Why would Apple want to sell a "cheap" iphone to "cheap" customers in a country with the most the most rampant software piracy in the world. Apple sells more than a phone, they sell a "phone ecosystem". Why should Apple pursue a customer base that would by and large, pirate there way out that ecosystem?
Sure, the USA has plenty of people that pirate but there are still plenty that are willing to buy their products. On top of that, Apple's profits come from selling the HW, not the SW, so these Americans still need to own Apple's HW before they can use their pirated SW.
... Plastic to many 'analysts' equals... low cost of pieces: it 'has' to be plastic, because the injection molded (sic) parts vs material cost and manufacturing of the glass and metal parts ...
I think the assumption is that even if it's plastic, it's likely to be "unibody" in that it would still be carved out of a block of plastic like the Apple TV and Airport Express.
Who knows, maybe they finally got that Zirconium process to work for a device housing. They can be turned out for pennies an item and on a very large scale from what I've heard.
The pre-paid market is huge in India, China and developing economies. That's what Apple would be going after if it produced a new lower-cost model (not my taste but prob plastic for easier, cheaper production and multi colours).
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable (obviously excluding companies like Amazon who loss lead to chase market share solely drive competitors out of the market).
The analyst just want Apple to sell more phones so they can manipulate the stock price. There is no shortage of cheap phones on the market!!! Think about it, when the portable cell phone came out it was waaaaaaay expensive.Now lets just go back 25 years to the present. The celly is now dirt cheap. So cheap it is disposable. Go into 7/11 and you see tons of throw away, pre paid phones. You don't think Indian/chinese business men and women haven't thought up a business model where the economically depressed can get hold of a cell phone? LOL! Necessity is the mother of invention.
maybe not the best example... the touch is $299 list without any phone hardware, and accompanying battery to power it. Push the price $100 for those components, the size bump, and the battery tech... you're still at $400 for the 'low end' phone.
But don't forget for that $299 iPod touch you get 32GB. If Apple made a cheaper iPhone it would likely come with a 16GB base model. So the added costs for phone hardware should be offset by lower storage. There is plenty of room for a very nice margin if a phone with 4S type internals but with lightning connector and maybe the looks of an iPod touch or similar.
The way I read the actual sources, Dediu (the only analyst who has any real credibility) is only saying that there are carriers that need a cheaper phone because the number of users willing to pay for the current phone is drying up. The article, on the other hand puts all this other stuff in his mouth about the "conditions" in Apple's contract, when in fact that seems to come mostly from the interviewer and "other sources."
[...]
The way this post (and the source articles), is written it seems like the argument is that "Horace Dediu says that Apple's contracts have lots of weird conditions that no carrier will agree to anymore," when in fact he hasn't said anything of the sort.
That seems to be more the interviewer's point of view than Didiu's.
agreed. Even Horace didn't agree with the title of the article in his tweet announcing it.
The fact of the matter is Apple just wants to get into every market... In lucrative markets (US EMEA), they have been there long enough to drive most carriers to carry the phone (competitive parity), and most buyers who want/afford an iPhone have bought one. In his asymco.com... he sees less than 2 years of 'growth' in the US market, when 80% of all people will have smart phones, and after that it's all about 'stealing' (not his word), customers from other platforms, not 'harvesting' new customers into the smartphone market.
the 2.8Billion people are in places where Apple requiring LTE bandwidth implemented by XX date with penalties if not met, upgrades and adherence to wireless signalling standards for compatibility to Apple's phone (remember most carriers can require tweaks to a phone so it works on their network), quotas on buying handset stock, and Point of Sale Marketing requirements would cost the carrier up front, and the carriers are still playing the 'old game' where 'they' are the customer' not the user of the handset. Those are the conditions a lot of these carriers are objecting to... conditions that effectively make them spend money first
then you have the soft money stuff... voicemail, no skinning the interface, no email lockin, iMessage bypassing SMS, iCloud obviating carrier based storage and backups. These are big items for smaller companies.
My own favorite: After introducing the iPhone 5S Apple will keep the iPhone 4.
The iPhone 4 would be updated with the new single core A5r3 (cheaper to produce than the A4) and both the 4 and the 4S would switch to the Lightning connector.
And for those with a passion for big screens: The iPhone 5SL - 4.5" screen with a 1280x720 resolution.
the 2.8Billion people are in places where Apple requiring LTE bandwidth implemented by XX date with penalties if not met, upgrades and adherence to wireless signalling standards for compatibility to Apple's phone (remember most carriers can require tweaks to a phone so it works on their network), quotas on buying handset stock, and Point of Sale Marketing requirements would cost the carrier up front, and the carriers are still playing the 'old game' where 'they' are the customer' not the user of the handset. Those are the conditions a lot of these carriers are objecting to... conditions that effectively make them spend money first
How many carriers are actually objecting to that? Do you have a list? The fact is, if one carrier isn't going to do it another one will because they will be able to use it as a selling point to steal customers away from someone else. This is happening in Japan and China. Apple has no need to back down. Backing down on their standards will only hurt them in the long run for silly, short-term market share gains.
Besides, if these analysts are so prescient about how to run successful businesses why are they not doing so rather than just sitting around all day passing judgement on others? My guess is that if most of them became the CEO of a company they'd run it into the ground.
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable (obviously excluding companies like Amazon who loss lead to chase market share solely drive competitors out of the market).
Apple isn't Lamborghini nor is it it BMW or like any other car company selling an item costing tens or hundreds of thousands of dollar phones. Car analogies fail on all levels. The iPhone is just a consumer product sold on contract between $199 and $399 which is the same price as many of the competing smart phones. The S4 is actually selling for a higher base price of $250. it is not a luxury item only affordable by the wealthy, it is a mass market consumer electronics product targeted toward the masses unlike a Lamborghini.
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
Why does Apple need a "new" low/medium cost iPhone. That's what the 4/4S is for. Apple isn't going to use cheap parts.
Quote:
Originally Posted by hittrj01
While I agree, I could see them coming out with an iPhone 4S equivalent with the Lightning connector once the 5S comes out, just so they can get everything off of the old dock connector. I believe this is what's happening. iPhone 4S on the inside, polycarbonate body, Lightning connector, maybe multiple colors. I think it would be huge for its intended market.
Selling previous year's models at a lower price is a great tactic and has worked in the past. But now that Apple is looking at market saturation at the entry point of the current iPhone, they need to do something. A "sticky" ecosystem only gets you so far. The iPhone is no longer in a niche market and the competition is gaining quickly.
Although I can't agree that a plastic body iPhone with 4S parts is the only solution. Getting off the old dock connector and introducing a new model that's just as high quality but with lesser performance (but still equal to the 4S) is a smart move. They will sell more New lesser iPhone (i.e. previous year's internals but with a new body) to new customers than they will last year's models to them IMO. Studies have shown the newest model is almost always a better seller than the previous years. And if they can further reduce the cost to the sweet spot on the graph (i.e. the $200-$400 range unlocked and off contract), even better. I'd say if they produced something like this in the fall, they'd have a winning roadmap for another 5 years. Also wouldn't hurt to produced a higher-end larger screen model as well.
Apple isn't Lamborghini nor is it it BMW or like any other car company selling an item costing tens or hundreds of thousands of dollar phones. Car analogies fail on all levels. The iPhone is just a consumer product sold on contract between $199 and $399 which is the same price as many of the competing smart phones. The S4 is actually selling for a higher base price of $250. it is not a luxury item only affordable by the wealthy, it is a mass market consumer electronics product targeted toward the masses unlike a Lamborghini.
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. If you know so well how Apple should be running its business why don't you start your own company and follow your advice? You should be an instant success, no?
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the very same analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
Agreed. My long and slow adoption of the Apple Ecosystem from 2004 to current is proof in the pudding that starting with an affordable option is the best way to lock people into the Apple Ecosystem. I bought my first iPod in 2004 (Gen 1 Shuffle). Once I was convinced the Ecosystem was working for me, I upgraded every couple years (as I could afford) and now I have just about one of every product category. And I'm not looking back or regretting a single purchase.
Exactly, the point is to make the people come to you not to beg and plead for people to buy your stuff. And as you mention and as we've seen even in the US, people are more than willing to switch carriers to get the iPhone if the company they are on won't offer it. I remember talking to a manager at a local T-Mobile shortly after the 5 launched saying how T-Mobile would never agree to offering the iPhone because of all the additional conditions that Apple imposed. Now look where we are at now.
The manager you talked to was wrong. T-Mobile wanted the iPhone, but didn't have the correct spectrum for GSM back then for the iPhone to work properly on it. Sure you could do edge, but bleh. Now they do. In fact, T-Mobile went out of their way to get the iPhone unofficially on their network, by making nano sims for the iPhone and having them at their stores. All you needed to do was buy an unlocked iPhone at the Apple store and take it to the T-Mobile store and they would program it for you.
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. Yes
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
Neither you nor I nor anyone else on this forum have any idea what it would cost to make this cheaper phone. All we can do is speculate based on currently shipping products and other estimates. We know that Apple can make a profit on a $299 iPod Touch with 32GB of storage. I don't think it unreasonable to think they could also make a profit off a 16GB essentially iPod touch with some telephone hardware added. apple will run the numbers and do their due diligence and make a decision based on that research, If it makes financial sense they will do it, if not they won't. Either way it won't won't effect me because I am not the target consumer. As a stockholder I hope they can find a way since I think this would boost their profits by many billions every quarter.
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. If you know so well how Apple should be running its business why don't you start your own company and follow your advice? You should be an instant success, no?
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the very same analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
It's the same issue with the iPad mini. Analcysts complained about Apple getting killed if they didn't release a smaller tablet, then when they did they complained that it was too expensive, and then when Apple reported their earnings, they complained they didn't make a big enough profit on them. I hate them.
But don't forget for that $299 iPod touch you get 32GB. If Apple made a cheaper iPhone it would likely come with a 16GB base model. So the added costs for phone hardware should be offset by lower storage. There is plenty of room for a very nice margin if a phone with 4S type internals but with lightning connector and maybe the looks of an iPod touch or similar.
delta of the cost of memory: $10. again, you're arguing for a $400 reduction in ASP on a $10 part? To match apple's current margins, you'll need to get down well less than $130 to make it 'worth the while'.
Internals: The fact that a phone is 'always on' requires a bigger battery... the size of an iPhone. 2.6cu in iPod Touch volume vs 3.84 cu in volume.
Even if you use the better battery tech, you're stuck with the more power hungry (and likely larger) 4s internals.
to your point, why not use the 4s then? is that more logical or is spending the billion or so and design a completely new phone. now you've just
- dedicated another production line
(losing the opportunity to build more iPhone 5s in parallel for it's release)
- provided a top line choice to the consumer (you're making it harder for them to choose).
- committed to 5 years of support for the product (staff/stock inventory/qualifications for all the regulatory bodies)
For what, people in 2nd and 3rd world countries (regions) who really don't give a hoot that it's an apple phone to begin with?
I think the fact that carriers in those regions won't build a 'spec' LTE network is the the primary barrier to entry, not the price of the phone. Heck if it's a spec network, people would be buying grey and 2nd hand iPhones and using them there anyway, and from an ecosystem point of view, that's good for Apple as well.
Neither you nor I nor anyone else on this forum have any idea what it would cost to make this cheaper phone. All we can do is speculate based on currently shipping products and other estimates. We know that Apple can make a profit on a $299 iPod Touch with 32GB of storage. I don't think it unreasonable to think they could also make a profit off a 16GB essentially iPod touch with some telephone hardware added. apple will run the numbers and do their due diligence and make a decision based on that research, If it makes financial sense they will do it, if not they won't. Either way it won't won't effect me because I am not the target consumer. As a stockholder I hope they can find a way since I think this would boost their profits by many billions every quarter.
So, we agree. If Apple can do it profitable they will, if they can't they won't. So why were you arguing with me? As I said:
Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable
Nowhere in what you quoted did I say Apple shouldn't do this or that, all I said was that Apple shouldn't do it purely to chase market share to appease analysts if they can't be profitable.
Selling previous year's models at a lower price is a great tactic and has worked in the past. But now that Apple is looking at market saturation at the entry point of the current iPhone, they need to do something. A "sticky" ecosystem only gets you so far. The iPhone is no longer in a niche market and the competition is gaining quickly.
Although I can't agree that a plastic body iPhone with 4S parts is the only solution. Getting off the old dock connector and introducing a new model that's just as high quality but with lesser performance (but still equal to the 4S) is a smart move. They will sell more New lesser iPhone (i.e. previous year's internals but with a new body) to new customers than they will last year's models to them IMO. Studies have shown the newest model is almost always a better seller than the previous years. And if they can further reduce the cost to the sweet spot on the graph (i.e. the $200-$400 range unlocked and off contract), even better. I'd say if they produced something like this in the fall, they'd have a winning roadmap for another 5 years. Also wouldn't hurt to produced a higher-end larger screen model as well.
The old dock connector is not a barrier to entry for a person who is buying their first apple product. That and your last sentence basically voids your assessment.
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits?
First off, car analogies never work with phones
For example, Lamborghinis are not owned by a large chunk of the world's sports car drivers.
Quote:
Originally Posted by Juil
I don’t now of many carriers currently crying about having regrets to have made a deal to get the iPhone. And I don’t remember a carrier anoucing that they would not continue selling the iPhone after having introduced it...
It was because of a few carriers around the world early last year announcing that they were dropping the iPhone because of the high subsidies, that analysts started the whole "OMG Apple needs to make a cheaper phone" theme. At the time, it was feared to be a trend that could accelerate.
Quote:
Originally Posted by Gazoobee
It paints a picture of draconian terms and iron-clad contracts, it even implies that these contracts are irregular in some way or unheard of, but no proof or even supporting evidence is offered. It's never even explicitly stated what the (hypothetical) "other" complaints about Apple's contracts are beyond the sales quotas which are quite normal in such circumstances.
The other complaints included forced high prices, and not being able to add a carrier brand name.
While you're right that he didn't specifically cite everything, Dediu implied that he agreed with the need to focus on what operators want and/or need:
"The narrative has been focused on the consumer demand, and the narrative needs to shift to the operator. Apple has run out of the kinds of operators that will say yes to them."
How many carriers are actually objecting to that? Do you have a list? The fact is, if one carrier isn't going to do it another one will because they will be able to use it as a selling point to steal customers away from someone else. This is happening in Japan and China. Apple has no need to back down. Backing down on their standards will only hurt them in the long run for silly, short-term market share gains.
Besides, if these analysts are so prescient about how to run successful businesses why are they not doing so rather than just sitting around all day passing judgement on others? My guess is that if most of them became the CEO of a company they'd run it into the ground.
If history is any teacher.... All of them object to it initially.
and I think you're trying to make me your opposition... we appear to be in violent agreement.
To the article's hidden point... if Apple isn't selling on every carrier, they are losing sales, therefore they shouldn't have such onerous demands on carriers. I disagree. Apple's key product is quality... and having 100 variants of experience and 200 SKU variants for all the non-std carrier networks is not going to improve quality. Apple is changing the wireless industry into a commodity 'pipe' where it's one device can connect anywhere. There goal is that the only decision you need to make when you buy an iPhone is at what price you buy bits from a carrier. but Apple isn't trying to have 8 or 180 different phones to be in everyone's pocket, especially when it's not the consumer that's asking for it, but the carrier.
Comments
Sure, the USA has plenty of people that pirate but there are still plenty that are willing to buy their products. On top of that, Apple's profits come from selling the HW, not the SW, so these Americans still need to own Apple's HW before they can use their pirated SW.
Quote:
Originally Posted by TheOtherGeoff
... Plastic to many 'analysts' equals... low cost of pieces: it 'has' to be plastic, because the injection molded (sic) parts vs material cost and manufacturing of the glass and metal parts ...
I think the assumption is that even if it's plastic, it's likely to be "unibody" in that it would still be carved out of a block of plastic like the Apple TV and Airport Express.
Who knows, maybe they finally got that Zirconium process to work for a device housing. They can be turned out for pennies an item and on a very large scale from what I've heard.
Quote:
Originally Posted by enzos
The pre-paid market is huge in India, China and developing economies. That's what Apple would be going after if it produced a new lower-cost model (not my taste but prob plastic for easier, cheaper production and multi colours).
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable (obviously excluding companies like Amazon who loss lead to chase market share solely drive competitors out of the market).
There is no shortage of cheap phones on the market!!!
Think about it, when the portable cell phone came out it was waaaaaaay expensive.Now lets just go back 25 years to the present. The celly is now dirt cheap. So cheap it is disposable. Go into 7/11 and you see tons of throw away, pre paid phones. You don't think Indian/chinese business men and women haven't thought up a business model where the economically depressed can get hold of a cell phone? LOL!
Necessity is the mother of invention.
Quote:
Originally Posted by TheOtherGeoff
maybe not the best example... the touch is $299 list without any phone hardware, and accompanying battery to power it. Push the price $100 for those components, the size bump, and the battery tech... you're still at $400 for the 'low end' phone.
But don't forget for that $299 iPod touch you get 32GB. If Apple made a cheaper iPhone it would likely come with a 16GB base model. So the added costs for phone hardware should be offset by lower storage. There is plenty of room for a very nice margin if a phone with 4S type internals but with lightning connector and maybe the looks of an iPod touch or similar.
Quote:
Originally Posted by Gazoobee
The way I read the actual sources, Dediu (the only analyst who has any real credibility) is only saying that there are carriers that need a cheaper phone because the number of users willing to pay for the current phone is drying up. The article, on the other hand puts all this other stuff in his mouth about the "conditions" in Apple's contract, when in fact that seems to come mostly from the interviewer and "other sources."
[...]
The way this post (and the source articles), is written it seems like the argument is that "Horace Dediu says that Apple's contracts have lots of weird conditions that no carrier will agree to anymore," when in fact he hasn't said anything of the sort.
That seems to be more the interviewer's point of view than Didiu's.
agreed. Even Horace didn't agree with the title of the article in his tweet announcing it.
The fact of the matter is Apple just wants to get into every market... In lucrative markets (US EMEA), they have been there long enough to drive most carriers to carry the phone (competitive parity), and most buyers who want/afford an iPhone have bought one. In his asymco.com... he sees less than 2 years of 'growth' in the US market, when 80% of all people will have smart phones, and after that it's all about 'stealing' (not his word), customers from other platforms, not 'harvesting' new customers into the smartphone market.
the 2.8Billion people are in places where Apple requiring LTE bandwidth implemented by XX date with penalties if not met, upgrades and adherence to wireless signalling standards for compatibility to Apple's phone (remember most carriers can require tweaks to a phone so it works on their network), quotas on buying handset stock, and Point of Sale Marketing requirements would cost the carrier up front, and the carriers are still playing the 'old game' where 'they' are the customer' not the user of the handset. Those are the conditions a lot of these carriers are objecting to... conditions that effectively make them spend money first
then you have the soft money stuff... voicemail, no skinning the interface, no email lockin, iMessage bypassing SMS, iCloud obviating carrier based storage and backups. These are big items for smaller companies.
My own favorite: After introducing the iPhone 5S Apple will keep the iPhone 4.
The iPhone 4 would be updated with the new single core A5r3 (cheaper to produce than the A4) and both the 4 and the 4S would switch to the Lightning connector.
And for those with a passion for big screens: The iPhone 5SL - 4.5" screen with a 1280x720 resolution.
Just to hound Samsung
Quote:
Originally Posted by TheOtherGeoff
the 2.8Billion people are in places where Apple requiring LTE bandwidth implemented by XX date with penalties if not met, upgrades and adherence to wireless signalling standards for compatibility to Apple's phone (remember most carriers can require tweaks to a phone so it works on their network), quotas on buying handset stock, and Point of Sale Marketing requirements would cost the carrier up front, and the carriers are still playing the 'old game' where 'they' are the customer' not the user of the handset. Those are the conditions a lot of these carriers are objecting to... conditions that effectively make them spend money first
How many carriers are actually objecting to that? Do you have a list? The fact is, if one carrier isn't going to do it another one will because they will be able to use it as a selling point to steal customers away from someone else. This is happening in Japan and China. Apple has no need to back down. Backing down on their standards will only hurt them in the long run for silly, short-term market share gains.
Besides, if these analysts are so prescient about how to run successful businesses why are they not doing so rather than just sitting around all day passing judgement on others? My guess is that if most of them became the CEO of a company they'd run it into the ground.
Quote:
Originally Posted by Applelunatic
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable (obviously excluding companies like Amazon who loss lead to chase market share solely drive competitors out of the market).
Apple isn't Lamborghini nor is it it BMW or like any other car company selling an item costing tens or hundreds of thousands of dollar phones. Car analogies fail on all levels. The iPhone is just a consumer product sold on contract between $199 and $399 which is the same price as many of the competing smart phones. The S4 is actually selling for a higher base price of $250. it is not a luxury item only affordable by the wealthy, it is a mass market consumer electronics product targeted toward the masses unlike a Lamborghini.
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
Quote:
Originally Posted by jungmark
Why does Apple need a "new" low/medium cost iPhone. That's what the 4/4S is for. Apple isn't going to use cheap parts.
Quote:
Originally Posted by hittrj01
While I agree, I could see them coming out with an iPhone 4S equivalent with the Lightning connector once the 5S comes out, just so they can get everything off of the old dock connector. I believe this is what's happening. iPhone 4S on the inside, polycarbonate body, Lightning connector, maybe multiple colors. I think it would be huge for its intended market.
Selling previous year's models at a lower price is a great tactic and has worked in the past. But now that Apple is looking at market saturation at the entry point of the current iPhone, they need to do something. A "sticky" ecosystem only gets you so far. The iPhone is no longer in a niche market and the competition is gaining quickly.
Although I can't agree that a plastic body iPhone with 4S parts is the only solution. Getting off the old dock connector and introducing a new model that's just as high quality but with lesser performance (but still equal to the 4S) is a smart move. They will sell more New lesser iPhone (i.e. previous year's internals but with a new body) to new customers than they will last year's models to them IMO. Studies have shown the newest model is almost always a better seller than the previous years. And if they can further reduce the cost to the sweet spot on the graph (i.e. the $200-$400 range unlocked and off contract), even better. I'd say if they produced something like this in the fall, they'd have a winning roadmap for another 5 years. Also wouldn't hurt to produced a higher-end larger screen model as well.
Quote:
Originally Posted by gwmac
Apple isn't Lamborghini nor is it it BMW or like any other car company selling an item costing tens or hundreds of thousands of dollar phones. Car analogies fail on all levels. The iPhone is just a consumer product sold on contract between $199 and $399 which is the same price as many of the competing smart phones. The S4 is actually selling for a higher base price of $250. it is not a luxury item only affordable by the wealthy, it is a mass market consumer electronics product targeted toward the masses unlike a Lamborghini.
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. If you know so well how Apple should be running its business why don't you start your own company and follow your advice? You should be an instant success, no?
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the very same analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
Quote:
Originally Posted by gwmac
If Apple can make a cheaper version of the iPhone and reach possibly billions more customers while still making a vert hefty margin why wouldn't they enter that market? It will not tarnish the brand in the least. In the same way the Mac Mini can lead to upsell to an iMac or a Macbook Pro for the next purchase so could a cheaper iPhone help to create a future customer later on. Why allow all these billions to buy an Android and get used to it and locked into that ecosystem. Given a choice between a brand new iPhone model that has the exact same specs as an iPhone 4S people will alway choose a new model if given a choice.
Agreed. My long and slow adoption of the Apple Ecosystem from 2004 to current is proof in the pudding that starting with an affordable option is the best way to lock people into the Apple Ecosystem. I bought my first iPod in 2004 (Gen 1 Shuffle). Once I was convinced the Ecosystem was working for me, I upgraded every couple years (as I could afford) and now I have just about one of every product category. And I'm not looking back or regretting a single purchase.
Quote:
Originally Posted by Applelunatic
Exactly, the point is to make the people come to you not to beg and plead for people to buy your stuff. And as you mention and as we've seen even in the US, people are more than willing to switch carriers to get the iPhone if the company they are on won't offer it. I remember talking to a manager at a local T-Mobile shortly after the 5 launched saying how T-Mobile would never agree to offering the iPhone because of all the additional conditions that Apple imposed. Now look where we are at now.
The manager you talked to was wrong. T-Mobile wanted the iPhone, but didn't have the correct spectrum for GSM back then for the iPhone to work properly on it. Sure you could do edge, but bleh. Now they do. In fact, T-Mobile went out of their way to get the iPhone unofficially on their network, by making nano sims for the iPhone and having them at their stores. All you needed to do was buy an unlocked iPhone at the Apple store and take it to the T-Mobile store and they would program it for you.
Quote:
Originally Posted by Applelunatic
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. Yes
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
Neither you nor I nor anyone else on this forum have any idea what it would cost to make this cheaper phone. All we can do is speculate based on currently shipping products and other estimates. We know that Apple can make a profit on a $299 iPod Touch with 32GB of storage. I don't think it unreasonable to think they could also make a profit off a 16GB essentially iPod touch with some telephone hardware added. apple will run the numbers and do their due diligence and make a decision based on that research, If it makes financial sense they will do it, if not they won't. Either way it won't won't effect me because I am not the target consumer. As a stockholder I hope they can find a way since I think this would boost their profits by many billions every quarter.
Quote:
Originally Posted by Applelunatic
You and the analysts have yet to prove that chasing market share with a cheaper iPhone will be profitable enough to do so. That was the entire point of my post. Chasing market share without chasing a profitable market segment is absurd. If you know so well how Apple should be running its business why don't you start your own company and follow your advice? You should be an instant success, no?
The funniest part about the calls of this "lower-cost iPhone" is that the analysts are whining because Apple's margins are going down and yet they want them to make a phone that the very same analysts then admit will have even less margin thus having the net effect of driving Apple's margins even lower. The absurdity is astounding.
It's the same issue with the iPad mini. Analcysts complained about Apple getting killed if they didn't release a smaller tablet, then when they did they complained that it was too expensive, and then when Apple reported their earnings, they complained they didn't make a big enough profit on them. I hate them.
Quote:
Originally Posted by gwmac
But don't forget for that $299 iPod touch you get 32GB. If Apple made a cheaper iPhone it would likely come with a 16GB base model. So the added costs for phone hardware should be offset by lower storage. There is plenty of room for a very nice margin if a phone with 4S type internals but with lightning connector and maybe the looks of an iPod touch or similar.
delta of the cost of memory: $10. again, you're arguing for a $400 reduction in ASP on a $10 part? To match apple's current margins, you'll need to get down well less than $130 to make it 'worth the while'.
Internals: The fact that a phone is 'always on' requires a bigger battery... the size of an iPhone. 2.6cu in iPod Touch volume vs 3.84 cu in volume.
Even if you use the better battery tech, you're stuck with the more power hungry (and likely larger) 4s internals.
to your point, why not use the 4s then? is that more logical or is spending the billion or so and design a completely new phone. now you've just
- dedicated another production line
(losing the opportunity to build more iPhone 5s in parallel for it's release)
- provided a top line choice to the consumer (you're making it harder for them to choose).
- committed to 5 years of support for the product (staff/stock inventory/qualifications for all the regulatory bodies)
For what, people in 2nd and 3rd world countries (regions) who really don't give a hoot that it's an apple phone to begin with?
I think the fact that carriers in those regions won't build a 'spec' LTE network is the the primary barrier to entry, not the price of the phone. Heck if it's a spec network, people would be buying grey and 2nd hand iPhones and using them there anyway, and from an ecosystem point of view, that's good for Apple as well.
Quote:
Originally Posted by gwmac
Neither you nor I nor anyone else on this forum have any idea what it would cost to make this cheaper phone. All we can do is speculate based on currently shipping products and other estimates. We know that Apple can make a profit on a $299 iPod Touch with 32GB of storage. I don't think it unreasonable to think they could also make a profit off a 16GB essentially iPod touch with some telephone hardware added. apple will run the numbers and do their due diligence and make a decision based on that research, If it makes financial sense they will do it, if not they won't. Either way it won't won't effect me because I am not the target consumer. As a stockholder I hope they can find a way since I think this would boost their profits by many billions every quarter.
So, we agree. If Apple can do it profitable they will, if they can't they won't. So why were you arguing with me? As I said:
Why should Apple chase a market unless there is a guarantee of good profits? Market share means dick if you're not profitable
Nowhere in what you quoted did I say Apple shouldn't do this or that, all I said was that Apple shouldn't do it purely to chase market share to appease analysts if they can't be profitable.
Quote:
Originally Posted by antkm1
Selling previous year's models at a lower price is a great tactic and has worked in the past. But now that Apple is looking at market saturation at the entry point of the current iPhone, they need to do something. A "sticky" ecosystem only gets you so far. The iPhone is no longer in a niche market and the competition is gaining quickly.
Although I can't agree that a plastic body iPhone with 4S parts is the only solution. Getting off the old dock connector and introducing a new model that's just as high quality but with lesser performance (but still equal to the 4S) is a smart move. They will sell more New lesser iPhone (i.e. previous year's internals but with a new body) to new customers than they will last year's models to them IMO. Studies have shown the newest model is almost always a better seller than the previous years. And if they can further reduce the cost to the sweet spot on the graph (i.e. the $200-$400 range unlocked and off contract), even better. I'd say if they produced something like this in the fall, they'd have a winning roadmap for another 5 years. Also wouldn't hurt to produced a higher-end larger screen model as well.
The old dock connector is not a barrier to entry for a person who is buying their first apple product. That and your last sentence basically voids your assessment.
Quote:
Originally Posted by Applelunatic
But are those people going to be worth going after? Lamborghini doesn't make a "lower-cost" Gallardo for developing economies. Why should Apple chase a market unless there is a guarantee of good profits?
First off, car analogies never work with phones
For example, Lamborghinis are not owned by a large chunk of the world's sports car drivers.
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Originally Posted by Juil
I don’t now of many carriers currently crying about having regrets to have made a deal to get the iPhone. And I don’t remember a carrier anoucing that they would not continue selling the iPhone after having introduced it...
It was because of a few carriers around the world early last year announcing that they were dropping the iPhone because of the high subsidies, that analysts started the whole "OMG Apple needs to make a cheaper phone" theme. At the time, it was feared to be a trend that could accelerate.
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Originally Posted by Gazoobee
It paints a picture of draconian terms and iron-clad contracts, it even implies that these contracts are irregular in some way or unheard of, but no proof or even supporting evidence is offered. It's never even explicitly stated what the (hypothetical) "other" complaints about Apple's contracts are beyond the sales quotas which are quite normal in such circumstances.
The other complaints included forced high prices, and not being able to add a carrier brand name.
While you're right that he didn't specifically cite everything, Dediu implied that he agreed with the need to focus on what operators want and/or need:
"The narrative has been focused on the consumer demand, and the narrative needs to shift to the operator. Apple has run out of the kinds of operators that will say yes to them."
Quote:
Originally Posted by Applelunatic
How many carriers are actually objecting to that? Do you have a list? The fact is, if one carrier isn't going to do it another one will because they will be able to use it as a selling point to steal customers away from someone else. This is happening in Japan and China. Apple has no need to back down. Backing down on their standards will only hurt them in the long run for silly, short-term market share gains.
Besides, if these analysts are so prescient about how to run successful businesses why are they not doing so rather than just sitting around all day passing judgement on others? My guess is that if most of them became the CEO of a company they'd run it into the ground.
If history is any teacher.... All of them object to it initially.
and I think you're trying to make me your opposition... we appear to be in violent agreement.
To the article's hidden point... if Apple isn't selling on every carrier, they are losing sales, therefore they shouldn't have such onerous demands on carriers. I disagree. Apple's key product is quality... and having 100 variants of experience and 200 SKU variants for all the non-std carrier networks is not going to improve quality. Apple is changing the wireless industry into a commodity 'pipe' where it's one device can connect anywhere. There goal is that the only decision you need to make when you buy an iPhone is at what price you buy bits from a carrier. but Apple isn't trying to have 8 or 180 different phones to be in everyone's pocket, especially when it's not the consumer that's asking for it, but the carrier.