RBC: Apple would only launch low-cost iPhone if it had 'category-killer' experience



  • Reply 21 of 35
    blackbookblackbook Posts: 1,361member
    Originally Posted by lamewing View Post

    MANY MANY kids (for one example) whose parents cannot/will not set up an iPhone contract, but want to be able to run iOS devices, do text messaging (iMessage), social networking, etc. While you may not want it...there is a huge market for this. The iPad 3G doesn't fit the bill here because it is not pocketable.....

    They can do all those things on Wifi.

    Most non-techie people will still have a dumbphone and will be paying that phone bill plus a separate 3G bill for their iPod Touch 3G, which would negate most of the savings. I'm sure most teens that had a 3G Touch would rarely ever activate the 3G anyway because of the addition $20 a month the 3G would cost them.

    We're thinking and talking about 2 completely different demographics. You're talking about techies that know they can replace 99% of their phone functions with Google Voice, Skype, etc, and I'm talking about the average joe (and teen) that would probably still carry a phone around with them even if they had an iPod Touch 3G.

    That's why I say a low cost iPhone would probably have broader appeal because it makes more sense to people. You pay less for the phone and you have 1 bill in the mail for service.
  • Reply 22 of 35
    blackbookblackbook Posts: 1,361member
    Originally Posted by mbarriault View Post

    The 3GS is in a good spot to be pushed down a price spot. Keep the specs mostly the same (update where it can without impacting financially), update the casing to be more in line with modern iterations, and you're done. There's lots of people out there who don't need front-facing video or high-resolution camera or a Retina Display.

    There are rumors Apple is winding down 3GS production, but in general I agree that the 3GS would be a sufficient low cost iPhone. If they drop the price down to $299, freshened up the case as you said, and somehow made a CDMA version that would be an extremely popular phone on Virgin Mobile, MetroPCS, and Cricket.
  • Reply 23 of 35
    ngmapplengmapple Posts: 117member
    Like others have suggested we already have a lost-cost iPhone option. It's called buying the older model. In other words buying a 3GS when the 4 is out. If you consider the number of storage options and colors and networks Apple already has 12 SKU's plus the older models. 2 colors x 3 storage options x 2 networks. That's more than enough to manage.
  • Reply 24 of 35
    Apple does not do cheap. That is a one way ticket to the bottom. Dell anyone?...
  • Reply 25 of 35
    Originally Posted by lamewing View Post

    Agreed. With the introduction of an iPod Touch 3G and a low-cost iPhone for use on prepaid (and free with 2 year contract), Apple could lock up a larger section of the market. May folks get Android phones because they are $50 or less when they sign their contracts. This would allow Apple to take part of the low cost market. In addition, using an iPhone on as a GoPhone works well. I did it for two months (as an experiment), one month using only minutes/texting/wifi and the next month using only 3G data/wifi/Skype. Both months cost me $27.xx and worked flawlessly.

    The kicker would be release the iPod Touch 3G. Apple could slightly gimp it with no GPS (I hope not) and no ability to act as a wifi hotspo as well as continue to give it substandard cameras/displayt so as to separate it from the iPhone. This idea would bring in potential, future iPhone users without really cannibalizing the iPhone sales. Toyota has done this forever by getting kids interested in Toyota by first selling them Scions, later Toyotas and finally Lexus.

    I am part of a small minority who (contract is finished) is ready to drop my plan and switch back to a dumbphone and use an iPod Touch for my iOS needs. But IF Apple released a 3G enabled iPhone Touch I will buy that instead. I can use Skype on 3G & wifi, iMessage to iOS users and Google Voice free SMS to those non-iOS folks.

    I guess we will see.

    Would a lot of people pay $30 a month for data on a 3G iPod Touch?
  • Reply 26 of 35
    robin huberrobin huber Posts: 3,264member
    Originally Posted by twistedarts View Post

    Apple does not do cheap. That is a one way ticket to the bottom. Dell anyone?...

    Agree. Apple dominated the music player and high end smartphone business because the market was fairly new, there weren't that many choices, and no one had really got it right.

    The low end phone market is very mature. There are lots of choices. And many of these burners do their little job quite well. People don't buy these phones just because they are small. They get them because they are dirt cheap (free mostly).

    I agree with the premise of this article. Apple won't enter the low end market unless they can do something no one can, and do what they can do better. Unless and until some kind of revolutionary new technology emerges that can change everything in this market, Apple won't enter it. And even then they won't unless they can either patent it or corner the market on it. Why go to all that trouble only to have Google or HTC immediately copy and give it away?
  • Reply 27 of 35
    dlorddlord Posts: 3member
    I think we will see the 4 mostly as-is with two minor changes:

    1. It will be cheaper and available at a reasonable price off contact.

    2. combined CDMA/GSM radio/antenna.

    The 3GS no longer makes sense for one simple reason, China. China Telecom uses CDMA and their customers can do nothing with a GSM phone. But, a $350 CDMA/GSM world phone would sell so well it would be like printing money. You could activate such a phone on any network. Also, all the current accessories/cases don't require a redo.

    I think the iPhone 5 will be a quad-band world phone with an upgraded processor and slightly bigger screen. Basically, all the same goodness with a little newer/bigger sprinkled on top. This would be the dream phone for people looking to upgrade on-contract. The form factor will probably be different just to create a Toyota<Lexus or Nissan<Infiniti vibe.

    That is what I think will happen.
  • Reply 28 of 35
    cvaldes1831cvaldes1831 Posts: 1,832member
    Originally Posted by Michael Scrip View Post

    Would a lot of people pay $30 a month for data on a 3G iPod Touch?

    Probably not, but there could be a variety of plans, including one cheaper one.

    The entry level 3G data plan for the iPad is $15. I've bought it twice in the ten months I've owned an iPad.

    The primary demographic of iPod touch users is the younger 13-24 age group whereas iPhone owners are the very desirable 25-49 age group. There might be some opportunity in offering a cheaper plan, something in the ten dollar range.
  • Reply 29 of 35
    Originally Posted by dlord View Post

    The 3GS no longer makes sense for one simple reason, China. China Telecom uses CDMA and their customers can do nothing with a GSM phone.

    But no one uses China Telecom's mobile service. OK, OK, so they have 108 million subscribers (12% of the mobile market), but that's "no one" here.
  • Reply 30 of 35
    trumptmantrumptman Posts: 16,455member
    Apple could and should do this but they can't and won't for now due to the very entity they were battling when they started with the iPhone in the first place, the telecom providers.

    Apple has gone the way things ought to everywhere else in the world but it is clear they have conceded defeat to the U.S. telecom model of subsidized phones on radically overpriced plans.

    I have two sons that are 11 and 9 respectively. They each have an iPod touch and a prepaid cellphone. I've gotten them both a Google Voice number and when they are around wifi (home or friend's house) the iPod will ring and they can talk and text as much as they desire. When they are not around wifi, their Google Voice number rings their cellphone and they answer it if it is clearly someone they need to talk to about whereabouts, being picked up, etc.

    The prepaid phone costs $25 for 400 minutes worth of talk or text time and it is good for 4 months. They don't go anywhere near using it all up because they are often around wifi.

    Obviously this would work easily with an iPod with celluar chip and telephony type service.

    However it means the lay person could drop their $200+ cell bills for multiple smartphones and just use what they need instead of what they are scared into buying by cell providers.

    So what is the likelihood of that happening given how AT&T, Verizon and others operate.

    I'd say less than zero.
  • Reply 31 of 35
    asdasdasdasd Posts: 5,293member
    Originally Posted by twistedarts View Post

    Apple does not do cheap. That is a one way ticket to the bottom. Dell anyone?...

    The entry level iPad, iPod touch lines are cheap.
  • Reply 32 of 35
    sdw2001sdw2001 Posts: 17,036member
    Originally Posted by addicted44 View Post

    Apple has rarely released a product unless it has been a category killer. The times they have released a product which has not been a category killer they have failed (e.g. iPod Boombox?yeah, I know most don't even remember that travesty, and the original Apple TV).

    1. It was called the iPod Hi-Fi, not "boombox."

    2. The Apple TV was not and is not a disaster. It's a good example of Apple releasing and sticking to a product that is NOT a segment killer. It's niche product, and they even say as much.


    However, I don't know about this point of view.

    You just agreed with it! What do you mean you don't know?


    The fact is that the iPod Touch is indeed a category killer (this is evident from the complete absence of any competitors). Why wouldn't Apple be able to add a cellular chip to the iPod Touch and sell it for $120 more without contract (i.e. $350?). It would only extend the category defining aspect of the iPod Touch.

    They could sell iPod Touches the way they do iPads. WiFi only for a base price of $229, and with a 3G chip for an additional $119 ($129 for the iPad, but I think Apple could afford to reduce the markup by $10).

    The point is that Apple does not need a new product. They need an iPod Touch + 3G..

    They "need" that like they need a hole in the head. Your analysis is utterly flawed as well.
    • Why focus on the contract free price? This is not how they sell most of their hardware in this category.

    • Do you realize that price point cannabilizes the iPhone and vice versa?

    • This would not be a new market segment. It would be nearly the same as the iPhone, have the same screen size, etc.

    • Re #2...why would anyone buy an iPod Touch+3G for say, $200 when they can buy an iPhone 4 for the same price with contract?

    If Apple does this, it needs to be a truly new market segment. The iPhone starts at $200. So, you want me to pay maybe $150-200 for an "iPod Touch 3G." Brilliant. \
  • Reply 33 of 35
    ameldrum1ameldrum1 Posts: 252member
    Originally Posted by Curmudgeon View Post

    You wouldn't include the iPhone in that list? Apple completely redefined the smartphone with the release of the iPhone. After all the crap they took about daring to compete with Motorola, Nokia, etc., they stood the market on its ear.

    Yes they redefined the smartphone with the iPhone; no, it's not a category killer in the way the iPod or iPad have been. In fact not even close.
  • Reply 34 of 35
    jeffdmjeffdm Posts: 12,946member
    Originally Posted by ameldrum1 View Post

    Yes they redefined the smartphone with the iPhone; no, it's not a category killer in the way the iPod or iPad have been. In fact not even close.

    By that token, iPod might not have been a category killer. Even if it had 70% of the market in several markets, it had 25% of worldwide market share.
  • Reply 35 of 35
    Originally Posted by ameldrum1 View Post

    I'm not sure how many products Apple have launched in the last 35 years or so, but by my reckoning exactly 2 have been category killers. The iPod and the iPad. Each of these achieved more than 50% market share (quite a remarkable achievement).

    Apple popularized the graphical user interface. That's three. Otherwise you'd still be typing DOS or CPM commands.
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