Can Apple afford to go cheaper with new iPhones?

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  • Reply 61 of 138
    jungmarkjungmark Posts: 6,718member
    flaneur wrote: »
    Glass is breakable was my point, and Apple can do plastic that is not cheap looking. Samsing does cheap looking, Apple does classy, like old Bakelite or celluloid. Their white polycarbonite laptops were beautiful in their way.

    Transparent Aluminum
  • Reply 62 of 138
    solipsismxsolipsismx Posts: 19,566member
    rogifan wrote: »
    Why can't Apple make a phone out of the 5th gen iPod touch? Why does a cheaper iPhone have to be plastic (and no I won't use the word polycarbonate just to make it sound better).

    I don't understand your query. What makes you think they don't have the ability? The iPod Touch comes from the iPhone R&D in most regards.
  • Reply 63 of 138
    gwmacgwmac Posts: 1,797member

    Quote:

    Originally Posted by Rogifan View Post



    Why can't Apple make a phone out of the 5th gen iPod touch? Why does a cheaper iPhone have to be plastic (and no I won't use the word polycarbonate just to make it sound better).


    No one is stopping them and I wrote about them doing exactly that with the next iPod touch on the 1st page of comments. With touch sales declining why not change the game and add 3G and even LTE to a slightly redone and updated Touch. Apple are also very capable of making an attractive and quality product whether it is made of plastic or some new type of ceramic or any other material. Amazing how they get anything done at all without the input of so many geniuses here that think they are the Oracles of Delphi when it comes to making predictions and to challenge them is blasphemy. (not directed at you by the way)

  • Reply 64 of 138
    MarvinMarvin Posts: 14,230moderator
    gwmac wrote: »
    Oh please. People post links here all the time. It is fine to post links to roughlydrafted or daring fireball and all the other sites but not to this website? He could have lied and said he read that article and pretended not to be the author but he was upfront and honest. No one was forced to click it and he made a lot more sense than many here and it tied in well with the topic at hand.

    All or some of the content of the article should be put into the forum post. A new poster who puts an article on their site and just says 'go to my website' is not participating in the discussion here and it's considered spamming. It's much worse when it's the poster's own site and it's the first and only thing they've posted.
  • Reply 65 of 138
    gwmacgwmac Posts: 1,797member

    Quote:

    Originally Posted by Marvin View Post





    All or some of the content of the article should be put into the forum post. A new poster who puts an article on their site and just says 'go to my website' is not participating in the discussion here and it's considered spamming. It's much worse when it's the poster's own site and it's the first and only thing they've posted.


    That's fine and I have no problems with a mod doing your job as you see fit according to the rules. But isn't that what the report button is for and not further hijacking the discussion by pointing it out? That is what bothered me, if you see a post that breaks the rules report it and move on with the discussion. 

  • Reply 66 of 138
    timmydaxtimmydax Posts: 284member
    They could make an iPod+Cellular, but they'd have to make several design decisions; these can be posed as a series of questions:

    1) Do they add the hardware most seem to ignore as well, ie. mic, top speaker, proximity sensor, does it even have a flash?

    2) How do they produce this and add a new direction or spin on it so it isn't meh?

    3) Do they keep the anodised metal back, or would this not provide good enough reception?

    4) Would replacing the Touch's casing with plastic maintain it's strong feel of quality?

    I would answer these as:

    1) they would probably have to, but this would clearly increase the price, and cannibalise some iPhone purchases if the perceived value is not differentiated enough (as it currently is). Apple has become less wary of cannibalisation of late due in part, I believe, to the almost equally valuable upsell.

    2) This is hotly-debated, but, completely pulling this out of my... hat, I'd suggest a software and revenue-sharing solution to this problem. Apple could use the new "Touch" to push a paid VOIP>Phone based service a la Skype with paid minutes, app-specific unlimited data (Talk, messages and FaceTime only probably) with a revenue-split on minutes with whatever carrier you choose (software-based sign up, no contract but registered to a person adding value for carrier partners). They could also do iMessage forwarding to text with a carrier deal for non-iOS devices (the carrier then benefits from iMessage users, texts have always been free to them) and no MMS (this has still not really taken off due to lack of carrier plans). They could have data plans of straight GB for $ with possible discounts for larger amounts, and all this could also work over WiFi, again to the benefit of the carrier (no bandwidth, still get a share of minutes). It might just work.

    3) & 4) This is a highly-technical issue in which it would be hard to make a guess at, but a plastic back would definitely be spun as a "downgrade" by pundits, even if it was hugely more practical from both end-use & cost perspectives. It's a hard one to guess at, especially considering Apple's varied history in these decisions (3G/S, iPod touch history)

    It could be done, but do all the pieces fit?
  • Reply 67 of 138


    "while also holding that lower margins would destroy the company's profitability."


     


    If you had 20% of dead mass in your body, it would probably kill you.


     


    So why is it that Wall St. demands that Apple keep posting these ridiculous margins?


     


    There's no upside here. If Apple's margins improve but marketshare slides, the stock will be punished. If the margins go down but they get more share, the stock will be punished.


     


    All the while Apple stocks up cash for no reason at all. If that money was spent on R&D - no, forget that - if 1/3rd of that money was spent on R&D instead of propping up analysis's balance sheets, Apple would be so far out in the lead on tech that… the stock would be punished.

  • Reply 68 of 138
    erannerann Posts: 38member
    As far as "cheap" is concerned, is e.g. BMW Mini Cooper or BMW 1 series or Audi A1 or Mercedes Benz A class cars cheap or low cost? Do you think that BMW, Audi or MB can afford those models?
  • Reply 69 of 138
    aegeanaegean Posts: 114member
    No.

  • Reply 70 of 138
    rogifanrogifan Posts: 10,669member
    solipsismx wrote: »
    I don't understand your query. What makes you think they don't have the ability? The iPod Touch comes from the iPhone R&D in most regards.
    I ask the question because I hardly ever hear anyone say they should turn the iPod touch into a low cost phone. I guess I don't get why everyone (or it seems like everyone) assumes a low cost iPhone would be a brand new product and would be plastic.
  • Reply 71 of 138
    robbyxrobbyx Posts: 479member

    Quote:

    Originally Posted by hmm View Post


     


     


    The US is not the only the important market, and these prices are US specific. Apple's sales are far more distributed than that. Subsidized purchases are not the norm in every country. Even here you have things like prepaid services such as straight talk and virgin with lower plan rates. The question for Apple would be if they are better off addressing these markets with one and 2 year old models starting at $450 and $550 off contract or by a variation in design. The overall final matrix of features and price points is up  to Apple, but this is about what is good for the company, just like any other decision.



     


    Fair enough.  But I still don't understand the product.  An unsubsidized iPhone 4 or 4S is less expensive than an unsubsidized iPhone 5 today.  So what people want, then, is a phone that is somehow based on the current model but costs 2/3 the price of the unsubsidized "flagship" model?  This new phone should be even cheaper than the two year old model that is still in production.  Am I getting this right?


     


    The only thing the "cheap" iPhone will be is...a cheap iPhone.  There's a reason these phones cost a lot of money unsubsidized.  They are incredible pieces of engineering.  They are computers and we don't expect our computers to cost $200.  We all know better.  We all know that a $200 computer is going to be a miserable, compromised experience.


     


    I used to think a large screen iPhone was a bad idea but I've come around on my thinking.  I do think a larger (not phablet large, though) screen iPhone makes a lot of sense, far more sense than a "cheap" one.  The other thing to consider about a "cheap" iPhone is whether buyers of such a product will be inclined to make iTunes Store purchases.  Does it really serve Apple to offer a barebones iPhone when the purchasers are (my guess) less likely to generate further revenue through App and iTunes Store purchases?  How many of these cheap Android phones and tablets are used to buy apps or music or rent movies?  My guess is very few.


     


     


     


    Quote:

    Originally Posted by Apple ][ View Post


    That is on a 2 year contract.


     


    Nobody is getting any iPhone for only 99 cents. You are paying many hundreds of dollars for that iPhone which costs 99 cents.



     


    I get that.  See above.

  • Reply 72 of 138
    MacProMacPro Posts: 18,423member
    solipsismx wrote: »
    No, he didn't say that. He very clearly stated, "We know developers aren't going to [...] change their software every time the screen size changes," he added. "When we make decisions on 7-inch tablets it's not about cost, it's about the value of the product when you factor in the software." On top of that he stated exactly what chabig paraphrased, that the current lot of 7" tablets are DOA.

    Apple didn't make a 16:9 7" tablet that required nearly as many developer contortions to get apps to work as you write on AI, but instead made an ? 8" tablet with the same aspect ratio and resolution as a currently shipping iPad that required no additional effort by developers thereby making the App Store options for the iPad mini over 200,000 strong on the very first day.


    Other comments of interest you ignored from that article:
    • "As a software driven company we think about the software strategies first."
    • "When we make decisions on 7-inch tablets it's not about cost, it's about the value of the product when you factor in the software."
    • "Sorry, I'm not going to write a watered down version of my app just because you can sell this version of your phone for $50 less."

    Ignore list for this guy is easier than wasting time rising to his bait!
  • Reply 73 of 138
    jungmarkjungmark Posts: 6,718member
    erann wrote: »
    As far as "cheap" is concerned, is e.g. BMW Mini Cooper or BMW 1 series or Audi A1 or Mercedes Benz A class cars cheap or low cost? Do you think that BMW, Audi or MB can afford those models?

    The mini isn't branded a BMW.
    Do any of the other cars cost $20000?
  • Reply 74 of 138

    Quote:

    Originally Posted by Apple ][ View Post


    I'm still trying to figure out what the endgame is here, because that is not at all clear to me.


     


    I mean, what is Apple's purpose and why do they exist?



     


    Purpose is usually expressed in a company's mission statement. But Apple's mission statement is not written particularly well:


    http://investor.apple.com/faq.cfm?FaqSetID=6


     


    Quote:


    What is Apple's mission statement?


    Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.




     


    Uh, so ignoring the résumé-sounding parts of this mission statement, the only thing "mission statementy" is the second half of the last sentence: to define the future of mobile media and computing devices with iPad. Hmm... that seems somehow wanting. I'm sure this mission statement is obligatory, rather than utilitarian.

  • Reply 75 of 138
    freerangefreerange Posts: 1,589member
    DED - please stop using the term "cheaper" when refering to Apple's product line. That term has completely different connotations than saying "less expensive". Apple does not build cheap products, unlike their competitors. They add to their product lines less expensive models that are still built with Apple's same dedication to engineering excellence, innovation and high quality, but at a lower price point. There in lies a huge world of difference between the two terms.
  • Reply 76 of 138
    analogjackanalogjack Posts: 1,071member
    freerange wrote: »
    ...but at a lower price point.

    "price point" sounds like marketspeak for "cheap", what's wrong with simply using "price"
  • Reply 77 of 138
    solipsismxsolipsismx Posts: 19,566member
    rogifan wrote: »
    I ask the question because I hardly ever hear anyone say they should turn the iPod touch into a low cost phone. I guess I don't get why everyone (or it seems like everyone) assumes a low cost iPhone would be a brand new product and would be plastic.

    if it's not a brand new product then it's an existing product. The iPod Touch becoming an iPhone would require plenty of new changes to make that happen, even if they did do it to be a data connected device sans the direct phone HW for making and sending calls without a headphone setup.

    analogjack wrote: »
    "price point" sounds like marketspeak for "cheap", what's wrong with simply using "price"

    Price point is much exacting for a given set of known or assumed performance, features, and quality.
  • Reply 78 of 138
    mac_128mac_128 Posts: 3,452member
    apple ][ wrote: »
    I don't quite understand all of the interest in poor people all of a sudden, because Apple has certainly not cared about poor people or about providing for that particular market for most of their history.
    Nope. Steve Jobs has always catered to one of the poorest segments of our society -- education. And there are few poorer than many college students. Not only has Apple always offered sizeable discounts to the education market, and sold specialized equipment not available to the general public, but Apple often gives away equipment to particularly needy organizations.

    In many ways, emerging markets can be seen similarly. They may not have much money now, but like a student the potential is promising. And just like students, you don't want your poorer customers getting used to Samsung and Android products. This happened to Apple in the 90s, after they focused solely on the wealthy, dropped their support of education, and let Windows slowly erode their market share on cheaper equipment as customers jumped ship and became heavily invested in the Microsoft ecosystem.

    Yes Apple makes nice hardware, but the new battleground is the essentially the same as it always has been -- control of the ecosystem. In the 80s and 90s it was about what software was available for your computer: "I'd sure like a Mac, but I need to run WordPerfect". Today the deciding factor is not going to be Mac OS or Windows, it's going to be about iTunes, Amazon, and Google. If you've been collecting your music and apps since high school and college on a Samsung when that's all you could afford, where is the incentive to switch to the iPhone when you can afford it, if the bulk of that cost is replacing all your music and apps for the compatible platform? Even the wealthy don't just throw away a substantial investment for no reason. They didn't do it with Windows in the 90s and they're not going to do it now. Unless Apple wants to make iTunes available on the Android platform the way they made it available on Windows, then they probably should start looking at how to get poorer customers into their hardware sooner rather than later.
  • Reply 79 of 138
    ksecksec Posts: 1,567member


    Assuming iSuppli 's BOM are reasonably accurate. Then the more affordable iPhone will need to cut its BOM price by $40 to maintain the same profitably while selling the phone at $499.

    Further price cut could be done if Apple decide to sell the affordable iPhone all by themselves without contact, cutting the extra $100 discount when Carrier buy bulk from Apple, and sell it for $449, while the other $50 to cover up for profits to 3rd party Retail store like Best buy and possibly Carriers themselves if they agree to do so, ( And T-Mobile in US will very likely to be ). So for every 1 affordable iPhone Apple sell by themselves, that is through their Apple Retail or Apple Online Store, they could afford to have 3rd party to sell 1 as well while maintaining the same profits ratio.



    Buying a phone without contract is extremely popular in the east, whether they are low end market or not. At $449 the iPhone has much higher reach then the Higher end iPhone.



    Cutting $40 off BOM Cost is tough. And i continue to maintain that the affordable iPhone will be the larger screen iPhone. Where smaller equals more expensive, the larger iPhone will give Apple much more room to do cost cutting techniques where they dont have to squeeze every thing, reusing as much iPad component as possible. However even with these measures, reusing last year SoC, plastic or other material casing, same resolution display etc, i still dont see how they could achieve a $40 cost cut without cutting the LTE component. Actually being Apple they may actually do just that and only to introduce a LTE based affordable iPhone one year later. ( Hint: China still dont have LTE yet )

  • Reply 80 of 138
    solipsismxsolipsismx Posts: 19,566member
    ksec wrote: »
    Assuming iSuppli 's BOM are reasonably accurate. Then the more affordable iPhone will need to cut its BOM price by $40 to maintain the same profitably while selling the phone at $499.

    1) Is that the same profit or profit margin.

    2) Nice thoughtful post.
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