Up until yesterday Apple would mark down last year's model by $100. This year many thought "Awesome, finally Apple will create a phone that is a little more affordable for those who don't want to pay $500+ off contract" but instead they took last years model and cheapened it to boost margins. That's right, now you can't even get last years model for the same (marginally better) discount as in previous generations. Aside, there's the completely illogical decision to keep the 4S around, further extending the 40-pin hardware fragmentation.
Why is everyone confused? <span style="line-height:1.4em;">Take off the blinders folks</span>
<span style="line-height:1.4em;">, they dropped the ball.</span>
Hope they dropped the ball on your head? When did Apple have a 40 pin connector? Those that buy the iPhone 4S will probably use it until it dies and couldn't care less about the accessories.
Just wait till developers get ahold of the Touch ID and start integrating its capabilities into their apps.
It is completely inaccessible to 3rd party apps at this time.
They're smart to start using it just for Apple purchases. If all goes well, and it proves itself (with a real world test of millions of users), then it will eventually open itself up to other payment possibilities.
Apple is smart, and knows staking their reputation on such a thing is bad idea, and they will control test it until they know it can't hurt them.
Analysts wanting Apple to lower their margins and increase volume productivity strikes me as having an ulterior motive; they want to drive Apple into a race to the bottom and break their stranglehold on profits. It will never happen.
Let's face it. The smartphone space is a mature market right now. No company has really done a great deal of wowing us lately.
No one said that the 5c would be so cheap and you really can't make money in a race to the bottom either.
Next year Apple will increase screen size, the A8 and M7 will enter a more utilized period because of them blazing a trail to 64 bit computing, camera will improve, and more features will be added to make that fingerprint scanner more useful and maybe split screen tech will be added.
Budget conscious folks will get the 4S just like they the 4 and made it a best seller.
Icahn just bough more apple stock, the only reason he buys is if he think it is undervalue and he can force the company to change business practice to improve the price. Look Apple Icahn is coming after you.
Here's an interesting post I read on another forum -- that may be the explanation for what Apple attempting to accomplish with the iPhone 5C:
[QUOTE]philvanallen 09/11/2013 11:32 AM PDT
I think the article is right,[B][I][COLOR=black] the 5c is now the main phone[/COLOR][/I][/B]. Apple is using the 5c to throw down the gauntlet to the other phone companies - [B][I][COLOR=blue]now the "normal" price for a contract phone is $100 instead of $200[/COLOR][/I][/B]. The analysts may be missing this, but I bet Samsung and all the others are worried since Apple can grab a larger share and a lower price.[/QUOTE]
and another about the 5S:
[QUOTE]stsk 09/11/2013 11:03 AM PDT
No one seems to understand what the 64 bit processor does to the portable gaming market. I wouldn't want to be Nintendo or Sony right now...[/QUOTE]
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
Apple doesn't respond to rumors. If they did then they have to respond to all rumors including the truth.
And I suspect you're an idiot.
My suspicions have been proven correct. Forstall = Apple Maps 1.0. Apple release products when they are ready and not to Wall Street's timeline.
Apple won't officially respond to rumors, but they have ways of getting information out. Like a "yep" or "nope" from Jim Dalrymple.
Extremely disappointed. You don't have to be an 'analyst' to see to it.
People on this board said 'Apple would never make a cheap, plastic iPhone' - it would damage Apple's premium, quality brand reputation. Of course they would never go low end, and race to the bottom. But expectations were of a cheaper model.
Now we have something far worse - the said cheaper plastic iPhone with last years technology, (in kid's colours). Except it does not have the one single advantage that everyone assumed a plastic iPhone would have. It's not any cheaper to buy. Apple wants the same amount of money for it as they have always done for last year's technology in a premium metal case.
Essentially Apple has taken the short term greed option. We can sell people a cheaper-to-make plastic version for the same price as we used to charge for a premium one. This will net a greater profit. But will not grow marketshare. And there is a cost to not growing marketshare. Survey after survey shows stronger brand loyalty to Apple than any other smartphone maker. Get people to buy their first iPhone, and the chances are their next phone will be an iPhone as well. And if they're looking for a tablet, what will they want? Starts with an 'i'. Bigger share of the market means more sales through iTunes. Kerching - 30% on Apps and in App-content. Not sure what the margins on songs, video, TV series are, but they all add up.
I think iOS is brilliant. I want more people to discover it and use it. And thus contribute to the vibrancy of the eco-system. Apple is shooting itself in the foot - with it's pricing.
IMO, apple has had two years to come out with a larger screen for all of us that can hardly read the current size screens. While not really innovative it would have been far better received than just adding colors. Colors which by the way will be covered by cases. It's little things overlooked like this that IMO makes apple look like they can't keep up. Strange how a DoCoMo deal didn't help at all nor that they got a license in china! Octobers earning report needs to be good or apple plunges more!
Extremely disappointed. You don't have to be an 'analyst' to see to it.
People on this board said 'Apple would never make a cheap, plastic iPhone' - it would damage Apple's premium, quality brand reputation. Of course they would never go low end, and race to the bottom. But expectations were of a cheaper model.
Now we have something far worse - the said cheaper plastic iPhone with last years technology, (in kid's colours). Except it does not have the one single advantage that everyone assumed a plastic iPhone would have. It's not any cheaper to buy. Apple wants the same amount of money for it as they have always done for last year's technology in a premium metal case.
Essentially Apple has taken the short term greed option. We can sell people a cheaper-to-make plastic version for the same price as we used to charge for a premium one. This will net a greater profit. But will not grow marketshare. And there is a cost to not growing marketshare. Survey after survey shows stronger brand loyalty to Apple than any other smartphone maker. Get people to buy their first iPhone, and the chances are their next phone will be an iPhone as well. And if they're looking for a tablet, what will they want? Starts with an 'i'. Bigger share of the market means more sales through iTunes. Kerching - 30% on Apps and in App-content. Not sure what the margins on songs, video, TV series are, but they all add up.
You must be new to Apple if you have realize what Apple iPhones it has sold in the last few years.
This strategy worked with the iPod mini and the iPad mini. I see no reason why the 5S and 5C won't be #1 and #2.
The fact that you think Apple is overlooking something tells me you're overlooking something.
Who cares about the stock price? Apple going private would be great for them.
Who cares about the stock price? Are you moronic? Millions of people have their money tied up in this company and it affects them personally when the stock drops. It's more important than your little hobby of blogging on this forum.
Who cares about the stock price? Are you moronic? Millions of people have their money tied up in this company and it affects them personally when the stock drops.
Shame. Maybe they should get off their hinders and actually do something about the idiots responsible for lying about Apple for months and then shorting the stock, huh.
Except they don't. So I guess they don't really care that much.
I love (or at least used to love) Apple for it's computers and software. For two decades Apple was so much ahead of its time. Apple had a massive influence on many industries. Most notably graphic design and printing (wysiwyg, postscript, first affordable laser printers, ...), the music industry and film making (well Final Cut Studio that is, not FCPX). And OK, iOS really is (or used to be) a great piece of interface design. But the way the mobile market is now defining Apples business and R&D strategies will become a massive problem. How come I know? In my drawer I still have my previous phones: 2 Nokia's, 3 Sony Ericsson's, 1 Motorrola and a few palm pilots. I bet the kids don't even remember some of these brands. And why should Apple be longer lasting in this highly fluctuating market than others?
Let's face it. The smartphone space is a mature market right now. No company has really done a great deal of wowing us lately.
Maybe not, but the 5S comes pretty close. Twice the performance, new fingerprint detection, new motion coprocessor, better camera, etc. If that doesn't wow you, then your expectations are totally unreasonable.
If Munster said that, he does not understand valuation. I doubt he said something like that.
While EPS can mathematically increase, that is only part of the pricing equation: Price = [P/E]×[EPS]
Lower margins ? Lower expected ROIC ? Lower P/E ratio. In other words, the valuation consequences of an incremental EPS increase can be negative if the margin is lower.
You're also ignoring a huge factor. The proposal was to sell the iPhone 5C at 15% margin. But you still have to subtract overheads from that. A 15% gross margin would amount to 5% net (their overheads are around 10% of sales). If they were off even a little bit, the EPS might not increase at all. So not only would the P/E drop, the EPS might stay the same, so the stock could drop a lot.
Up until yesterday Apple would mark down last year's model by $100. This year many thought "Awesome, finally Apple will create a phone that is a little more affordable for those who don't want to pay $500+ off contract" but instead they took last years model and cheapened it to boost margins. That's right, now you can't even get last years model for the same (marginally better) discount as in previous generations. Aside, there's the completely illogical decision to keep the 4S around, further extending the 40-pin hardware fragmentation.
Why is everyone confused? <span style="line-height:1.4em;">Take off the blinders folks</span>
<span style="line-height:1.4em;">, they dropped the ball.</span>
Blinders? Illogical decision? Rail against the wind much?
When you produce a smartphone, you can decide to price it.
Extremely disappointed. You don't have to be an 'analyst' to see to it.
People on this board said 'Apple would never make a cheap, plastic iPhone' - it would damage Apple's premium, quality brand reputation. Of course they would never go low end, and race to the bottom. But expectations were of a cheaper model.
Now we have something far worse - the said cheaper plastic iPhone with last years technology, (in kid's colours). Except it does not have the one single advantage that everyone assumed a plastic iPhone would have. It's not any cheaper to buy. Apple wants the same amount of money for it as they have always done for last year's technology in a premium metal case.
Essentially Apple has taken the short term greed option. We can sell people a cheaper-to-make plastic version for the same price as we used to charge for a premium one. This will net a greater profit. But will not grow marketshare. And there is a cost to not growing marketshare. Survey after survey shows stronger brand loyalty to Apple than any other smartphone maker. Get people to buy their first iPhone, and the chances are their next phone will be an iPhone as well. And if they're looking for a tablet, what will they want? Starts with an 'i'. Bigger share of the market means more sales through iTunes. Kerching - 30% on Apps and in App-content. Not sure what the margins on songs, video, TV series are, but they all add up.
You must be new to Apple if you have realize what Apple iPhones it has sold in the last few years.
This strategy worked with the iPod mini and the iPad mini. I see no reason why the 5S and 5C won't be #1 and #2.
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
Agreed on many points DA.
1. The 5C will walk off the shelves.
2. The 5S is the equivalent of the Tesla S sedan - high end, well-engineered, ground-breaking tech (bio-security, 64 bit . . .) the new standard for 'phones.
3. A little more reasoned debate on AI, with a little less "one hand on the keyboard" enthusiasm would be nice ;-)
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
I don't think anyone has qualms with the contract price of the 5C (ok maybe a few people here).
The main complaint is the unsubsidized price.
Would you personally pay $550 for a phone that looks like the 5C?
Add in the fact that in Europe and Asia the price is even more exorbitant and you'll understand why the backlash.
The 5C looks great and seems like a wonderful phone, but it's certainly not a flagship phone. I think it would have been better if Apple made 8GB and 16GB configs starting at $450 rather than the 16GB and 32GB they landed on. They could have kept their high margins (considering many in the US would upgrade to the 16GB model anyway) while having a better entry price for the 5C.
Yes people would still bitch and moan, but at least $450 is a better entry price for overseas where the iPhone 4 did well although it was an "old" phone. Imagine if there was a "new" phone at that price in Europe and Asia?
Another benefit? No more dedicated production line to the old 4/4S form factor which would save them money as well.
Comments
Hope they dropped the ball on your head? When did Apple have a 40 pin connector? Those that buy the iPhone 4S will probably use it until it dies and couldn't care less about the accessories.
Just wait till developers get ahold of the Touch ID and start integrating its capabilities into their apps.
It is completely inaccessible to 3rd party apps at this time.
They're smart to start using it just for Apple purchases. If all goes well, and it proves itself (with a real world test of millions of users), then it will eventually open itself up to other payment possibilities.
Apple is smart, and knows staking their reputation on such a thing is bad idea, and they will control test it until they know it can't hurt them.
Analysts wanting Apple to lower their margins and increase volume productivity strikes me as having an ulterior motive; they want to drive Apple into a race to the bottom and break their stranglehold on profits. It will never happen.
No one said that the 5c would be so cheap and you really can't make money in a race to the bottom either.
Next year Apple will increase screen size, the A8 and M7 will enter a more utilized period because of them blazing a trail to 64 bit computing, camera will improve, and more features will be added to make that fingerprint scanner more useful and maybe split screen tech will be added.
Budget conscious folks will get the 4S just like they the 4 and made it a best seller.
ANALyst are just lining their pockets as usual.
Icahn just bough more apple stock, the only reason he buys is if he think it is undervalue and he can force the company to change business practice to improve the price. Look Apple Icahn is coming after you.
Here's an interesting post I read on another forum -- that may be the explanation for what Apple attempting to accomplish with the iPhone 5C:
[QUOTE]philvanallen
09/11/2013 11:32 AM PDT
I think the article is right,[B][I][COLOR=black] the 5c is now the main phone[/COLOR][/I][/B]. Apple is using the 5c to throw down the gauntlet to the other phone companies - [B][I][COLOR=blue]now the "normal" price for a contract phone is $100 instead of $200[/COLOR][/I][/B]. The analysts may be missing this, but I bet Samsung and all the others are worried since Apple can grab a larger share and a lower price.[/QUOTE]
and another about the 5S:
[QUOTE]stsk
09/11/2013 11:03 AM PDT
No one seems to understand what the 64 bit processor does to the portable gaming market. I wouldn't want to be Nintendo or Sony right now...[/QUOTE]
Both from:
http://www.macworld.com/article/2048561/apples-neat-trick-why-the-iphone-5c-will-outsell-the-5s.html
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
Extremely disappointed. You don't have to be an 'analyst' to see to it.
People on this board said 'Apple would never make a cheap, plastic iPhone' - it would damage Apple's premium, quality brand reputation. Of course they would never go low end, and race to the bottom. But expectations were of a cheaper model.
Now we have something far worse - the said cheaper plastic iPhone with last years technology, (in kid's colours). Except it does not have the one single advantage that everyone assumed a plastic iPhone would have. It's not any cheaper to buy. Apple wants the same amount of money for it as they have always done for last year's technology in a premium metal case.
Essentially Apple has taken the short term greed option. We can sell people a cheaper-to-make plastic version for the same price as we used to charge for a premium one. This will net a greater profit. But will not grow marketshare. And there is a cost to not growing marketshare. Survey after survey shows stronger brand loyalty to Apple than any other smartphone maker. Get people to buy their first iPhone, and the chances are their next phone will be an iPhone as well. And if they're looking for a tablet, what will they want? Starts with an 'i'. Bigger share of the market means more sales through iTunes. Kerching - 30% on Apps and in App-content. Not sure what the margins on songs, video, TV series are, but they all add up.
I think iOS is brilliant. I want more people to discover it and use it. And thus contribute to the vibrancy of the eco-system. Apple is shooting itself in the foot - with it's pricing.
The fact that you think Apple is overlooking something tells me you're overlooking something.
Who cares about the stock price? Apple going private would be great for them.
You must be new to Apple if you have realize what Apple iPhones it has sold in the last few years.
This strategy worked with the iPod mini and the iPad mini. I see no reason why the 5S and 5C won't be #1 and #2.
The fact that you think Apple is overlooking something tells me you're overlooking something.
Who cares about the stock price? Apple going private would be great for them.
Who cares about the stock price? Are you moronic? Millions of people have their money tied up in this company and it affects them personally when the stock drops. It's more important than your little hobby of blogging on this forum.
Who cares about the stock price? Are you moronic? Millions of people have their money tied up in this company and it affects them personally when the stock drops.
Shame. Maybe they should get off their hinders and actually do something about the idiots responsible for lying about Apple for months and then shorting the stock, huh.
Except they don't. So I guess they don't really care that much.
I love (or at least used to love) Apple for it's computers and software. For two decades Apple was so much ahead of its time. Apple had a massive influence on many industries. Most notably graphic design and printing (wysiwyg, postscript, first affordable laser printers, ...), the music industry and film making (well Final Cut Studio that is, not FCPX). And OK, iOS really is (or used to be) a great piece of interface design. But the way the mobile market is now defining Apples business and R&D strategies will become a massive problem. How come I know? In my drawer I still have my previous phones: 2 Nokia's, 3 Sony Ericsson's, 1 Motorrola and a few palm pilots. I bet the kids don't even remember some of these brands. And why should Apple be longer lasting in this highly fluctuating market than others?
Maybe not, but the 5S comes pretty close. Twice the performance, new fingerprint detection, new motion coprocessor, better camera, etc. If that doesn't wow you, then your expectations are totally unreasonable.
You're also ignoring a huge factor. The proposal was to sell the iPhone 5C at 15% margin. But you still have to subtract overheads from that. A 15% gross margin would amount to 5% net (their overheads are around 10% of sales). If they were off even a little bit, the EPS might not increase at all. So not only would the P/E drop, the EPS might stay the same, so the stock could drop a lot.
Blinders? Illogical decision? Rail against the wind much?
When you produce a smartphone, you can decide to price it.
Slight correction: 5S and 5C will be #2 and #1.
Re: Pricing of the 5C;
Here's an interesting post I read on another forum -- that may be the explanation for what Apple attempting to accomplish with the iPhone 5C:
and another about the 5S:
Both from:
http://www.macworld.com/article/2048561/apples-neat-trick-why-the-iphone-5c-will-outsell-the-5s.html
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
Agreed on many points DA.
1. The 5C will walk off the shelves.
2. The 5S is the equivalent of the Tesla S sedan - high end, well-engineered, ground-breaking tech (bio-security, 64 bit . . .) the new standard for 'phones.
3. A little more reasoned debate on AI, with a little less "one hand on the keyboard" enthusiasm would be nice ;-)
Re: Pricing of the 5C;
Here's an interesting post I read on another forum -- that may be the explanation for what Apple attempting to accomplish with the iPhone 5C:
and another about the 5S:
Both from:
http://www.macworld.com/article/2048561/apples-neat-trick-why-the-iphone-5c-will-outsell-the-5s.html
The article is a good read -- as are the comments.
I miss having these kind of discussions on AI forums -- where, for the most, part the participants are polite, thoughtful and offer well-reasons (if differing) points of view.
I don't think anyone has qualms with the contract price of the 5C (ok maybe a few people here).
The main complaint is the unsubsidized price.
Would you personally pay $550 for a phone that looks like the 5C?
Add in the fact that in Europe and Asia the price is even more exorbitant and you'll understand why the backlash.
The 5C looks great and seems like a wonderful phone, but it's certainly not a flagship phone. I think it would have been better if Apple made 8GB and 16GB configs starting at $450 rather than the 16GB and 32GB they landed on. They could have kept their high margins (considering many in the US would upgrade to the 16GB model anyway) while having a better entry price for the 5C.
Yes people would still bitch and moan, but at least $450 is a better entry price for overseas where the iPhone 4 did well although it was an "old" phone. Imagine if there was a "new" phone at that price in Europe and Asia?
Another benefit? No more dedicated production line to the old 4/4S form factor which would save them money as well.