It's déjà vu all over again. This is exactly the same refrain the "analysts" sang about how Apple had to get into netbooks: they are the future of computing, Apple can't leave all that money lying on the table, netbooks will be especially big in developing countries/emerging markets, Apple will definitely release a netbook any day now. This despite every indication from Apple to the contrary. I think most of them has simply done a search and replace in their netbook analysis and republished it as a cheap iPhone analysis.
People can always ship these phones around the world. There is no way they can be geographically restricted.
Last time I checked Apple's website a year ago, about half the carriers around the world that sell the iPhone, sell it locked to themselves. (It's not just AT&T that does that.)
So a lower priced phone could be restricted by carrier, if Apple wanted.
Of course, there's almost always a jailbreak and unlock path.
I know this has been covered already, but why would you sell a lower margin product that would erode your higher margin product? If given the chose most would buy the cheaper over the more expensive as most see a phone as a phone.
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
I know this has been covered already, but why would you sell a lower margin product that would erode your higher margin product? If given the chose most would buy the cheaper over the more expensive as most see a phone as a phone.
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
There is a way to get around this and make an iPhone that is $600.00 cheaper than the current one, but it's unlikely to happen.
If Apple could do what everyone said they would do in 2007 and actually do something about the stranglehold the carriers have on the customers, then they could put a phone app in the iPads as well as in the iPhones.
Then a lot of folks who don't actually need a f*cking smartphone at all can just use their iPads and thereby save the entire cost of an iPhone by not getting one in the first place.
Boom. Disruption.
Of course it's unlikely because it means that Apple would have to fight for consumers interests in an area where doing so won't actually make them any more money so they probably won't despite all the high and mighty talk about customers first.
For sure there's a market, but Apple won't go there until there's a profit.
Profit is the second consideration. First is if they can make an item of quality. Apple isn't going to chase a price point with plastic casings, a nasty quality screen and a crappy battery. If that's what it takes to enter this cheap market they will stay out. Something they have publicly said and something the analysts just don't get.
Personally I wish Munster, Wu, White etc would be fired already
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
Seriously? It's not "free"...it's subsidized through higher plan pricing. The rest of the world (yes, I'm in the U.S.) might disagree that because they purchase(d) their iPhone unsubsidized that they are not 'Apple's normal customer base.'
I pay full price for my phones and I use them on any carrier I choose and sell them anytime I want. I want a 2 year contract with AT&T like I want another hole in my head. I own my cars, I owe nothing on credit cards.
The iPhone 4S is available free or for less than a $100 with contract. So I am not sure why they would even feel the need for lower quality phone.
Because its $450 without contract so it doesn't work as well for prepaid focused markets.
This iPhone cheap would $200 no contract, unlocked. Perfect for prepaid.
I say IF Apple ever did this it wouldn't be full featured. Voice, text and limited Internet like email and safari only. No FaceTime, no App Store. It would be designed as the 'jitterbug' model of the lineup.
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.
How does Apple "abandon" a market (for cheap phones) it is not in?
Apple don't care too much about self cannibalisation. They probably do care about market share. Everybody who buys the cheap iPhone is a future customer for the expensive one, and a present customer for the App Store and iTunes. Which will lock them in.
as for cannibalisation. The market for top end iPhones stays the same - high end consumers in rich countries on contract. The market for the lower end iPhone is off contract purchasers in poorer countries. Hard to see where significant cannibalisation would come from.
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.
Interesting take. Concentrate on producing a reinvention of the feature phone instead of producing a cheaper smart phone. After all, even today that is still what the vast majority of the world uses. Perhaps even the iPod OS could be modified to work on such a phone or at least something similar, call it the iPhone Nano. Americans have a bad impression of feature or dumb phones because we really never saw any that were very capable of much at all. Japan still sell some pretty impressive feature phones which may be one reason that countries like the U.K. and Korea have far larger smart phone penetration with far smaller populations. They have very nice CCD cameras, are water and shatter proof, you can watch TV, and many other tasks usually only found on smart phones.
I don't know if Apple would want to go this route either for the fact that app store is a big revenue generator for them so I think they would want at least some revenue stream from a cheaper phone after it is in the customer's hands. I also see even these types of phones with the potential for disruptions by the very reasons you listed. More and more people are gravitating towards the iPad/Mini line and are resentful at those $100 a month phone bils. Phone bills like cable TV is also continually getting more expensive rapidly. Eventually people when given the choice between paying the mortgage and electricity over a cellphone bill will choose their mortgage. Some families are already paying $300 or more a month for phone service, Now wouldn't that be interesting, a counter-revolution to return to a reinvented feature phone due to carrier greed where people go no contract and shop for cheap service.
Apple will always be faced with the cannibalism question when considering introducing a new product with a lower margin into an existing category. The deciding factor will always be if they fail to introduce such a product will other companies steal enough of those customers to make it worth their while. The other question is whether many of these potential customers would have never bought into the existing product line and you are expanding your base. Thanks for your comments as it was an interesting hypothesis.
I still think a 3.5" plastic iPhone in multiple colors with a lightning connector makes the most sense and is the most likely. These phones would not need a case and would be great advertising since they would be so easily recognizable. They would be like the Camry or Corolla are to Toyota in the hopes that one day the customer switches to a Lexus.Then keep the current iPhone at 4" and hopefully offer a larger version of around 4.7" to 5.0" with a base price of $299 with contract subsidy. That would allow them to offer a $99/$199/$299 clean differentiation in price as well as screen size to avoid confusion.
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; } I heard that Apple is going to debut a low-cost iTunes store.
Albums are 30% cheaper, but you only get 70% of the tracks.
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; } I heard that Apple is going to debut a low-cost iTunes store.
Albums are 30% cheaper, but you only get 70% of the tracks.
I am confident that This Will Happen!
Don't you just love all the sarcasm on Appleinsider. Nothing like sarcasm to try and end good discussions.
I still don't get the plastic iPhone argument, how much more expensive to make is the aluminum case anyway, $200 more? Using their unibody process I think it's more like $20. And as they've done with iPods, they can be multi-colored even in aluminum. I don't think Apple is going to go back to plastic and it has nothing to do with it not looking cheap - they have after all used plastic before and it didn't look cheap. But the only thing going back to plastic now is going to accomplish is make the phone bulkier and/or reduce space for internal components. That's a big price to pay just to shave a few bucks off the manufacturing cost. And that's leaving aside the issue of the decreased durability and sturdiness of plastic. And it isn't going to significantly reduce the weight over aluminum either.
Quote:
Originally Posted by gwmac
I still think a 3.5" plastic iPhone in multiple colors with a lightning connector makes the most sense and is the most likely. These phones would not need a case and would be great advertising since they would be so easily recognizable. They would be like the Camry or Corolla are to Toyota in the hopes that one day the customer switches to a Lexus.Then keep the current iPhone at 4" and hopefully offer a larger version of around 4.7" to 5.0" with a base price of $299 with contract subsidy. That would allow them to offer a $99/$199/$299 clean differentiation in price as well as screen size to avoid confusion.
I still don't get the plastic iPhone argument, how much more expensive to make is the aluminum case anyway, $200 more? Using their unibody process I think it's more like $20. And as they've done with iPods, they can be multi-colored even in aluminum. I don't think Apple is going to go back to plastic and it has nothing to do with it not looking cheap - they have after all used plastic before and it didn't look cheap. But the only thing going back to plastic now is going to accomplish is make the phone bulkier and/or reduce space for internal components. That's a big price to pay just to shave a few bucks off the manufacturing cost. And that's leaving aside the issue of the decreased durability and sturdiness of plastic. And it isn't going to significantly reduce the weight over aluminum either.
I hear what you are saying but offering plastic is more than just about cost. It also clearly differentiates the lines. I disagree with the decreased durability and sturdiness of plastic though. I think the the 3GS is probably more sturdy and durable than the 4. I also fail to see how using plastic necessarily reduce space inside the phone either. It might make it slightly more bulky on the outside but people expect compromises when paying significantly lower prices. But I think the main reason to avoid aluminium is clear product separation although multi-colored aluminium or other metal would also offer that as well.
Comments
Quote:
Originally Posted by Buzzz
The iPhone 4S is available free or for less than a $100 with contract. So I am not sure why they would even feel the need for lower quality phone.
Where can you get an unsubsidized 4S for free or $99? I believe a unlocked 4S starts at $450.
Or not ... http://ben-evans.com/benedictevans/2013/2/15/the-cheap-apple-phone-problem
http://www.virginmobile.ca/en/phones/phones-summary.html?dType=deviceType_smartphone
It's déjà vu all over again. This is exactly the same refrain the "analysts" sang about how Apple had to get into netbooks: they are the future of computing, Apple can't leave all that money lying on the table, netbooks will be especially big in developing countries/emerging markets, Apple will definitely release a netbook any day now. This despite every indication from Apple to the contrary. I think most of them has simply done a search and replace in their netbook analysis and republished it as a cheap iPhone analysis.
Quote:
Originally Posted by peter236
People can always ship these phones around the world. There is no way they can be geographically restricted.
Last time I checked Apple's website a year ago, about half the carriers around the world that sell the iPhone, sell it locked to themselves. (It's not just AT&T that does that.)
So a lower priced phone could be restricted by carrier, if Apple wanted.
Of course, there's almost always a jailbreak and unlock path.
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
Quote:
Originally Posted by Richard Getz
I know this has been covered already, but why would you sell a lower margin product that would erode your higher margin product? If given the chose most would buy the cheaper over the more expensive as most see a phone as a phone.
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
There is a way to get around this and make an iPhone that is $600.00 cheaper than the current one, but it's unlikely to happen.
If Apple could do what everyone said they would do in 2007 and actually do something about the stranglehold the carriers have on the customers, then they could put a phone app in the iPads as well as in the iPhones.
Then a lot of folks who don't actually need a f*cking smartphone at all can just use their iPads and thereby save the entire cost of an iPhone by not getting one in the first place.
Boom. Disruption.
Of course it's unlikely because it means that Apple would have to fight for consumers interests in an area where doing so won't actually make them any more money so they probably won't despite all the high and mighty talk about customers first.
Quote:
Originally Posted by DESuserIGN
For sure there's a market, but Apple won't go there until there's a profit.
Profit is the second consideration. First is if they can make an item of quality. Apple isn't going to chase a price point with plastic casings, a nasty quality screen and a crappy battery. If that's what it takes to enter this cheap market they will stay out. Something they have publicly said and something the analysts just don't get.
Personally I wish Munster, Wu, White etc would be fired already
Quote:
And again, you can get an iPhone for FREE with contract so I don't see the need for cheaper than FREE. The only people not on a contract are not Apple's normal customer base in the first place.
Seriously? It's not "free"...it's subsidized through higher plan pricing. The rest of the world (yes, I'm in the U.S.) might disagree that because they purchase(d) their iPhone unsubsidized that they are not 'Apple's normal customer base.'
Take a look at this WSJ article:
http://online.wsj.com/article/SB10001424052970204653604577247471036145902.html
I pay full price for my phones and I use them on any carrier I choose and sell them anytime I want. I want a 2 year contract with AT&T like I want another hole in my head. I own my cars, I owe nothing on credit cards.
Quote:
Originally Posted by Buzzz
The iPhone 4S is available free or for less than a $100 with contract. So I am not sure why they would even feel the need for lower quality phone.
Because its $450 without contract so it doesn't work as well for prepaid focused markets.
This iPhone cheap would $200 no contract, unlocked. Perfect for prepaid.
I say IF Apple ever did this it wouldn't be full featured. Voice, text and limited Internet like email and safari only. No FaceTime, no App Store. It would be designed as the 'jitterbug' model of the lineup.
How does Apple "abandon" a market (for cheap phones) it is not in?
as for cannibalisation. The market for top end iPhones stays the same - high end consumers in rich countries on contract. The market for the lower end iPhone is off contract purchasers in poorer countries. Hard to see where significant cannibalisation would come from.
Quote:
Originally Posted by antkm1
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.
Interesting take. Concentrate on producing a reinvention of the feature phone instead of producing a cheaper smart phone. After all, even today that is still what the vast majority of the world uses. Perhaps even the iPod OS could be modified to work on such a phone or at least something similar, call it the iPhone Nano. Americans have a bad impression of feature or dumb phones because we really never saw any that were very capable of much at all. Japan still sell some pretty impressive feature phones which may be one reason that countries like the U.K. and Korea have far larger smart phone penetration with far smaller populations. They have very nice CCD cameras, are water and shatter proof, you can watch TV, and many other tasks usually only found on smart phones.
Here is one example.
http://mb.softbank.jp/en/products/sharp/002sh.html
I don't know if Apple would want to go this route either for the fact that app store is a big revenue generator for them so I think they would want at least some revenue stream from a cheaper phone after it is in the customer's hands. I also see even these types of phones with the potential for disruptions by the very reasons you listed. More and more people are gravitating towards the iPad/Mini line and are resentful at those $100 a month phone bils. Phone bills like cable TV is also continually getting more expensive rapidly. Eventually people when given the choice between paying the mortgage and electricity over a cellphone bill will choose their mortgage. Some families are already paying $300 or more a month for phone service, Now wouldn't that be interesting, a counter-revolution to return to a reinvented feature phone due to carrier greed where people go no contract and shop for cheap service.
Apple will always be faced with the cannibalism question when considering introducing a new product with a lower margin into an existing category. The deciding factor will always be if they fail to introduce such a product will other companies steal enough of those customers to make it worth their while. The other question is whether many of these potential customers would have never bought into the existing product line and you are expanding your base. Thanks for your comments as it was an interesting hypothesis.
I still think a 3.5" plastic iPhone in multiple colors with a lightning connector makes the most sense and is the most likely. These phones would not need a case and would be great advertising since they would be so easily recognizable. They would be like the Camry or Corolla are to Toyota in the hopes that one day the customer switches to a Lexus.Then keep the current iPhone at 4" and hopefully offer a larger version of around 4.7" to 5.0" with a base price of $299 with contract subsidy. That would allow them to offer a $99/$199/$299 clean differentiation in price as well as screen size to avoid confusion.
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }
I heard that Apple is going to debut a low-cost iTunes store.
Albums are 30% cheaper, but you only get 70% of the tracks.
I am confident that This Will Happen!
Quote:
Originally Posted by AppleZilla
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }
I heard that Apple is going to debut a low-cost iTunes store.
Albums are 30% cheaper, but you only get 70% of the tracks.
I am confident that This Will Happen!
Don't you just love all the sarcasm on Appleinsider. Nothing like sarcasm to try and end good discussions.
I still don't get the plastic iPhone argument, how much more expensive to make is the aluminum case anyway, $200 more? Using their unibody process I think it's more like $20. And as they've done with iPods, they can be multi-colored even in aluminum. I don't think Apple is going to go back to plastic and it has nothing to do with it not looking cheap - they have after all used plastic before and it didn't look cheap. But the only thing going back to plastic now is going to accomplish is make the phone bulkier and/or reduce space for internal components. That's a big price to pay just to shave a few bucks off the manufacturing cost. And that's leaving aside the issue of the decreased durability and sturdiness of plastic. And it isn't going to significantly reduce the weight over aluminum either.
Quote:
Originally Posted by gwmac
I still think a 3.5" plastic iPhone in multiple colors with a lightning connector makes the most sense and is the most likely. These phones would not need a case and would be great advertising since they would be so easily recognizable. They would be like the Camry or Corolla are to Toyota in the hopes that one day the customer switches to a Lexus.Then keep the current iPhone at 4" and hopefully offer a larger version of around 4.7" to 5.0" with a base price of $299 with contract subsidy. That would allow them to offer a $99/$199/$299 clean differentiation in price as well as screen size to avoid confusion.
Perhaps AppleZilla would offer to be the manager of the new low-cost iTunes store?
Quote:
Originally Posted by gwmac
Don't you just love all the sarcasm on Appleinsider. Nothing like sarcasm to try and end good discussions.
Quote:
Originally Posted by kForceZero
I still don't get the plastic iPhone argument, how much more expensive to make is the aluminum case anyway, $200 more? Using their unibody process I think it's more like $20. And as they've done with iPods, they can be multi-colored even in aluminum. I don't think Apple is going to go back to plastic and it has nothing to do with it not looking cheap - they have after all used plastic before and it didn't look cheap. But the only thing going back to plastic now is going to accomplish is make the phone bulkier and/or reduce space for internal components. That's a big price to pay just to shave a few bucks off the manufacturing cost. And that's leaving aside the issue of the decreased durability and sturdiness of plastic. And it isn't going to significantly reduce the weight over aluminum either.
I hear what you are saying but offering plastic is more than just about cost. It also clearly differentiates the lines. I disagree with the decreased durability and sturdiness of plastic though. I think the the 3GS is probably more sturdy and durable than the 4. I also fail to see how using plastic necessarily reduce space inside the phone either. It might make it slightly more bulky on the outside but people expect compromises when paying significantly lower prices. But I think the main reason to avoid aluminium is clear product separation although multi-colored aluminium or other metal would also offer that as well.
Quote:
Originally Posted by gwmac
Don't you just love all the sarcasm on Appleinsider. Nothing like sarcasm to try and end good discussions.
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }Yes, I love it. There is nothing I love better.
#next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; }