Perhaps some readers have missed my subtlety. Apple is pursuing the correct strategy. But a flippant "we don't make junk" in a broad sweep reference to everyone else who isn't us or doesn't talk like us and look like us, is just flat wrong for the CEO of the company right up near the largest market cap on the planet.
And here's one tiny part of why it particularly irks me. I was COO of a third of a billion trust company, and I ran that financial institution on all Macs, except for one PC to run a bank-provided secure online connection for funds transfer. This included all databases, all transactions, all content creation (which was largely print in those days), all tax form generation, all online customer support. All. Macs. Conventional wisdom at the time was that it could never be done. I believe at that time Apple was using Windows in its own accounting department.
Area Apple reps could not be bothered to stop by and see what we were doing. I'm convinced it's because we were commercial and not graphics arts or advertising or any other "soft" business. I say soft because these other businesses can be off a penny or so and it doesn't matter. Apple developed and to this day holds an "attitude" about business use. The parties of the original big brother theme ad have pretty much flipped 180 degrees in the Apple sub-culture. Try saying something on one of these boards contrary to the Party Line and see what happens.
In recent releases, Apple has stopped bothering to keep Open Directory working as a viable alternative to Active Directory in OS X Server. This without any regard to the courageous IT pros who might have risked career and money to advance Apple into the depths of the corporation, and undercut Microsoft where it gets a large revenue at $200 per seat just for single sign on. No warning, no acknowledgement, no regrets, no "we're working on it" because they're not.
I call it flippant arrogance. Trash talking it can afford because Microsoft is still there to keep its suppliers working. Adolescent. Not the Tim Cook I respect and admire. More like the Android fans commenting on this site than a CEO of a half trillion dollar company.
Hell, $350-$400 is a very reasonable expectation and still get a quality phone with decent margins.
"
Explain to me what benefit this would be to Apple, please.
Well, that comment on its own...: it would mean that Apple has the ability to build a lower cost phone with high quality that would gain even more customers without a massive hit to its margins.
... but that comment coupled with the qualifying comment in the last paragraph:
"Depending on how the fiscal 1st and 2nd quarters add up, Apple may or may not change its strategy."
... would mean that if Apple's current strategy (inserting the 5C into the mid tier) doesn't pan out then there is still an opportunity to build a lower priced model without "racing to the bottom", as you put it.
You seem to have missed the majority of what I said in my post. (ie. I didn't just include Ford as an example)
Perhaps some readers have missed my subtlety. Apple is pursuing the correct strategy. But a flippant "we don't make junk" in a broad sweep reference to everyone else who isn't us or doesn't talk like us and look like us, is just flat wrong for the CEO of the company right up near the largest market cap on the planet.
What?! Where did you come up with all of that? He simply said they don't make junk. And he's right!
Huh? We're talking about a company's image. Ford was selling junk in the 70s and 80s. Ford's image got tarnished. The build quality has improved vastly over the last 20 years. The image has greatly improved. Ford still builds affordable vehicles and not so affordable vehicles (so does Mercedes). I believe Apple could do the same thing... and I'm not talking $99 off contract. Hell, $350-$400 is a very reasonable expectation and still get a quality phone with decent margins.
Depending on how the fiscal 1st and 2nd quarters add up, Apple may or may not change its strategy.
How would they do that? Use crappy components? Not only will that not work but it will eat away at the flagship model faster and faster and thus lowering the avg margins and thus lowering profits.
How would they do that? Use crappy components? Not only will that not work but it will eat away at the flagship model faster and faster and thus lowering the avg margins and thus lowering profits.
At $350 to $400 per phone... and Apple couldn't do it at those prices when others are selling phones for $99.
Get off it man. You're not making sense.
What you are saying is that the 5C will eat away at the flagship 5S. LOL!
Samsung's smartphones aren't junk either, but they're selling for $100 to $200 less and often have features that iPhones lack, such as larger screens.
Apple's making the same mistake it made in the nineties. It's assuming that its products are different enough to command a premium price. But as technologies mature, it gets harder and harder to create products that are better enough to justify those higher prices.
Apple's already began to hit that point in the curve. To justify keeping the price of an iPhone 5c high, they've been forced to blather on about color and plastic. That won't wash. Even a third grader can tell that the 'new' iPhone doesn't look any different from dozens of other phones that are also plastic and in bright colors.
There's an old medical adage that, "In the early stages of a disease, diagnosis is difficult but treatment is easy. In the later stages, diagnosis is easy but treatment is difficult." The smartphone market is transitioning from one where new features matter to one where price matters more. If Apple doesn't come to that diagnosis while treatment is easy, it'll find itself in a situation where treatment becomes difficult as millions of once-potential customers are now happy Samsung users. It will find itself on the wrong side of product lock-in.
I was wondering when someone would try to compare this to the Apple Computer of the 90's. With how many models of desktop computers they sold, to how many segments with how much fragmentation, and how confusing was it to the die hard fans, let alone the general public? At that time they sold their product at what was considered a completely unreasonable price without enough differentiation to justify the costs. How is this the same now? Any product similar to theirs sells at a very similar price point and for the most part really cannot fully compete at the software level, let alone hardware build quality. A very poor comparison at best.
I don't think anyone is seriously suggesting they do a 180 degree and do that.
However.
Is the iPod Touch 'junk?'
It's made of premium materials. Yet, Apple makes a decent margin on it presumingly. Take a £250 iPod Touch...and add a phone chipset. Does that really equate to the £215 price difference between the Alu iPod Touch and the 'plastic' iPhone c?
There was all the talk about how Apple couldn't do a cheaper phone.
it's nonsense.
The 4s is £350. Is that junk? People said Apple wouldn't do a cheaper phone. But they did. It's the iPhone 5c. And they have an even cheaper one. It's the 4s.
So. They can do 'cheapER' phones.
I'd hardly call £350 'cheap' for a phone off contract either. That would be a mid range market price. Not cheap. (Far from it.) Not over expensive compared to the 5s ofc.
The variables are age of the tech.
My bet is Apple did a sleight of hand with the 5c and has handsome margins on it. More so than if they'd had the '5' as 'last year's' phone. Didn't they bump the price of the flagship from £525 to £545? So the 5c is only '£60' cheaper than the old '5' flagship? It's not a £100 cheaper. That's for sure.
My bet is we'll see the 4s disappear next year and the 5c will drop into it's price bracket...with the 5S into the now 5c bracket. ...and the new + iPhone 5 incher will go flagship.
Then the 5c will make more sense. Because the price, to me, is 'reaching' as is.
Are you even comprehending what I am saying? I don't think so.
[ Just to help you out a little... there is a big difference between $99 and $350 to $400 ]
And how many companies are making $$$ with a $400 phone. The C will probably be the bigger seller of the 2. If the c was cheaper, margins would be lower and profit would be lower. You can't escape that reality.
I wouldn't call the lumia 520 junk. Its $99 off contract. that's cheap enough for anybody to have one as a second phone. Heck load here maps onto it and you have a gps also (here maps allows you to download the whole USA maps on it for free).
If nokia can make a quality cheap phone I do not understand why apple cant either.
'Quality cheap phone' equals zero profit, or worse. That's why.
What?! Where did you come up with all of that? He simply said they don't make junk. And he's right!
So on this site, "reply" means "post" and to reply you need to click "quote." Sorry for adding to the confusion.
If you click the link that is the submitters name, you can see all the posts and maybe put the thread back together. I've already spent more time trying to make a point than I should have. I have client work I need to do.
Negative marketing isn't going to work for Apple any better than those tasteless YouTube posts last week worked for Microsoft. Name a top-tier brand with a CEO that has made the kinds of public comments a sports figure with an attitude might make. Tim Cook & team, and I'm guessing he wishes he hadn't quite come off that way, and didn't intend for media to turn it into the headline it did. Read the headline from the perspective of a professional with a post-graduate degree who found herself or himself with an Android phone and is thinking about taking the time and trouble to stop by an outlet and swap it for a iPhone (the cost being of no consequence to such a person). Now how does this comment come across?
And how many companies are making $$$ with a $400 phone. The C will probably be the bigger seller of the 2. If the c was cheaper, margins would be lower and profit would be lower. You can't escape that reality.
I would imagine that quite a few companies are making money with $400 phones. Samsung for sure.
How the f*ck do you even know that the 5C isn't the $400 phone in Apple's future.
You can make a helluva phone with a very good margin selling it for $400.
So on this site, "reply" means "post" and to reply you need to click "quote." Sorry for adding to the confusion.
If you click the link that is the submitters name, you can see all the posts and maybe put the thread back together. I've already spent more time trying to make a point than I should have. I have client work I need to do.
Negative marketing isn't going to work for Apple any better than those tasteless YouTube posts last week worked for Microsoft. Name a top-tier brand with a CEO that has made the kinds of public comments a sports figure with an attitude might make. Tim Cook & team, and I'm guessing he wishes he hadn't quite come off that way, and didn't intend for media to turn it into the headline it did. Read the headline from the perspective of a professional with a post-graduate degree who found herself or himself with an Android phone and is thinking about taking the time and trouble to stop by an outlet and swap it for a iPhone (the cost being of no consequence to such a person). Now how does this comment come across?
What are you talking about? He specified a market segment. He didn't single out any vendor. Apple doesn't do junk. Nothing wrong with that. As for the Android user, she would probably say the same thing after she plays with the iPhone.
Why would Apple cheapen their image? That's like asking BMW to make a Civic-like car with a BMW logo.
Apple will never do dirt cheap, we're talking middle ground, where there are profits - not least for a company like Apple who can recycle previous technology, minimising development costs.
No-one need debate whether Apple should make a cheaper iPhone. They have done. The 5c. Those who've got their hands on it say it's decent quality compared with some other plastic phones. And, yes, it runs the best mobile OS yet. It's a terrific plastic smartphone. But none-the-less a plastic phone, packed with last year's technology.
Tim Cook, on the 5c "Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost."
Although Tim would like people to be focus on the first part of the sentence, the truth is in the latter. Apple already had the great phone and the great experience that was the iPhone 5. The world knows it. Nothing new. It's the 'we figured a way to do it at a lower cost' is the telling bit. (Of course - a plastic shell!).
But having done this, what do they do with the lower cost phone? They sell it at the same price as they've always sold what is last year's technology.
So Apple has given us a 'cheaper' phone lacking the only real advantage of a cheaper phone - it's no cheaper.
Comments
Tim, there sure is room for a sub 500$ 3,5" iPhone mini?
Here's what I think Apple should do to cater 95% of the people:
1. iPhone, 4" screen
2. iPhone mini, 3,5" screen
3. iPod = iPod touch, 4" screen
4. iPod mini, 3,5" screen
5. iPod nano = iWatch
6. iPod shuffle
7. iPad, 9,7" screen
8. iPad mini, 7,9" screen
No.
Perhaps some readers have missed my subtlety. Apple is pursuing the correct strategy. But a flippant "we don't make junk" in a broad sweep reference to everyone else who isn't us or doesn't talk like us and look like us, is just flat wrong for the CEO of the company right up near the largest market cap on the planet.
And here's one tiny part of why it particularly irks me. I was COO of a third of a billion trust company, and I ran that financial institution on all Macs, except for one PC to run a bank-provided secure online connection for funds transfer. This included all databases, all transactions, all content creation (which was largely print in those days), all tax form generation, all online customer support. All. Macs. Conventional wisdom at the time was that it could never be done. I believe at that time Apple was using Windows in its own accounting department.
Area Apple reps could not be bothered to stop by and see what we were doing. I'm convinced it's because we were commercial and not graphics arts or advertising or any other "soft" business. I say soft because these other businesses can be off a penny or so and it doesn't matter. Apple developed and to this day holds an "attitude" about business use. The parties of the original big brother theme ad have pretty much flipped 180 degrees in the Apple sub-culture. Try saying something on one of these boards contrary to the Party Line and see what happens.
In recent releases, Apple has stopped bothering to keep Open Directory working as a viable alternative to Active Directory in OS X Server. This without any regard to the courageous IT pros who might have risked career and money to advance Apple into the depths of the corporation, and undercut Microsoft where it gets a large revenue at $200 per seat just for single sign on. No warning, no acknowledgement, no regrets, no "we're working on it" because they're not.
I call it flippant arrogance. Trash talking it can afford because Microsoft is still there to keep its suppliers working. Adolescent. Not the Tim Cook I respect and admire. More like the Android fans commenting on this site than a CEO of a half trillion dollar company.
That's my point. Show some class.
You must have read some other post because you sure as hell didn't read mine.
"
Hell, $350-$400 is a very reasonable expectation and still get a quality phone with decent margins.
"
"
Hell, $350-$400 is a very reasonable expectation and still get a quality phone with decent margins.
"
Well, that comment on its own...: it would mean that Apple has the ability to build a lower cost phone with high quality that would gain even more customers without a massive hit to its margins.
... would mean that if Apple's current strategy (inserting the 5C into the mid tier) doesn't pan out then there is still an opportunity to build a lower priced model without "racing to the bottom", as you put it.
You seem to have missed the majority of what I said in my post. (ie. I didn't just include Ford as an example)
Perhaps some readers have missed my subtlety. Apple is pursuing the correct strategy. But a flippant "we don't make junk" in a broad sweep reference to everyone else who isn't us or doesn't talk like us and look like us, is just flat wrong for the CEO of the company right up near the largest market cap on the planet.
What?! Where did you come up with all of that? He simply said they don't make junk. And he's right!
How would they do that? Use crappy components? Not only will that not work but it will eat away at the flagship model faster and faster and thus lowering the avg margins and thus lowering profits.
How would they do that? Use crappy components? Not only will that not work but it will eat away at the flagship model faster and faster and thus lowering the avg margins and thus lowering profits.
At $350 to $400 per phone... and Apple couldn't do it at those prices when others are selling phones for $99.
Get off it man. You're not making sense.
What you are saying is that the 5C will eat away at the flagship 5S. LOL!
What?! Where did you come up with all of that? He simply said they don't make junk. And he's right!
Actually, Tim said:
What vendor is making money on $99 smart phones?
What vendor is making money on $99 smart phones?
Are you even comprehending what I am saying? I don't think so.
[ Just to help you out a little... there is a big difference between $99 and $350 to $400 ]
I don't think anyone is seriously suggesting they do a 180 degree and do that.
However.
Is the iPod Touch 'junk?'
It's made of premium materials. Yet, Apple makes a decent margin on it presumingly. Take a £250 iPod Touch...and add a phone chipset. Does that really equate to the £215 price difference between the Alu iPod Touch and the 'plastic' iPhone c?
There was all the talk about how Apple couldn't do a cheaper phone.
it's nonsense.
The 4s is £350. Is that junk? People said Apple wouldn't do a cheaper phone. But they did. It's the iPhone 5c. And they have an even cheaper one. It's the 4s.
So. They can do 'cheapER' phones.
I'd hardly call £350 'cheap' for a phone off contract either. That would be a mid range market price. Not cheap. (Far from it.) Not over expensive compared to the 5s ofc.
The variables are age of the tech.
My bet is Apple did a sleight of hand with the 5c and has handsome margins on it. More so than if they'd had the '5' as 'last year's' phone. Didn't they bump the price of the flagship from £525 to £545? So the 5c is only '£60' cheaper than the old '5' flagship? It's not a £100 cheaper. That's for sure.
My bet is we'll see the 4s disappear next year and the 5c will drop into it's price bracket...with the 5S into the now 5c bracket. ...and the new + iPhone 5 incher will go flagship.
Then the 5c will make more sense. Because the price, to me, is 'reaching' as is.
Lemon Bon Bon.
And how many companies are making $$$ with a $400 phone. The C will probably be the bigger seller of the 2. If the c was cheaper, margins would be lower and profit would be lower. You can't escape that reality.
I wouldn't call the lumia 520 junk. Its $99 off contract. that's cheap enough for anybody to have one as a second phone. Heck load here maps onto it and you have a gps also (here maps allows you to download the whole USA maps on it for free).
If nokia can make a quality cheap phone I do not understand why apple cant either.
'Quality cheap phone' equals zero profit, or worse. That's why.
What?! Where did you come up with all of that? He simply said they don't make junk. And he's right!
So on this site, "reply" means "post" and to reply you need to click "quote." Sorry for adding to the confusion.
The 4S is either free or .99c how much cheaper do people want?
And how many companies are making $$$ with a $400 phone. The C will probably be the bigger seller of the 2. If the c was cheaper, margins would be lower and profit would be lower. You can't escape that reality.
I would imagine that quite a few companies are making money with $400 phones. Samsung for sure.
What are you talking about? He specified a market segment. He didn't single out any vendor. Apple doesn't do junk. Nothing wrong with that. As for the Android user, she would probably say the same thing after she plays with the iPhone.
Just Sammy and Apple are making money. Btw, Sammy makes its money with the higher cost GS4 and Note.
Why would Apple cheapen their image? That's like asking BMW to make a Civic-like car with a BMW logo.
Apple will never do dirt cheap, we're talking middle ground, where there are profits - not least for a company like Apple who can recycle previous technology, minimising development costs.
No-one need debate whether Apple should make a cheaper iPhone. They have done. The 5c. Those who've got their hands on it say it's decent quality compared with some other plastic phones. And, yes, it runs the best mobile OS yet. It's a terrific plastic smartphone. But none-the-less a plastic phone, packed with last year's technology.
Tim Cook, on the 5c "Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost."
Although Tim would like people to be focus on the first part of the sentence, the truth is in the latter. Apple already had the great phone and the great experience that was the iPhone 5. The world knows it. Nothing new. It's the 'we figured a way to do it at a lower cost' is the telling bit. (Of course - a plastic shell!).
But having done this, what do they do with the lower cost phone? They sell it at the same price as they've always sold what is last year's technology.
So Apple has given us a 'cheaper' phone lacking the only real advantage of a cheaper phone - it's no cheaper.