Apple COO Jeff Williams 'aware' of iPhone, Mac price concerns

Posted:
in General Discussion edited February 25
Apple COO Jeff Williams delivered a brief speech at at Elon University where he touched on a variety of topics including the rising cost of the company's products and inaccuracy of analyst cost estimates.

Jeff Williams
Apple COO Jeff Williams


The short speech took place Friday, February 22 at Elon University where he talked about Apple's incredible growth since he joined two decades ago.During a question and answer session following the speech, Williams was asked by a student regarding Apple's plans to lower product prices. The student also cited a recent report that claims an iPhone only costs $350 to manufacture.

"The stories that come out about the cost of our products [have been] the bane of my existence from the beginning of time, including our early days," said Williams. "Analysts don't really understand the cost of what we do and how much care we put into making our products."

The Times News, who covered the speech, describes the lengths Apple has gone to for its product development. Citing the Apple Watch as an example, instead of just mimicking fitness trackers that existed prior to Apple's wearable, the company built an entire physiology lab with 40 licensed nurses and enlisted the help of 10,000 participants to further study how calories are burned in various fitness exercises.

Williams did admit he understands the concern of Apple's rising price points -- which has been especially noticeable on the iPhone models that now can sell for well over $1000.

"It's something we're very aware of," Williams said. "We do not want to be an elitist company. That's not -- we want to be an egalitarian company, and we've got a lot of work going on in developing markets."
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Comments

  • Reply 1 of 86
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear? I think what customers want is for some of that past R&D to start to amortize, and result in stable product lines. This unpredictable continuous rise in prices for no compelling reason has everyone concerned. 

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 

    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 
    ouraganelijahgkitatitflyingdpolscaladanianElCapitanrepressthismuthuk_vanalingamireland
  • Reply 2 of 86
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear? I think what customers want is for some of that past R&D to start to amortize, and result in stable product lines. This unpredictable continuous rise in prices for no compelling reason has everyone concerned. 

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 

    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 
    It’s kind of like when a car dealer tries to add a service fee for advertising.
    ouraganelijahgMetriacanthosauruskitatitleavingthebiggmuthuk_vanalingam1STnTENDERBITSn2itivguy
  • Reply 3 of 86
    Obviously Apple is a premium brand. You cant say no to that. I am glad that Apple exists as a premium brand in the tech field.They have little to no competition on the high end. People in the states & in Europe can easily afford Apple products. I just hope in the poorer regions of the world like India, Africa & South America Apple pushes the iPhone 6S,7 & iPad 10'. Those products are good enough for most people. Plus, if idiots actually looked at the profit margins they have remained between 36-39% for the last 5-7 years. So , no ,they are not making more money on average. Maybe on certain storage tiers, yes. But not overall.
    edited February 24 gilly33redgeminipamacxpressnetmageAppleExposedwatto_cobra
  • Reply 4 of 86
    AndrewMDAndrewMD Posts: 2unconfirmed, member
    The problem with his response comes from being so far removed from the average consumer which Apple originally reached to appeal to in order to get to the place they are today. As others have commented, research and development is always going to be a factor for any company and it is incorporated as such in their balance sheets and amortized over a number of years to reach maximum benefit. There is nothing wrong with Apple creating a premium line either. Apple needs to make two lines - one that is affordable for average consumers and the other for professionals. I could see a line of non pro Apple products that should range from $500 to $1000 for computers/laptops and $400 to $800 for mobile phones, tablets, and wearables.
    designrouraganrepressthislwiomuthuk_vanalingam
  • Reply 5 of 86
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear? I think what customers want is for some of that past R&D to start to amortize, and result in stable product lines. This unpredictable continuous rise in prices for no compelling reason has everyone concerned. 

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 

    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 
    It’s kind of like when a car dealer tries to add a service fee for advertising.
    Yeah, but it's the same problem for all industries. Have you ever noticed that every time someone farts in the middle east, gas stations are out there changing the sign ten minutes later? Didn't they already buy that gas in the ground? Maybe I don't understand the oil to the gas pump expense, but it happens. Every year it's the same story, faster processor, better camera, and we lemmings go out and get one. This made sense when they first came out cause every phone was miles above the previous one. No so much anymore. I managed to wait from the 6 to the xs, four years. I'll probably do the same this time. that's two phones in 8 years instead of 6 phones in 6 years. Vote with your wallet.
    flyingdptobianmuthuk_vanalingamAppleExposed
  • Reply 6 of 86

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 
    Profits (flow) don’t appear on the balance sheet (stock).
    racerhomie3GeorgeBMacwatto_cobra
  • Reply 7 of 86
    Yeah, but it's the same problem for all industries. Have you ever noticed that every time someone farts in the middle east, gas stations are out there changing the sign ten minutes later? Didn't they already buy that gas in the ground? Maybe I don't understand the oil to the gas pump expense, but it happens. Every year it's the same story, faster processor, better camera, and we lemmings go out and get one. This made sense when they first came out cause every phone was miles above the previous one. No so much anymore. I managed to wait from the 6 to the xs, four years. I'll probably do the same this time. that's two phones in 8 years instead of 6 phones in 6 years. Vote with your wallet.
    Can you specify how the early generations of iPhone were vastly different between each release? From my perspective the changes between every generation has been nearly the same.

    What has changed is our experiences and expectations. We never had any expectations of what personal and truly portable technology could be, the iPhone changed that and made us aware. Now, 10 years later, we realize that we had hit the seven year itch and things have not been the same since then. I mean I still love my iPhone and I cannot see my life with out it but it’s just not doing what it once did for me. So what to do? I could leave and get a new phone. I mean they look different and sexy, but I suspect that it will not fill that preceived void. After a few months the excitement I longed for fades, leaving me regretting my decision to leave in the first place. 
    GeorgeBMac
  • Reply 8 of 86
    AndrewMD said:
    The problem with his response comes from being so far removed from the average consumer which Apple originally reached to appeal to in order to get to the place they are today. As others have commented, research and development is always going to be a factor for any company and it is incorporated as such in their balance sheets and amortized over a number of years to reach maximum benefit. There is nothing wrong with Apple creating a premium line either. Apple needs to make two lines - one that is affordable for average consumers and the other for professionals. I could see a line of non pro Apple products that should range from $500 to $1000 for computers/laptops and $400 to $800 for mobile phones, tablets, and wearables.
    Which of course Steve - yes, yes I know, "Steve would have done" - did first with the iMac and G3/4/5, and iBooks and PowerBooks, and more recently the MacBook and MacBook Pro. Now the damn MacBook is nigh on the same price as the arguably more capable 2015 Pro!
    caladanian
  • Reply 9 of 86
    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 
    Except… about a gazillion new tech projects that must be explored to not be behind if they become the next thing; and such projects are just becoming more and more complex/expensive to play around with.

    20 years ago you could still get a revolutionary idea out of a single nerd getting inspired and just putting something together; and now you more often than not need whole teams producing and analyzing a ridiculous amount of data to get things right. You need to get the hardware right, and then the software for the underlying platform/APIs, and then get a lot of internal development going to explore what your developers can do with it all etc. 
    wonkothesanetobianrandominternetpersonStrangeDayswatto_cobra
  • Reply 10 of 86
    wood1208wood1208 Posts: 1,989member
    Unless you can develop and manufacturer all components for your product, it's hard to keep price down. OLED display from Samsung is an example.
    gilly33watto_cobra
  • Reply 11 of 86
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear? I think what customers want is for some of that past R&D to start to amortize, and result in stable product lines. This unpredictable continuous rise in prices for no compelling reason has everyone concerned. 

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 

    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 
    Uhm, who else has to pay for any non material costs other than the customer? That’s their only source of income. If they decide to set up a full blown lab in order to develop their own health tracking systems then of course this has to be factories into the product price. Likewise the heating systems, electricity bills, the Library (if they habe one), emplyee parking, and salaries. 
    Plus everything they develop that never sees the light of day. 

    Whoch by some very basic rules implies that if you want to sell products, of a certain level of quality and a certain level of innovation, your product is going to cost more than another of of lesser quality/level of innovation.  

    Now regarding making profit, as SJ already pointed out that customers will vote with their wallets. They’re doing this now like they did in the past. And it’s now Apple’s job to respond this this by either eating up some margin, lowering the costs, etc. 
    gilly33randominternetpersonnetmagewatto_cobra
  • Reply 12 of 86
    wood1208 said:
    Unless you can develop and manufacturer all components for your product, it's hard to keep price down. OLED display from Samsung is an example.
    Actually, developing and manufacturing all of your compnents usually drives costs up significantly.
    muthuk_vanalingamgilly33
  • Reply 13 of 86
    ksecksec Posts: 1,566member
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear? I think what customers want is for some of that past R&D to start to amortize, and result in stable product lines. This unpredictable continuous rise in prices for no compelling reason has everyone concerned. 

    Meanwhile, our puny minds can comprehend the balance sheet, and profit is obscene. The same old story doesn’t fly. 

    Dont get get me wrong I think it’s perfectly fine for Apple to have a wide line of iPhone, but they’ve pushed the envelope on what a flagship model can cost and they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 

    TL;DR -  Innovation is getting more expensive.

    It is not unpredictable. It has been the case ever since we finally see the end of Moore's law. It is just most people 1. Did not bother to google and known enough about the topic, 2. Media did an absolutely appalling job, not only did they not understand it themselves, they didn't bother to report it since it is not click baiting enough.

    Ever since the Smartphone Revolution, which kicks off a whole lots of other advancement in every computing industry ( or arguably in every industry ), the engineering cost of components and products has been steadily rising. From the Machines that design and Manufacturer the Chips, Engineers wages that has sky rocketed, to Tools required for QA and design, every single part of the process has shoot up in price. That is not including the fact R&D are getting harder as we reach some fundamental limits. It is likely to cost $1B to Fab an TSMC 5nm Chip. That is excluding the cost to ARM and other IP Price. You can literally count with your fingers Companies that has this budget and a market to sell these chips.

    Consumer don't see these price increase because most of these R&D were spread to a much larger usage base, 1.3B Annual Smartphones sales compared to ~250M PC, a total of 10-100x increase in Global Mobile Revenue that drives the innovation in 4G and 5G as well as other advancement in the backend. Because the market were so much larger these technologies manage to recoup their R&D and made a handsome profits while charging you tiny amount of money.

    But now the Smartphone Market has reached the end of its growth curve and a stage of saturation. Smartphone has reached roughly 80% of the total addressable market, that is world population minus infants and elderly. With the rest concerning more about Food and Water. Smartphone cycle are now longer than 3 years, and trending towards 4. There will be less Smartphone sold every year. ( And one reason why the media and marketing are trying to hype up 5G to force a upgrade cycle )

    So what used to be an $1B R&D that spread over 400M iPhones in 2 years time, will now cost $3B R&D that spread over 300M iPhones in 3 years time. That is $0.25 / Unit as compared to  $1 / unit. The numbers are not absolute, they just shows the scale of differences. ( The 400M unit were with respect to most of the early iPhones sold were cutting edge model, the recent iPhone has a much wider spread on older model, which means R&D cost on leading model and spread over a lower volume )

    Of Course some of these are over simplified. For example with a 5% decline on Smartphone unit sold causes an avalanche to NAND and DRAM Price ( No, there isn't a cartel in recent NAND and DRAM pricing despite what ever that makes you believe ) Display Prices from OLED and LCD are dropping fast as well due to capacity needed to fill. So some of these will off set the cost of rising R&D. But as a general trend, Tech innovation is only going to get more expensive, and the industry now worries at their 5G investment will take longer to recoup. 
    edited February 25 wonkothesanemuthuk_vanalingamgilly33netmagewatto_cobra
  • Reply 14 of 86
    Not buying Apple's argument. When the cost of a Mac mini goes up 60%, Apple Pencil 30%, Apple TV 50% or so, something else is wrong. It's not inflation, it's greed. Imagine the cost of your Toyota Camry up 30% the next year for an all-new design and more HP. It's the same thing and now imagine that if the spare tire was extra.

    Apple is insanely greedy these days. I remember the days when Steve Jobs stood up and say "And it's still $ xx," where xx was the same price was last year. Not anymore. Add a 30% premium and that is the new price these days.

    I make a lot more money now than what I did a few years ago, but cannot stomach seeing a $129 wireless keyboard when I can buy the same thing for $40 at some other place. Sure there may be minor issues between the two, but the issues are minor and not worth the 3x premium I have to pay.
    caladaniantobianirelandAppleExposedgatorguyelijahg
  • Reply 15 of 86
    It’s always the same story. Our puny minds can’t comprehend the expenses Apple has. Well, every company has expenses that are not materials cost. Is that really the customer’s burden to bear?
    ...
    they’re not doing anything they weren’t doing 5 years ago when a flagship iPhone was $650. 

    Yes, those are costs that customers must bear, otherwise the company is running below-cost, essentially losing money.

    There are far more costs beyond just $350 worth of physical parts for an iPhone. Think about all the man-hours in every department, plus the cost of supporting devices after they sell. The costs that Apple must bear are astronomical! It's amazing they are reporting a profit year after year, if you ask me.

    People expect to get wage increases, including Apple employees. But the product we are buying can't go up in price?

    Hey, I'm not rich. I'd love Apple products be cheaper, and I do think they are missing the mark some on some (ie. an affordable Mac mini), but I'm not going to claim that Apple is screwing their customers for no reason. They do have enormous costs to cover, and they need to have money in the bank to keep investing into their products and services. Yes, they need to work harder to bring costs down. And Apple has acknowledged that. Let's keep the pressure on them, but let's also stay realistic about it.

    gilly33netmagewatto_cobra
  • Reply 16 of 86

    mindwaves said:
    Not buying Apple's argument. When the cost of a Mac mini goes up 60%, Apple Pencil 30%, Apple TV 50% or so, something else is wrong. It's not inflation, it's greed. Imagine the cost of your Toyota Camry up 30% the next year for an all-new design and more HP. It's the same thing and now imagine that if the spare tire was extra. ... Apple is insanely greedy these days. 

    Does Apple not report on their gross "margins" each quarter? Have you analyzed those margins and concluded that they are unrealistically inflated?

    If you look closely, you'll see that Apple has been _spending_ far more on research and development. Those costs needs to be covered. I am confident their margins have not increased anywhere near the levels that you claim in your comment.

    gilly33netmageAppleExposed
  • Reply 17 of 86
    Well just maybe if all those stupid American Troll companies.. and all those stupid American Class Actions suits over trivial crap.. Apple could put some of those Billions back into affordability.. They need that extra profit because some moron and his mates aren’t happy with the precise count of pixels, or Apples website is not designed specifically for the vision impaired, or there 4 year old iPhone isn’t as fast as it was when new.. so suck it up princesses .. There’s plenty of cheap phones out there.. so go buy one !!
    gilly33n2itivguywatto_cobra
  • Reply 18 of 86

    mindwaves said:
    Not buying Apple's argument. When the cost of a Mac mini goes up 60%, Apple Pencil 30%, Apple TV 50% or so, something else is wrong. It's not inflation, it's greed. Imagine the cost of your Toyota Camry up 30% the next year for an all-new design and more HP. It's the same thing and now imagine that if the spare tire was extra. ... Apple is insanely greedy these days. 

    Does Apple not report on their gross "margins" each quarter? Have you analyzed those margins and concluded that they are unrealistically inflated?

    If you look closely, you'll see that Apple has been _spending_ far more on research and development. Those costs needs to be covered. I am confident their margins have not increased anywhere near the levels that you claim in your comment.

    They do report such margins and they are generally going up. That is, however, not my point. The point is that Apple products are overpriced, some much more so than the competition, and that overprice-ness is increasing. That is my point --  the increasing disparity in price which no other competitor does, and this is what the COO acknowledges above and has to address.
    elijahg
  • Reply 19 of 86
    mike54mike54 Posts: 347member
    I do not buy Jeff Williams downright pathetic excuse.

    Take the mac mini as a classic example. After 4 years of do nothing, zilch (actually they raised the prices), they came with a mac mini with the exact same case, they did the min upgrade of internals with a crap internal GPU and sold it for significantly more. Over the course 4 years the R&D expenditure on product was small.

    As for cost, they have culled products, reduced the size of the macOS team, contracting out to other countries more. Jeff is full of it.

  • Reply 20 of 86
    LOL, is he really!!!
    This is coming from an ex apple customer and a Steve Jobs fan. You people have a choice and you could get a phone or computer that will do anything that apple promises to do and much more for literally one tenth the price. 
    They even have the worst customer service, I sent my old imac to be fixed at their stores and due to several wrong diagnosis so they can start charge me to replace the most expensive part without actually listening to me or acknowledging the real problem, they ended up stealing it because I was late a week for picking it up and told me they threw it in the trash to be recycled and I lost $2500 and a life time of memories and hard work.
    ivanhAppleExposedanantksundaram
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