I don't see the feature phone landscape as 'new' - it is ultra competitive, due to the low cost of entry, and demand by the consuming public. However, it's a spiral to commodity, and Apple doesn't do commodity.
I don't see a 'new customer base' existing in feature phones. it's just those that can't/won't/shouldn't jump the chasm to smart phones. There is no reward in capturing that market if the product that you sell to them doesn't have a hook to drive them to your core set of products. And a feature phone (one that is not smart), has very little stickiness (about the only thing would be the contact list) to the iOS marketplace. hardly a compelling motivation to stay within the ecosystem. Ergo no reward.
Therefore, a low cost feature phone would not have any impact on future profits (movement to the true iPhone space), and the cost of maintaining relevancy in the space would be the race to the bottom commodity war. ergo all risk.
It's a non starter argument. no reward (odds of migration to iOS vs other smart phones remains the same), all risk (to remain competitive, you have to spend money and/or lower margins to maintain share).
The feature phone, for Apple would be new. I did not mean that feature phones are new.
Really, you don't see a 'new customer base' for Apple in feature phones? If you can't see that, you're blind and I am unable to continue this conversation.
Yes, there will be a "hook". There will be an innovative feature that will differentiate it from other feature phones. I agree with you on that....no hook, no feature phone.
A feature phone is not an iPhone. The iPhone is Apps and the Internet. Without those, you might as well stay home. Apple gets into profitable markets. If anything, Apple may repackage the 4 with Al rather than glass.
Yes, there's a high probability that Apple will continue selling an older model (like iPhone 4/4s possibly tweaked) to bring down cost.
Not sure what the whole point is in saying a feature phone is not an iPhone. The first iPad was a computer without word processing, spreadsheet software, and many other computer-like features, so what?
...and many of you are forgetting that the cost of ownership (in most countries anyway) is much greater for smart phones due to higher cost data plans (for smart phones). Feature phones eat up much less data, thereby lowering the cost of ownership. A feature phone ensures the owner that data costs will be low...which isn't evident to consumers in an iPhone 4/4s/5/etc.
I can't stress this enough, I'm not saying that a feature phone is inevitable...it's just that so many here use dismissive repartee than relevant logic. Not all, but many. :-)
The feature phone, for Apple would be new. I did not mean that feature phones are new.
Really, you don't see a 'new customer base' for Apple in feature phones? If you can't see that, you're blind and I am unable to continue this conversation.
Yes, there will be a "hook". There will be an innovative feature that will differentiate it from other feature phones. I agree with you on that....no hook, no feature phone.
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Plastic is in many ways the ideal component to manufacture a handheld device.
-Cheap
-easy to manipulate and shape
-works with antennas
-does not scratch
-can be flexible and durable
-Light weight
the negatives are....it feels cheap.
The idea that a phone is cheap because it is made out of plastic is a odd one. considering the other popular materials have huge drawbacks, glass cracks and shatters, Aluminum scratches and scuffs easily (but much better then glass)
Yes, there's a high probability that Apple will continue selling an older model (like iPhone 4/4s possibly tweaked) to bring down cost.
Not sure what the whole point is in saying a feature phone is not an iPhone. The first iPad was a computer without word processing, spreadsheet software, and many other computer-like features, so what?
...and many of you are forgetting that the cost of ownership (in most countries anyway) is much greater for smart phones due to higher cost data plans (for smart phones). Feature phones eat up much less data, thereby lowering the cost of ownership. A feature phone ensures the owner that data costs will be low...which isn't evident to consumers in an iPhone 4/4s/5/etc.
I can't stress this enough, I'm not saying that a feature phone is inevitable...it's just that so many here use dismissive repartee than relevant logic. Not all, but many. :-)
The problem is you don't understand that iOS would have to be almost ( if not exactly) as powerful under the hood to run Videos, Music, Safari, Maps, et al. The underlying API (with some lower level additions) used by Apple internal devs is largely the same as external devs. So the OS has to be as powerful. Why would they then not have an iTunes store, or an App store?
If by feature phone you mean "cheaper iPhone running full ( or mostly full*) iOS" then thats a different argument.
* ( bearing in mind that they may exclude some items like Siri)
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Apple never says that. They say they try to produce the best product at whatever price points, not the best profit. The margins are something the "street" worries about, not the general Apple designer, or worker.
Okay so it's a 135B$ market? So how much PROFIT is available in that "market"? From the numbers seen so far not all that much given Apple's profit share: 20% of the overall smartphone market, 70% of the profits.....
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Poor logic... since one can target the most profit by expanding market share.
Your $200 margin is random. Why wouldn't $100 margin @ 200 million a year garner profit?
Apple never says that. They say they try to produce the best product at whatever price points, not the best profit. The margins are something the "street" worries about, not the general Apple designer, or worker.
If they don't want the "best profit", what don't they sell it for cost or low profit margins.
Poor logic... since one can target the most profit by expanding market share.
Your $200 margin is random. Why wouldn't $100 margin @ 200 million a year garner profit?
But the low end will eat away at the "flagship" iPhone. And if profit margins are too low, you won't grow. Say 2 people were considering the 5 but instead choose the low cost one. The margins on the 5 is 300; 100 for the low. Instead of earning 600 they get 200.
The problem is you don't understand that iOS would have to be almost ( if not exactly) as powerful under the hood to run Videos, Music, Safari, Maps, et al. The underlying API (with some lower level additions) used by Apple internal devs is largely the same as external devs. So the OS has to be as powerful. Why would they then not have an iTunes store, or an App store?
If by feature phone you mean "cheaper iPhone running full ( or mostly full*) iOS" then thats a different argument.
* ( bearing in mind that they may exclude some items like Siri)
Basically, I'm thinking that the OS would be similar to the iPod Nano, but with addition of email, camera, phone, text messaging...and of course, with a different form factor to accommodate a type of keyboard/keypad.
This is not an easy task by any means, especially to make it apple-esque... including a "hook" (as some have mentioned here), a high quality finish, and superior operability, etc.
But the low end will eat away at the "flagship" iPhone. And if profit margins are too low, you won't grow. Say 2 people were considering the 5 but instead choose the low cost one. The margins on the 5 is 300; 100 for the low. Instead of earning 600 they get 200.
There will be some cannibalization and yes, it is a real challenge for Apple and always has been.
By my surveying, of those considering a purchase of an iPhone 5....only 1 in 5 would CONSIDER buying a low end (feature phone) instead of the iPhone 5... and of those, 40% were doubtful, 40% were on the fence and 19% were most likely...1% filled out my questionnaire incorrectly.
Oh yah... and don't forget to add the hundreds of millions of people outside your Venn diagram who are not and will not consider the iPhone 5.
Absolutely untrue. Apple creates products that meet their criteria for innovation, quality and their standards for user experience. The profit part comes afterward.
Quote:
Originally Posted by jungmark
If they don't want the "best profit", what don't they sell it for cost or low profit margins.
There is something fundamentally missing in your thinking process. Either that, or you're explaining yourself poorly.
Absolutely untrue. Apple creates products that meet their criteria for innovation, quality and their standards for user experience. The profit part comes afterward.
There is something fundamentally missing in your thinking process. Either that, or you're explaining yourself poorly.
I am explaining it incorrectly. They make the best products with high margins for the most profit. Somehow a cheapie plastic is not going to deliver "best in class" or "high margins".
I am explaining it incorrectly. They make the best products with high margins for the most profit. Somehow a cheapie plastic is not going to deliver "best in class" or "high margins".
That's a different issue.
I coulda posted this on the Katy Huberty thread...in that article, Katy mentions that the iPhone 4 is doing so well, so she suggests an iPhone "mini" (a cheap smart phone). What?! In this case I wholeheartedly disagree with the iPhone mini concept....making a cheap iPhone look-alike would hurt Apple way more than help it, and would slowly be the demise of great Apple products.
So instead of a cheap/plasticky new iPhone (mini)...I'd rather Apple just keep the iPhone 4s in the mix when the iPhone 5s (and/or 6) comes out. It may be $150-$200 less than the iPhone 5s/6 which is attractive enough for most to consider, maintains good margins (even if it cannibalizes the newer models), and maintains the high quality of fit/finish/customer satisfaction.
I guess the only thing to consider here is whether Apple could do something to the iPhone 4s to bring COGS down even further (other than plastic or other things that the majority of people see as crap). I'm not saying plastic is always crap, just that the perception that a flimsy plasticky phone is crap.
I guess the only thing to consider here is whether Apple could do something to the iPhone 4s to bring COGS down even further (other than plastic or other things that the majority of people see as crap). I'm not saying plastic is always crap, just that the perception that a flimsy plasticky phone is crap.
Exactly. They have the 4/4s so they don't need to intro a new cheapie.
Comments
Quote:
Originally Posted by TheOtherGeoff
I don't see the feature phone landscape as 'new' - it is ultra competitive, due to the low cost of entry, and demand by the consuming public. However, it's a spiral to commodity, and Apple doesn't do commodity.
I don't see a 'new customer base' existing in feature phones. it's just those that can't/won't/shouldn't jump the chasm to smart phones. There is no reward in capturing that market if the product that you sell to them doesn't have a hook to drive them to your core set of products. And a feature phone (one that is not smart), has very little stickiness (about the only thing would be the contact list) to the iOS marketplace. hardly a compelling motivation to stay within the ecosystem. Ergo no reward.
Therefore, a low cost feature phone would not have any impact on future profits (movement to the true iPhone space), and the cost of maintaining relevancy in the space would be the race to the bottom commodity war. ergo all risk.
It's a non starter argument. no reward (odds of migration to iOS vs other smart phones remains the same), all risk (to remain competitive, you have to spend money and/or lower margins to maintain share).
The feature phone, for Apple would be new. I did not mean that feature phones are new.
Really, you don't see a 'new customer base' for Apple in feature phones? If you can't see that, you're blind and I am unable to continue this conversation.
Yes, there will be a "hook". There will be an innovative feature that will differentiate it from other feature phones. I agree with you on that....no hook, no feature phone.
Quote:
Originally Posted by jungmark
A feature phone is not an iPhone. The iPhone is Apps and the Internet. Without those, you might as well stay home. Apple gets into profitable markets. If anything, Apple may repackage the 4 with Al rather than glass.
Yes, there's a high probability that Apple will continue selling an older model (like iPhone 4/4s possibly tweaked) to bring down cost.
Not sure what the whole point is in saying a feature phone is not an iPhone. The first iPad was a computer without word processing, spreadsheet software, and many other computer-like features, so what?
...and many of you are forgetting that the cost of ownership (in most countries anyway) is much greater for smart phones due to higher cost data plans (for smart phones). Feature phones eat up much less data, thereby lowering the cost of ownership. A feature phone ensures the owner that data costs will be low...which isn't evident to consumers in an iPhone 4/4s/5/etc.
I can't stress this enough, I'm not saying that a feature phone is inevitable...it's just that so many here use dismissive repartee than relevant logic. Not all, but many. :-)
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Plastic is in many ways the ideal component to manufacture a handheld device.
-Cheap
-easy to manipulate and shape
-works with antennas
-does not scratch
-can be flexible and durable
-Light weight
the negatives are....it feels cheap.
The idea that a phone is cheap because it is made out of plastic is a odd one. considering the other popular materials have huge drawbacks, glass cracks and shatters, Aluminum scratches and scuffs easily (but much better then glass)
Quote:
Originally Posted by drewys808
Yes, there's a high probability that Apple will continue selling an older model (like iPhone 4/4s possibly tweaked) to bring down cost.
Not sure what the whole point is in saying a feature phone is not an iPhone. The first iPad was a computer without word processing, spreadsheet software, and many other computer-like features, so what?
...and many of you are forgetting that the cost of ownership (in most countries anyway) is much greater for smart phones due to higher cost data plans (for smart phones). Feature phones eat up much less data, thereby lowering the cost of ownership. A feature phone ensures the owner that data costs will be low...which isn't evident to consumers in an iPhone 4/4s/5/etc.
I can't stress this enough, I'm not saying that a feature phone is inevitable...it's just that so many here use dismissive repartee than relevant logic. Not all, but many. :-)
The problem is you don't understand that iOS would have to be almost ( if not exactly) as powerful under the hood to run Videos, Music, Safari, Maps, et al. The underlying API (with some lower level additions) used by Apple internal devs is largely the same as external devs. So the OS has to be as powerful. Why would they then not have an iTunes store, or an App store?
If by feature phone you mean "cheaper iPhone running full ( or mostly full*) iOS" then thats a different argument.
* ( bearing in mind that they may exclude some items like Siri)
Quote:
Originally Posted by jungmark
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Apple never says that. They say they try to produce the best product at whatever price points, not the best profit. The margins are something the "street" worries about, not the general Apple designer, or worker.
Okay so it's a 135B$ market? So how much PROFIT is available in that "market"? From the numbers seen so far not all that much given Apple's profit share: 20% of the overall smartphone market, 70% of the profits.....
Quote:
Originally Posted by jungmark
Apple creates product to garner the most profit. It doesn't create product to expand market share. Unless they get $200 margins for a "low-end" iPhone, it's not going to happen.
Poor logic... since one can target the most profit by expanding market share.
Your $200 margin is random. Why wouldn't $100 margin @ 200 million a year garner profit?
If they don't want the "best profit", what don't they sell it for cost or low profit margins.
But the low end will eat away at the "flagship" iPhone. And if profit margins are too low, you won't grow. Say 2 people were considering the 5 but instead choose the low cost one. The margins on the 5 is 300; 100 for the low. Instead of earning 600 they get 200.
Quote:
Originally Posted by asdasd
The problem is you don't understand that iOS would have to be almost ( if not exactly) as powerful under the hood to run Videos, Music, Safari, Maps, et al. The underlying API (with some lower level additions) used by Apple internal devs is largely the same as external devs. So the OS has to be as powerful. Why would they then not have an iTunes store, or an App store?
If by feature phone you mean "cheaper iPhone running full ( or mostly full*) iOS" then thats a different argument.
* ( bearing in mind that they may exclude some items like Siri)
Basically, I'm thinking that the OS would be similar to the iPod Nano, but with addition of email, camera, phone, text messaging...and of course, with a different form factor to accommodate a type of keyboard/keypad.
This is not an easy task by any means, especially to make it apple-esque... including a "hook" (as some have mentioned here), a high quality finish, and superior operability, etc.
Quote:
Originally Posted by jungmark
But the low end will eat away at the "flagship" iPhone. And if profit margins are too low, you won't grow. Say 2 people were considering the 5 but instead choose the low cost one. The margins on the 5 is 300; 100 for the low. Instead of earning 600 they get 200.
There will be some cannibalization and yes, it is a real challenge for Apple and always has been.
By my surveying, of those considering a purchase of an iPhone 5....only 1 in 5 would CONSIDER buying a low end (feature phone) instead of the iPhone 5... and of those, 40% were doubtful, 40% were on the fence and 19% were most likely...1% filled out my questionnaire incorrectly.
Oh yah... and don't forget to add the hundreds of millions of people outside your Venn diagram who are not and will not consider the iPhone 5.
Quote:
Originally Posted by jungmark
Apple creates product to garner the most profit.
Absolutely untrue. Apple creates products that meet their criteria for innovation, quality and their standards for user experience. The profit part comes afterward.
Quote:
Originally Posted by jungmark
If they don't want the "best profit", what don't they sell it for cost or low profit margins.
There is something fundamentally missing in your thinking process. Either that, or you're explaining yourself poorly.
I am explaining it incorrectly. They make the best products with high margins for the most profit. Somehow a cheapie plastic is not going to deliver "best in class" or "high margins".
Quote:
Originally Posted by jungmark
I am explaining it incorrectly. They make the best products with high margins for the most profit. Somehow a cheapie plastic is not going to deliver "best in class" or "high margins".
That's a different issue.
I coulda posted this on the Katy Huberty thread...in that article, Katy mentions that the iPhone 4 is doing so well, so she suggests an iPhone "mini" (a cheap smart phone). What?! In this case I wholeheartedly disagree with the iPhone mini concept....making a cheap iPhone look-alike would hurt Apple way more than help it, and would slowly be the demise of great Apple products.
So instead of a cheap/plasticky new iPhone (mini)...I'd rather Apple just keep the iPhone 4s in the mix when the iPhone 5s (and/or 6) comes out. It may be $150-$200 less than the iPhone 5s/6 which is attractive enough for most to consider, maintains good margins (even if it cannibalizes the newer models), and maintains the high quality of fit/finish/customer satisfaction.
I guess the only thing to consider here is whether Apple could do something to the iPhone 4s to bring COGS down even further (other than plastic or other things that the majority of people see as crap). I'm not saying plastic is always crap, just that the perception that a flimsy plasticky phone is crap.
Exactly. They have the 4/4s so they don't need to intro a new cheapie.