Although Apple is trying to find ways to help them finance the phones, how often do you take your company into markets that can't afford your product/service?
It is not their product but their business model the indians can't afford. If, as I suspect, the iPhone 4 costs under $100 to produce, they could easily compete on price with Samsung, while still making a lot of money on each handset.
Correct, data (and voice, which is insanely overpriced) plans. A friend of mine who is now in Germany pays something like $15 a month for his data (for an iPhone) which is about a factor of three less than the cheapest prepaid plan in the US. Notice that Apple is also getting a kickback on the data plan from the carrier.
Although Apple is trying to find ways to help them finance the phones, how often do you take your company into markets that can't afford your product/service?
Are you suggesting not one single Indian can afford a iPhone? With 1 billion people chances are that Apple can sell as many iPhones in India as they do in small countries.
It is not their product but their business model the indians can't afford. If, as I suspect, the iPhone 4 costs under $100 to produce, they could easily compete on price with Samsung, while still making a lot of money on each handset.
Who's Apple? If Apple has to finance the phone, then the Indians can't afford it. If the country is on nothing but prepaid plans, then maybe Apple should wait until they can afford higher end tech. I'm not trying to be rude, but afford what you can afford (unlike us Americans).
If they can't afford the phone's plan, how can they afford the phone? And if a carrier should not survive subsidizing, how would Apple?
The cost of a postpaid (sorry, I said prepaid before, we regret the error ) plan over two years in the US is at least $2K (since you cannot get an iPhone without a data plan), which is much more than the cost of the device. Your phone is then locked, so you cannot opt out. As for Apple, all they need to do is accept making half the money they are on each handset -- in a country like India they would make it up in volume, but they refuse to budge from their business model (I am overstating this slightly, since the root article does say that they are willing to discount some).
Are you suggesting not one single Indian can afford a iPhone? With 1 billion people chances are that Apple can sell as many iPhones in India as they do in small countries.
Actually, I don't know, but what I am seeing within this thread and thus commenting on. They have pre-paid as they cannot afford regular plans. Then I suggested what you quoted. If the first is true, then the second would be logical.
I'm sure there are plenty of Indians that can afford the phone and are buying it. But the conversation is towards the ones that can't afford a regular phone plan, much less the cost of the phone.
Who's Apple? If Apple has to finance the phone, then the Indians can't afford it. If the country is on nothing but prepaid plans, then maybe Apple should wait until they can afford higher end tech. I'm not trying to be rude, but afford what you can afford (unlike us Americans).
And Apple can't afford to let the competition get entrenched in such a huge market.
The cost of a postpaid (sorry, I said prepaid before, we regret the error ) plan over two years in the US is at least $2K (since you cannot get an iPhone without a data plan), which is much more than the cost of the device. Your phone is then locked, so you cannot opt out. As for Apple, all they need to do is accept making half the money they are on each handset -- in a country like India they would make it up in volume, but they refuse to budge from their business model (I am overstating this slightly, since the root article does say that they are willing to discount some).
You had me up until selling a product at half price and expecting to make up for it volume, but do a agree that if there is room in the margin then that could be a possibility. Although Apple looks to have chosen the financing option which would probably work out better.
I don't have to sound businessy, asI'm not trying to court any customers.On the contrary, Apple should be more selective in choosing potential customers and potential markets to go after. It is debatable if it is a good idea for Apple to listen to all of the analysts and talking heads, and to release a cheap phone, just because certain people are crying out for one and they like to throw around dumb catch words like "developing markets". Developing markets my ass. It sounds like bad business strategy.
Maybe Apple can do like some others do, and sell at cost or even below cost. I'm sure that they'll make it all up in volume. What's the end game here? To sell as many phones as possible to everybody in the world? If that's the case, then Apple's current strategy is not a good one. You have to practically give your shit away for free, if maximum penetration is the goal. And judging by how conservative Apple is, maximum penetration is probably a banned word at Apple HQ.
Wow, have you applied to be the CEO of Apple? Because they are obviously really in need of your expertise.
And Apple can't afford to let the competition get entrenched in such a huge market.
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
You had to up until selling a product at half price and expecting to make up for it volume, but do a agree that if there is room in the margin then that could be a possibility. Although Apple looks to have chosen the financing option which would probably work out better.
He didn't say a half priced phone, he meant cut the margin in half. So instead of a 40% margin make it 20%.
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
Actually, I don't quite understand this. Higher quality products warrant higher COST, but why should they warrant higher margins?
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
Do you really think that Macs are a big source of income for Apple, their bread and butter since 2007 is the iPhone.
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
Oh, and by the way, your premise is not correct. Apple is one of the top couple of vendors in the laptop business. Curiously, their machines are quite reasonably priced these days (a comparable laptop to macbook pro retina will set you back probably MORE money elsewhere).
It's $650 US, but the import tax to india has been killing it's pricing. They were building some facilities w/foxcon there I understand to get around the import tax..
Doesn't Samsung have to deal with the same problem, or do they have factories in India?
Excellent point. They don't have factories in India.
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
(2) That depends. Look at Apple's stock price. People keep talking about Apple's shrinking margins. Do you think that those margins will continue to shrink or will they grow if Apple keeps making things cheaper?
you mean 'selling' things cheaper.
They cost the same to make.
They cost more to distribute in india.
Yet in a pricing war they are dropping their price.
All in all, the company with the the higher net margin wins. Apple, starting with the largest gross margin, and assuming all costs are the same for both parties can make a little bit more if it discounts to the same price as Samsung.
Apple just has to make the net cost in India+shipping abroad doesn't make for a grey market vacuum. Assuming the required middlemen, this is unlikely. So, in all, Apple discounting to improve the perceived value (not to compete with the $50 crap phones, but to maintain the 'most valuable high end' phone), is a long term win for Apple.
RichL clearly doesn't understand that the market in India is fundamentally different than the U.S.. Foreign companies are not allowed to own stores or sell merchandise directly .... etc. etc.
If anyone doesn't understand the market, it's you.
Single-brand retailing has been allowed for a long time in India. You really should educate yourself a bit before spouting off.
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
Telling people to "take a hike" because they are poor doesn't sound businessy to me.
I disagree. It is very businessy to not only know who your customers are, but who they're not.
Apple has never tried to to be everything to everybody, and I see no particular reason for them to start to abandon that strategy in places like India or China. Leave it to the others.
Comments
Quote:
Originally Posted by dasanman69
They go prepaid because they can't afford a post paid plan. How can a carrier survive subsidizing such a uncertain customer base?
If they can't afford the phone's plan, how can they afford the phone? And if a carrier should not survive subsidizing, how would Apple?
Quote:
Originally Posted by Richard Getz
Although Apple is trying to find ways to help them finance the phones, how often do you take your company into markets that can't afford your product/service?
It is not their product but their business model the indians can't afford. If, as I suspect, the iPhone 4 costs under $100 to produce, they could easily compete on price with Samsung, while still making a lot of money on each handset.
Quote:
Originally Posted by igriv
Correct, data (and voice, which is insanely overpriced) plans. A friend of mine who is now in Germany pays something like $15 a month for his data (for an iPhone) which is about a factor of three less than the cheapest prepaid plan in the US. Notice that Apple is also getting a kickback on the data plan from the carrier.
Now I'm really feeling used : (
Are you suggesting not one single Indian can afford a iPhone? With 1 billion people chances are that Apple can sell as many iPhones in India as they do in small countries.
Quote:
Originally Posted by igriv
It is not their product but their business model the indians can't afford. If, as I suspect, the iPhone 4 costs under $100 to produce, they could easily compete on price with Samsung, while still making a lot of money on each handset.
Who's Apple? If Apple has to finance the phone, then the Indians can't afford it. If the country is on nothing but prepaid plans, then maybe Apple should wait until they can afford higher end tech. I'm not trying to be rude, but afford what you can afford (unlike us Americans).
Quote:
Originally Posted by Richard Getz
If they can't afford the phone's plan, how can they afford the phone? And if a carrier should not survive subsidizing, how would Apple?
The cost of a postpaid (sorry, I said prepaid before, we regret the error
Quote:
Originally Posted by dasanman69
Are you suggesting not one single Indian can afford a iPhone? With 1 billion people chances are that Apple can sell as many iPhones in India as they do in small countries.
Actually, I don't know, but what I am seeing within this thread and thus commenting on. They have pre-paid as they cannot afford regular plans. Then I suggested what you quoted. If the first is true, then the second would be logical.
I'm sure there are plenty of Indians that can afford the phone and are buying it. But the conversation is towards the ones that can't afford a regular phone plan, much less the cost of the phone.
And Apple can't afford to let the competition get entrenched in such a huge market.
Quote:
Originally Posted by igriv
The cost of a postpaid (sorry, I said prepaid before, we regret the error
You had me up until selling a product at half price and expecting to make up for it volume, but do a agree that if there is room in the margin then that could be a possibility. Although Apple looks to have chosen the financing option which would probably work out better.
Quote:
Originally Posted by dasanman69
And Apple can't afford to let the competition get entrenched in such a huge market.
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
He didn't say a half priced phone, he meant cut the margin in half. So instead of a 40% margin make it 20%.
Quote:
Originally Posted by Richard Getz
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
Actually, I don't quite understand this. Higher quality products warrant higher COST, but why should they warrant higher margins?
Quote:
Originally Posted by dasanman69
He didn't say a half priced phone, he meant cut the margin in half. So instead of a 40% margin make it 20%.
Yes, exactly (except in the case of apple, instead of 100% make it 50%).
Do you really think that Macs are a big source of income for Apple, their bread and butter since 2007 is the iPhone.
Quote:
Originally Posted by Richard Getz
Why do you suggest that? Apple sells far, far fewer PCs than anyone else and yet, they still make money. I don't think you understand their business model. Unlike all the PC companies that are either gone under, about to, or are struggling, or the phone manufacturers that have gone the same way, Apple continues to make money hand over fist. Apple is about high quality products that warrant larger margins. That's just who they are. It's in their DNA as they have stated.
Oh, and by the way, your premise is not correct. Apple is one of the top couple of vendors in the laptop business. Curiously, their machines are quite reasonably priced these days (a comparable laptop to macbook pro retina will set you back probably MORE money elsewhere).
Quote:
Originally Posted by igriv
Quote:
Originally Posted by Adrayven
It's $650 US, but the import tax to india has been killing it's pricing. They were building some facilities w/foxcon there I understand to get around the import tax..
Doesn't Samsung have to deal with the same problem, or do they have factories in India?
Excellent point. They don't have factories in India.
(See, I can be reasonable.....
Quote:
Originally Posted by Apple ][
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
(2) That depends. Look at Apple's stock price. People keep talking about Apple's shrinking margins. Do you think that those margins will continue to shrink or will they grow if Apple keeps making things cheaper?
you mean 'selling' things cheaper.
They cost the same to make.
They cost more to distribute in india.
Yet in a pricing war they are dropping their price.
All in all, the company with the the higher net margin wins. Apple, starting with the largest gross margin, and assuming all costs are the same for both parties can make a little bit more if it discounts to the same price as Samsung.
Apple just has to make the net cost in India+shipping abroad doesn't make for a grey market vacuum. Assuming the required middlemen, this is unlikely. So, in all, Apple discounting to improve the perceived value (not to compete with the $50 crap phones, but to maintain the 'most valuable high end' phone), is a long term win for Apple.
Quote:
Originally Posted by iObserve
RichL clearly doesn't understand that the market in India is fundamentally different than the U.S.. Foreign companies are not allowed to own stores or sell merchandise directly .... etc. etc.
If anyone doesn't understand the market, it's you.
Single-brand retailing has been allowed for a long time in India. You really should educate yourself a bit before spouting off.
Quote:
Originally Posted by SolipsismX
Quote:
Originally Posted by Apple ][
(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.
Telling people to "take a hike" because they are poor doesn't sound businessy to me.
I disagree. It is very businessy to not only know who your customers are, but who they're not.
Apple has never tried to to be everything to everybody, and I see no particular reason for them to start to abandon that strategy in places like India or China. Leave it to the others.