many of these work with different carriers' SIMs.
The problem isn't with Apple; it's based on the carrier/market when you purchase your handset.
I don't need to tell that to the iPod because the iPod told me (as a shareholder): the iPod's GMs are very high.
It is worth pointing out that there have been hundreds if not thousands of PMP models from Apple's competitors that were competitively priced that found no traction.
Apple did not come to dominate the PMP market by cost competition. They did it by building a big box online music store and providing a high quality end user experience.
We're all investors.
Apple, as the guy above you pointed out, sells an iPod Touch with an A4 processor for $230. Yet, they still maintain their high over all ASP, and iPod GMs because that model is underpowered and you pay a lot more for the incremental improvements in the higher models. And, clearly, people do. On the other hand the aspirational and the poor, can get an iPod Touch rather than a cheap substitute, because the entry model is cheap. Then there is the nano. Were it a few years ago, your argument against the iPod nano, were it rumoured, would be the same as the one you just made against a cheap iPhone: Apple does not do cheap. Clearly it does.
That iPod touch could be the basis for the new iPhone. If they can make a margin on it at $230 ( retail) then the thing to do is to put a phone radio in there, call it the iPhone Touch, and you're done. Or not. Thats the only question.
Why?, it is certain that Apple will release a cheaper model because Tim cook has already said they will. The only discussions are when, how, and how cheap.
Starting with the assumption that they make 30% off of the 8GB iPod Touch (which is reasonable, in my opinion) and iSuppli's teardown of the iPhone 4. I don't see where this would be a problem for Apple.
The 8GB iPod Touch sells for $230.
According to iSuppli the cellular parts and GPS cost about $27. At 30% margin and it should add about $40.
Thus, simply adding the cell parts to the iPod Touch and a $270 device would still make Apple 30% margin.
Now granted, this is ignoring some things such as the need for a slightly larger case to accommodate the cellular parts. However, this is also an opportunity for cost savings. Basically, I see little reason that Apple couldn't make a $300 iPhone lite and still make a 30% margin.
Comments
also apple has huge economies and are tops in design.
what is the high end price for a contract phone......IN CHINA
that's where they want to be as well as europe, india, also big on contract phones
they also have to have enough stuff inside to allow all to use the same os, that way won't be fragmented
3gs might work, but i think that item is too long in the tooth, so i feel it will be startlingly clever
how i don't know, but present nano with phone capabilities would be clever
there has to be ways to use an arm band--
apple wants to be "clever" that means to me, something truly untried
Cook reportedly said that Apple is planning "clever things" to compete in the prepaid handset market. He also stated that Apple is "not ceding any market." He also referenced China, where Apple has found great success of late, and noted that it is a "classic prepaid market."
As for these numbers like $188 for the iPhone materials +$100 for other costs. This seems totally wild. I can't imagine a product having a 232% margin. The Macs have about a 20% margin, from what I have heard. I imagine the mark ups are more in mobile, but that much more? And wouldn't we be able to get some idea about the markup from quarterly Apples earnings information? I'm hoping someone can help balance this claim.
That's a consumer's ignorance if they can't discern quality and that quality comes at a price.
Absolutely, but a large part of the iPhone's price is the service, of which you only have one price available since in the USA both Verizon and ATT are about the same on plans (and it sounds like prepaid is preferred method in China). With ATT buying TMobile, that reduces options for carriers, assuming the iPhone would ever get there.
Android or whoever can go prepaid while Apple can't. And while Apple shouldn't be chasing market share, they shouldn't be forced to give up mindshare, or types of wallets available for that matter. Because some folks like prepaid, why not let them do it?
They can build a cheaper iPhone with the old resolution screen (which most or all apps still support) for a cheaper price point than the iPhone 4 or 5, and I think they should. Its necessary that they do for the prepaid market, which shouldn't be overlooked because there's money to be made, and why should Apple care about the carrier's bottom line if they can still profit?
I say a slightly modified 3GS should fit the bill nicely. I have one and it still works very well.
I think they are wrong about there not being a market for a smaller phone. I wouldn't be for me, but I think that Apple would sell a ton of iPhone Lites that didn't require a data plan. People would use them for phone calls, texting, photos, music, and possibly email (over WiFi). Sure, that would exclude a lot of apps, as well as Google Maps, but believe it or not, there are a lot of people out there that want an easy to use phone that isn't a computer.
I have said this since the iPhone came out, but I think the carriers are the ones who won't ever let this happen. They already require data plans on certain models, and I am sure the iPhone Lite would be included.
StraightTalk is offering the Nokia E71 with unlimited everything for $45 a month.
Apple needs to make a move here.
16% GM = ain't gonna happen
Apple pursues profit, not market share. Companies like Acer pursue market share.
tell that to the iPod. where it can Apple tries to increase market share. Also Tim Cook said he wanted a cheap phone.
I don't think Apple should do something like lowering their GM because they'd be committing financial suicide.
Any penalising of Apple because of a slightly lower GM is gaming the market - the stock doesnt pay dividends. If the iPhones share of the market starts to decline rapidly ( which will happen as the next batch of smart phone customers are poorer) then the stock will collapse. The market accepts lower GM for market gains - Apple's is very high anyway.
...
Once drive space get's cheaper.
- The iPod shuffle will go away (apple's not making app store money from it)
- The iPod classic will go away (apple's not making app store money from it)
- I bet we'll see "nano gadgets/apps" or something you buy for them.
I'm surprised the Macbook still exists. and it's not just the Pro's and Air.
You're just making crap up here. You know nothing about Apple or their motives, nothing about product design and nothing about the financials of the situation.
Go to Nokia's website.. they have 22 models of phone!
Apple has 1. You can't buy the wrong one. They only sell their best phone.
Once drive space get's cheaper.
- The iPod shuffle will go away (apple's not making app store money from it)
- The iPod classic will go away (apple's not making app store money from it)
- I bet we'll see "nano gadgets/apps" or something you buy for them.
I'm surprised the Macbook still exists. and it's not just the Pro's and Air.
I think you are forgetting iTunes here - there are music sales aplenty to keep the above devices viable - now as for a cheap cellpone?
How about the ipod phone? a classic with a keypad... (not a qwerty, just numbers)
What the analyst is completely missing out on is that the market for the cheaper feature phones is made up mostly of people who (by definition), don't need a smartphone. They don't need the ability to run apps, or download movies or most of that stuff. That's why they are currently using a feature phone.
I still think it's do-able for Apple to make a feature phone with just a few standard, built in apps, no app store, and make it smaller (T9 instead of keyboard), and cheaper, (mass produced small memory requirements). It would be a re-imagining of the standard feature/flip phone though, not a dumbed down iPhone.
I just want a phone and iPod (not Touch) in one package so I don't need to carry two devices. I bet there are tens of millions of iPod (not Touch) owners out there who would buy this device in a heartbeat.
1 a Retina Display
2 two cameras
3 8GB RAM
4 A4 processor
for $230
Then they can make a 3G R (comes after S)
1 with the older display
2 one camera
3 4GB RAM
4 "A3" processor
for $300
tell that to the iPod. where it can Apple tries to increase market share. Also Tim Cook said he wanted a cheap phone.
I don't need to tell that to the iPod because the iPod told me (as a shareholder): the iPod's GMs are very high.
It is worth pointing out that there have been hundreds if not thousands of PMP models from Apple's competitors that were competitively priced that found no traction.
Apple did not come to dominate the PMP market by cost competition. They did it by building a big box online music store and providing a high quality end user experience.
Also, what is happening with VOIP? Is it gaining on cell telephone calls? If so, and with Apple's new big data center, maybe the internet becomes the backbone of an Apple telephone system? So one doesn't even need a carrier contract, just a wifi connection. And then the iPod Touch becomes an iPhone....
A4 processor
Non-retina 3.5" display (similar to the one used in the 3GS)
Front and rear cameras (similar to the ones used in the iT4, not the better ones in the iP4)
8GB flash
A-GPS
Lower-cost materials
Updated styling (thinner?)
Modestly improved battery life (compared to the 3GS)
Wi-fi and GSM 3G-only (no support for CDMA nor 4G)
Key points are the use of the A4 processor and non-retina display. The A4 processor, having been shipped in such large volumes, must be dirt cheap by now. The other reason for using the A4 is the power savings over the "A3" used in the 3GS. Using the old non-retina display will cut costs and also provide differentiation from the premium iPhone. In addition, all existing apps will work (no fragmentation issue).
Some other notes:
-the reason for having a front camera is to promote Facetime
-to cut costs, it will have a plastic back. However, I believe that Apple will have to update the styling, perhaps take some cues from the iP4 (think plastic unibody MacBook). The 3G/3GS looks really dated and cheap now - they can't continue to use this design
-lack of 4G is to cut costs and also for differentation
-lack of CDMA is due to the focus on prepaid markets - most of these users will be on GSM (I could be wrong on this, however)
You're just making crap up here. You know nothing about Apple or their motives, nothing about product design and nothing about the financials of the situation.
Exactly!
Because I'm an analyst.
This way, people could buy it and use it with any prepaid GSM carrier they wish.
On top of this, if they wanted to go postpaid later, they could just sign up with AT&T and get a SIM card.
Hell, they should sell the iPhone 4 unlocked too. I've known of people who are more than willing to pay non-subsidy price for an iPhone 4 if it means not dealing with a contract and being able to go pre-paid. Hell, even I might consider it!
However, the price of such an unlocked iPhone is typically $600-700. Apple certainly isn't giving up its margins.
You can buy an unsubsidized iPhone from an Apple Retail Store (US), they don't publicize it though. It's still carrier-locked to AT&T. You can jailbreak it to use on T-Mobile USA's network, but due to network standard differences, there is no 3G data if you use T-Mobile USA's network. You just get voice and 2.5G EDGE data.
International consumers are more used to buying unsubsidized handsets, and many of these work with different carriers' SIMs.
The problem isn't with Apple; it's based on the carrier/market when you purchase your handset.
I don't need to tell that to the iPod because the iPod told me (as a shareholder): the iPod's GMs are very high.
It is worth pointing out that there have been hundreds if not thousands of PMP models from Apple's competitors that were competitively priced that found no traction.
Apple did not come to dominate the PMP market by cost competition. They did it by building a big box online music store and providing a high quality end user experience.
We're all investors.
Apple, as the guy above you pointed out, sells an iPod Touch with an A4 processor for $230. Yet, they still maintain their high over all ASP, and iPod GMs because that model is underpowered and you pay a lot more for the incremental improvements in the higher models. And, clearly, people do. On the other hand the aspirational and the poor, can get an iPod Touch rather than a cheap substitute, because the entry model is cheap. Then there is the nano. Were it a few years ago, your argument against the iPod nano, were it rumoured, would be the same as the one you just made against a cheap iPhone: Apple does not do cheap. Clearly it does.
That iPod touch could be the basis for the new iPhone. If they can make a margin on it at $230 ( retail) then the thing to do is to put a phone radio in there, call it the iPhone Touch, and you're done. Or not. Thats the only question.
Why?, it is certain that Apple will release a cheaper model because Tim cook has already said they will. The only discussions are when, how, and how cheap.
If Apple can make an iPod touch with:
1 a Retina Display
2 two cameras
3 8GB RAM
4 A4 processor
for $230
Then they can make a 3G R (comes after S)
1 with the older display
2 one camera
3 4GB RAM
4 "A3" processor
for $300
+++
Starting with the assumption that they make 30% off of the 8GB iPod Touch (which is reasonable, in my opinion) and iSuppli's teardown of the iPhone 4. I don't see where this would be a problem for Apple.
The 8GB iPod Touch sells for $230.
According to iSuppli the cellular parts and GPS cost about $27. At 30% margin and it should add about $40.
Thus, simply adding the cell parts to the iPod Touch and a $270 device would still make Apple 30% margin.
Now granted, this is ignoring some things such as the need for a slightly larger case to accommodate the cellular parts. However, this is also an opportunity for cost savings. Basically, I see little reason that Apple couldn't make a $300 iPhone lite and still make a 30% margin.