The question is whether or not a non-premium, non-flagship plastic (and candy colored) iPhone with last year's (at best) internals would sell for $350-$400? The answer, it seems to me, is no.
Given that the 32GB and the 64GB candy colored iPod touch with last year's (at best) internals sells for $300 and $400 respectively do you seriously believe that people would not pay $400 for a 16GB (or even 8GB) "last years" iPhone 5 equivalent?
Are you people kidding me? If you think the answer is no then HTF is Apple selling any iPod Touches?
For $350 it'd be a steal. I'd expect $400-$450.
And every Apple product is a "premium" product. Neither my 3G or 3GS felt cheap because they were plastic.
Given that the 32GB and the 64GB candy colored iPod touch with last year's (at best) internals sells for $300 and $400 respectively do you seriously believe that people would not pay $400 for a 16GB (or even 8GB) "last years" iPhone 5 equivalent?
Are you people kidding me? If you think the answer is no then HTF is Apple selling any iPod Touches?
For $350 it'd be a steal. I'd expect $400-$450.
And every Apple product is a "premium" product. Neither my 3G or 3GS felt cheap because they were plastic.
People are taking issue with the price because of the plastic not because of the candy colors.
But as has been pointed out the Lumia is a $500 candy colored plastic phone that seems to be selling ok.
I think this will sell well even if it were plastic, but if its aluminum this phone could be game changing for Apple.
A colorful high end aluminum smartphone for $300-$400? It'll sell like gangbusters and get iOS in the hands of millions more people all over the world.
These look slightly duller than the previous photos leaked, but the shades look remarkably consistent. Still don't 100% know what to make of it. Just have to wait and see. I'm warming up to the idea of a less expensive iPhone model.
Am I the only one that thinks this new photo looks exactly like the current iPod Touches? Not "matches nicely with" or "resembles" or "generally in the ballpark" but "could as well be iPod Touches"?
Take current iPod Touch cases, put protective plastic film on them, photograph, that's what you'd get.
So is it such a stretch to imagine that that's, in fact, what the cheap iPhone will be? We've been hearing about plastic cases, but that seems to be based on case shots that look glossy (which clearly involve protective plastic wrap) and some assumptions about what cheap means.
But Apple already sells a 32GB Touch with an A5 processor, Retina screen, mic and camera for $300, and that has an anodized aluminum case offered in what appears to be exactly the colors being leaked. Given the vastly larger market for a cheap iPhone, is it really that hard to imagine them adding a cell radio and keeping the price?
I mean, doesn't that sound more likely than all this carrying on about plastic cases and weird colors?
I'm really starting to believe these are real. Also considering the color scheme of iOS 7 combined with a cheaper multi-colored iPhone, I believe it will bode VERY well with the younger generation....
You think people will pay $400 for a colored plastic phone?
Sure. And then, as usual, over 2/3 will also buy a case to cover it up.
I just got my daughter an iPod 5G in that metallic green color. She picked it out. I thought it looked stunning. Then she promptly got a yellow background Ugly Doll case to put over it. Go figure.
Quote:
Originally Posted by AaronJ
Who is being "held back" from buying iPhones? See, this is what I don't get. Apple sold nearly 50 MILLION of these things in the first quarter of fiscal 2013. In fiscal 2012 they sold 125M iPhones alone.
Some people six years ago were saying similar things. "Apple is selling over two million a quarter, why do they need more?" Everything is relative. What seems like a big number now, is nothing in the future.
To answer your question, "who is being held back" ... BILLIONS of potential customers, that's who.
Heck, there are over a billion cell customers in India alone. Guess how many are buying an iPhone right now? Much less than a million a year... and that's with trade-ins and loan programs boosting the old rate by a factor of four or more.
Most of China. Most of southeast Asia. South America. Africa. Even a few European countries in financial straits. Most of these groups don't buy iPhones in any large quantity, because without subsidies, they cannot afford them and/or they find a better deal for the money.
Mind you, those are only potential customers. The price has to be right. To give us an idea of what that might be, here are how the current price ranges are selling :
I don't believe this budget iPhone one bit. If this cheap iPhone is expected to be price at $399-$449 now, how can they price it next year when iPhone 5 is free with contract (or $399-$449), $299-$349? At $299, it will kill the iPod Touch market. What about with supplier subsidy, -$100 with contract? Then Apple will have 4 tiers of iPhone on market: iPhone 6 (assumed) next year, 5s (assumed) this year, 5 and cheap iPhone. Analyze that, people.
I don't believe this budget iPhone one bit. If this cheap iPhone is expected to be price at $399-$449 now, how can they price it next year when iPhone 5 is free with contract (or $399-$449), $299-$349? At $299, it will kill the iPod Touch market. What about with supplier subsidy, -$100 with contract? Then Apple will have 4 tiers of iPhone on market: iPhone 6 (assumed) next year, 5s (assumed) this year, 5 and cheap iPhone. Analyze that, people.
At $299 it would largely replace the iPod Touch. Given that the potential inexpensive iPhone market is vastly larger than the iPod Touch market, I doubt Apple would be too concerned about that.
I would expect a cheap iPhone to replace at least one generation of old iPhone, which after all is only available to cover the price point. So whatever the latest phone is at $600 off contract, the last generation still available for $450 and the new cheap model for $300. Pretty typical Apple price spread, in other words.
Carrier subsidies apply across the board and don't effect the underlying pricing tiers. Free is free, doesn't hurt to have more than one model available.
Some people six years ago were saying similar things. "Apple is selling over two million a quarter, why do they need more?" Everything is relative. What seems like a big number now, is nothing in the future.
To answer your question, "who is being held back" ... BILLIONS of potential customers, that's who.
[snip]
I'm still not seeing the point here. Most of those people aren't going to buy iPhones anyways.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
Why not continue to do what you're good at, what you're making 100s of billions of years per year doing?
I'm still not seeing the point here. Most of those people aren't going to buy iPhones anyways.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
Why not continue to do what you're good at, what you're making 100s of billions of years per year doing?
Fully agree. While there may be a very large potential for anyone to grab the 'cheaper smartphone market' it doesn't look like this is something Apple 'needs to do'. They are indeed doing very well as it is, and I'm failing to see why they would go after the larger and cheaper phone market. But I'm not an analyst, so what do I know.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
For the potential customers we're talking about, the case material is not the key factor. The price is.
For Apple, the key factor is profit margin, as you point out. However, they seem happy with percentages, not cash per se.
The iPad mini is a good example. It has about the same gross profit margin percentage (~40%) as the regular iPad whose sales it cannibalizes, but a lower cash margin ($140 vs $190) per device. It helps that the mini turned out to be quite popular. (Anyone who already had a 7" tablet easily predicted that.)
In other words, Apple was willing to get more profit via quantity, while keeping the high margin percentages that investors and analysts love.
Likewise, a theoretical "cheap iPhone" that sold for say, $330 with a $165 BOM, would keep their 50% gross margin same as with the current iPhones, even though the per-device cash profit would be much lower. Yet sales would skyrocket, and the price could be lowered even more over time.
Fully agree. While there may be a very large potential for anyone to grab the 'cheaper smartphone market' it doesn't look like this is something Apple 'needs to do'. They are indeed doing very well as it is, and I'm failing to see why they would go after the larger and cheaper phone market. But I'm not an analyst, so what do I know.
Well, people have said for years that "Apple doesn't need to do" this or that, and yet they have. So that argument, on its own with no other input, is invalid.
However, and correct me if I'm wrong, I think what you mean is that Apple doesn't do "cheap". And I agree.
The key here is that people are confused about the definition of "cheap", mostly because they're used to thinking about high priced flagship phones.
I'd say that $150 is cheap. OTOH, a $350 smartphone is not cheap at all. In fact, these days it can be a pretty darned nice unit. Certainly plenty enough device for hundreds of millions of potential buyers. Heck, even the $250 devices are more than many people need, and often come with 4"+ screens.
Very good point. I remember, back in the day, coveting the G3 silver (Titanium-?) laptops but could only afford a G3 white plastic iBook. I came to really like the white color as opposed to the "pallbearer gray" and "funeral black" of all the other laptops. Nevertheless, the white ibooks did start looking dated and I now really like the MBA's.
I never did get a MBP or MP....but I sure bought into the ecosystem. First intel iMac, first intel MB, first ATV, first shuffle, mini, and first iteration of the iPhone, (3GS and now 4S) and an iPad2!
I think the white high end phone and the colors of the new phone will go quite well with the iO7 color scheme!
This post needs to be linked to every time someone wonders why Apple should ever go cheaper. It's the ecosystem,stupid.
(Anyone who already had a 7" tablet easily predicted that.)
Replying, but going totally off topic here: I put the Mini next to an Android 7". Wow, it's really a world of difference. One simply cannot compare the two sizes.
Replying, but going totally off topic here: I put the Mini next to an Android 7". Wow, it's really a world of difference. One simply cannot compare the two sizes.
Yep, but they're both in the same portability range, which is what I was after.
I just couldn't think of a single word that everyone would understand. I mean, we have "phablet" for the 5" to 6" range, and "full size" for the 9" to 10" range... but no easy word for tablets in the 7" to 8" range except "mini" and I was trying to avoid a redundant phrase.
Ah. I know. I could've said "eBook sized". Thanks!
I'm still not seeing the point here. Most of those people aren't going to buy iPhones anyways.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
Why not continue to do what you're good at, what you're making 100s of billions of years per year doing?
You seem to not want to understand. The top end if the market is stagnating, to further increase profits they need a mid range device. Since they do this everywhere else I can't even understand the counter arguments.
Well, people have said for years that "Apple doesn't need to do" this or that, and yet they have. So that argument, on its own with no other input, is invalid.
However, and correct me if I'm wrong, I think what you mean is that Apple doesn't do "cheap". And I agree.
The key here is that people are confused about the definition of "cheap", mostly because they're used to thinking about high priced flagship phones.
I'd say that $150 is cheap. OTOH, a $350 smartphone is not cheap at all. In fact, these days it can be a pretty darned nice unit. Certainly plenty enough device for hundreds of millions of potential buyers. Heck, even the $250 devices are more than many people need, and often come with 4"+ screens.
Exactly. Apple has always had an array of devices across multiple price-points in every category, typically ranging from "moderate" to "expensive."
When the iPad was introduced, people were shocked that Apple was able to keep the price so low, but no one considered it "cheap" in the sense of being compromised or shoddy. Even with the advent of genuinely cheap Android tablets (which indeed are compromised and or shoddy) the entry level iPad would have to be considered a moderately priced machine.
So given the market Apple is in, a $300 iPhone is hardly cheap. It would be a solidly mid-level offering, with the genuinely cheap stuff substantially below that (and being the compromised devices that Apple doesn't make).
Honestly, I'm mystified by the number of people that are freaking out at the idea of a relatively less expensive, multicolored iPhone, as if that were a betrayal of Apple's core values. It is in fact business as usual for Apple, the real question being what took them so long.
Comments
Quote:
Originally Posted by AaronJ
The question is whether or not a non-premium, non-flagship plastic (and candy colored) iPhone with last year's (at best) internals would sell for $350-$400? The answer, it seems to me, is no.
Given that the 32GB and the 64GB candy colored iPod touch with last year's (at best) internals sells for $300 and $400 respectively do you seriously believe that people would not pay $400 for a 16GB (or even 8GB) "last years" iPhone 5 equivalent?
Are you people kidding me? If you think the answer is no then HTF is Apple selling any iPod Touches?
For $350 it'd be a steal. I'd expect $400-$450.
And every Apple product is a "premium" product. Neither my 3G or 3GS felt cheap because they were plastic.
If they do colours, I hope they are good bold ones instead of these washed out colours on the iPods.
Bright orange please.
People are taking issue with the price because of the plastic not because of the candy colors.
But as has been pointed out the Lumia is a $500 candy colored plastic phone that seems to be selling ok.
I think this will sell well even if it were plastic, but if its aluminum this phone could be game changing for Apple.
A colorful high end aluminum smartphone for $300-$400? It'll sell like gangbusters and get iOS in the hands of millions more people all over the world.
Quote:
Originally Posted by Rogifan
You think people will pay $400 for a colored plastic phone?
Sure. And then, as usual, over 2/3 will also buy a case to cover it up.
I just got my daughter an iPod 5G in that metallic green color. She picked it out. I thought it looked stunning. Then she promptly got a yellow background Ugly Doll case to put over it. Go figure.
Quote:
Originally Posted by AaronJ
Who is being "held back" from buying iPhones? See, this is what I don't get. Apple sold nearly 50 MILLION of these things in the first quarter of fiscal 2013. In fiscal 2012 they sold 125M iPhones alone.
Some people six years ago were saying similar things. "Apple is selling over two million a quarter, why do they need more?" Everything is relative. What seems like a big number now, is nothing in the future.
To answer your question, "who is being held back" ... BILLIONS of potential customers, that's who.
Heck, there are over a billion cell customers in India alone. Guess how many are buying an iPhone right now? Much less than a million a year... and that's with trade-ins and loan programs boosting the old rate by a factor of four or more.
Most of China. Most of southeast Asia. South America. Africa. Even a few European countries in financial straits. Most of these groups don't buy iPhones in any large quantity, because without subsidies, they cannot afford them and/or they find a better deal for the money.
Mind you, those are only potential customers. The price has to be right. To give us an idea of what that might be, here are how the current price ranges are selling :
I don't believe this budget iPhone one bit. If this cheap iPhone is expected to be price at $399-$449 now, how can they price it next year when iPhone 5 is free with contract (or $399-$449), $299-$349? At $299, it will kill the iPod Touch market. What about with supplier subsidy, -$100 with contract? Then Apple will have 4 tiers of iPhone on market: iPhone 6 (assumed) next year, 5s (assumed) this year, 5 and cheap iPhone. Analyze that, people.
Quote:
Originally Posted by fallenjt
I don't believe this budget iPhone one bit. If this cheap iPhone is expected to be price at $399-$449 now, how can they price it next year when iPhone 5 is free with contract (or $399-$449), $299-$349? At $299, it will kill the iPod Touch market. What about with supplier subsidy, -$100 with contract? Then Apple will have 4 tiers of iPhone on market: iPhone 6 (assumed) next year, 5s (assumed) this year, 5 and cheap iPhone. Analyze that, people.
At $299 it would largely replace the iPod Touch. Given that the potential inexpensive iPhone market is vastly larger than the iPod Touch market, I doubt Apple would be too concerned about that.
I would expect a cheap iPhone to replace at least one generation of old iPhone, which after all is only available to cover the price point. So whatever the latest phone is at $600 off contract, the last generation still available for $450 and the new cheap model for $300. Pretty typical Apple price spread, in other words.
Carrier subsidies apply across the board and don't effect the underlying pricing tiers. Free is free, doesn't hurt to have more than one model available.
Quote:
Originally Posted by KDarling
Some people six years ago were saying similar things. "Apple is selling over two million a quarter, why do they need more?" Everything is relative. What seems like a big number now, is nothing in the future.
To answer your question, "who is being held back" ... BILLIONS of potential customers, that's who.
[snip]
I'm still not seeing the point here. Most of those people aren't going to buy iPhones anyways.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
Why not continue to do what you're good at, what you're making 100s of billions of years per year doing?
Fully agree. While there may be a very large potential for anyone to grab the 'cheaper smartphone market' it doesn't look like this is something Apple 'needs to do'. They are indeed doing very well as it is, and I'm failing to see why they would go after the larger and cheaper phone market. But I'm not an analyst, so what do I know.
Quote:
Originally Posted by AaronJ
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
For the potential customers we're talking about, the case material is not the key factor. The price is.
For Apple, the key factor is profit margin, as you point out. However, they seem happy with percentages, not cash per se.
The iPad mini is a good example. It has about the same gross profit margin percentage (~40%) as the regular iPad whose sales it cannibalizes, but a lower cash margin ($140 vs $190) per device. It helps that the mini turned out to be quite popular. (Anyone who already had a 7" tablet easily predicted that.)
In other words, Apple was willing to get more profit via quantity, while keeping the high margin percentages that investors and analysts love.
Likewise, a theoretical "cheap iPhone" that sold for say, $330 with a $165 BOM, would keep their 50% gross margin same as with the current iPhones, even though the per-device cash profit would be much lower. Yet sales would skyrocket, and the price could be lowered even more over time.
Interesting debate. We'll know soon enough!
Quote:
Originally Posted by PhilBoogie
Fully agree. While there may be a very large potential for anyone to grab the 'cheaper smartphone market' it doesn't look like this is something Apple 'needs to do'. They are indeed doing very well as it is, and I'm failing to see why they would go after the larger and cheaper phone market. But I'm not an analyst, so what do I know.
Well, people have said for years that "Apple doesn't need to do" this or that, and yet they have. So that argument, on its own with no other input, is invalid.
However, and correct me if I'm wrong, I think what you mean is that Apple doesn't do "cheap". And I agree.
The key here is that people are confused about the definition of "cheap", mostly because they're used to thinking about high priced flagship phones.
I'd say that $150 is cheap. OTOH, a $350 smartphone is not cheap at all. In fact, these days it can be a pretty darned nice unit. Certainly plenty enough device for hundreds of millions of potential buyers. Heck, even the $250 devices are more than many people need, and often come with 4"+ screens.
Quote:
Originally Posted by christopher126
Very good point. I remember, back in the day, coveting the G3 silver (Titanium-?) laptops but could only afford a G3 white plastic iBook. I came to really like the white color as opposed to the "pallbearer gray" and "funeral black" of all the other laptops. Nevertheless, the white ibooks did start looking dated and I now really like the MBA's.
I never did get a MBP or MP....but I sure bought into the ecosystem. First intel iMac, first intel MB, first ATV, first shuffle, mini, and first iteration of the iPhone, (3GS and now 4S) and an iPad2!
I think the white high end phone and the colors of the new phone will go quite well with the iO7 color scheme!
This post needs to be linked to every time someone wonders why Apple should ever go cheaper. It's the ecosystem,stupid.
Replying, but going totally off topic here: I put the Mini next to an Android 7". Wow, it's really a world of difference. One simply cannot compare the two sizes.
Quote:
Originally Posted by PhilBoogie
Replying, but going totally off topic here: I put the Mini next to an Android 7". Wow, it's really a world of difference. One simply cannot compare the two sizes.
Yep, but they're both in the same portability range, which is what I was after.
I just couldn't think of a single word that everyone would understand. I mean, we have "phablet" for the 5" to 6" range, and "full size" for the 9" to 10" range... but no easy word for tablets in the 7" to 8" range except "mini" and I was trying to avoid a redundant phrase.
Ah. I know. I could've said "eBook sized". Thanks!
Quote:
Originally Posted by AaronJ
I'm still not seeing the point here. Most of those people aren't going to buy iPhones anyways.
The iPhone market, as it stands, is incredibly powerful, profitable, and moves a ton of units. Apple shouldn't (in my opinion, of course) be in the business of chasing market share at low margin. That's what this seems like. It seems like a step backwards. Plastic? High volume?
Why not continue to do what you're good at, what you're making 100s of billions of years per year doing?
You seem to not want to understand. The top end if the market is stagnating, to further increase profits they need a mid range device. Since they do this everywhere else I can't even understand the counter arguments.
Quote:
Originally Posted by KDarling
Well, people have said for years that "Apple doesn't need to do" this or that, and yet they have. So that argument, on its own with no other input, is invalid.
However, and correct me if I'm wrong, I think what you mean is that Apple doesn't do "cheap". And I agree.
The key here is that people are confused about the definition of "cheap", mostly because they're used to thinking about high priced flagship phones.
I'd say that $150 is cheap. OTOH, a $350 smartphone is not cheap at all. In fact, these days it can be a pretty darned nice unit. Certainly plenty enough device for hundreds of millions of potential buyers. Heck, even the $250 devices are more than many people need, and often come with 4"+ screens.
Exactly. Apple has always had an array of devices across multiple price-points in every category, typically ranging from "moderate" to "expensive."
When the iPad was introduced, people were shocked that Apple was able to keep the price so low, but no one considered it "cheap" in the sense of being compromised or shoddy. Even with the advent of genuinely cheap Android tablets (which indeed are compromised and or shoddy) the entry level iPad would have to be considered a moderately priced machine.
So given the market Apple is in, a $300 iPhone is hardly cheap. It would be a solidly mid-level offering, with the genuinely cheap stuff substantially below that (and being the compromised devices that Apple doesn't make).
Honestly, I'm mystified by the number of people that are freaking out at the idea of a relatively less expensive, multicolored iPhone, as if that were a betrayal of Apple's core values. It is in fact business as usual for Apple, the real question being what took them so long.