What is being said here doesn't make sense, as many others have mentioned. Here's a few simple reasons why.
1) If you cannabilize one of your other products with one that makes you more money, then you are doing your job. If you do it with one that makes you less money, then you have problems. Cannabilization can hurt you if a lower margin product eats away at your higher margin products. I mean geez, is this stuff really that hard for analyst to figure out?
2) As stated, they expect the iPhone to maybe gain 1% of the mobile phone market? Doesn't that like leave 99% of the mobile phone market as potential iPod customers even if you make the poor assumption that every iPhone customer won't buy an iPod? How do they lose here, because the only way they could eat away more iPod market share is to grow the 1% to so 5%, and if they do that (which they won't) then they'll nearly own the world.
Am I missing something here?
IQ78
Well said. The term is UP-SELL. Marketing folks know it, you should too. iPods are commodity items with commodity profit margins. Apple is looking to increase their profit margins while expanding the total market size. Everyone has a cell phone. If apple can deliver on the hype, they will have a market leading high profit high volume phone. Win-win-win.
This isn't any underpants-gnome marketing plan. Apple want to sell to a larger market and cell phones are where it's at.
I'm just wondering - how many people out there currently have either a smartphone or a phone that has "decent" music playback features, AS WELL AS an iPod? Chances are, there's a good piece of the market that will end up having an iPod (especially once the widescreen iPod comes out) as well as an iPhone. They're similar devices, and there will likely be some cannibalization, but I don't think it'll be significant.
Besides, do these "analysts" REALLY think that Steve didn't consider this yet?
Apple themselves could be aware of risk. Companies don't always take the safe path.
They could be thinking that the upside is more than the downside.
The UBS specialist used this reasoning to justify issuing a "hold" rating on the stock, as the promise of the future gadget was offset by its potentially volatile side-effects.
Quote:
Originally Posted by tundraboy
I am tired of hearing the same old analyst's canard that company X's new product B is a mixed blessing because it might cannibalize sales of their other product A. This refrain has been played so often that people have started to believe it. The fact is, successful manufacturers are constantly seeking to cannibalize their own sales with new product because if they aren't doing it, then somebody else will beat them to it. Cannibalizing your own sales means that you're consistently developing new, more advanced, and more desirable products.
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
BINGO! You hit the nail exactly on the head.
And you're right, it is SO very tiresome to hear some idiot analyst get panicky because Apple is doing the EXACT RIGHT THING here. While it's very debatable as to what extent the iPhone will cannibalize iPod sales (my guess is 'not that much', especially once a touchscreen 6G iPod comes out), it's crystal clear, as you state, that if Apple didn't cannibalize it's own products, someone else would do it for them. Duhhh, analysts.
The sad thing? If Apple DIDN'T come out with the iPhone, we'd likely have this exact same UBS halfwit crying about how Apple is "blind to threat of multifunction devices" and we'd be hearing about how music cellphones are going to eat the iPod's lunch. In fact, we WERE hearing that before the iPhone was announced. So to cry about iPhone potentially hurting Apple is just dumb, REALLY dumb 'analysis'.
I personally am all too happy to point out when Apple's straying off the path, but this is so obviously not one of those times. The iPhone had to be made, so that Apple had a presence in both dedicated players and multifunction devices, and Apple created a damn good, game-changing product, every bit the equal of the iPod. Just ask Motorola, Nokia, Samsung, Microsoft, and all the others that are scrambling to respond to it.
I put a 'Hold' on accepting any more advice this particular UBS dumbass.
PS- The AppleInsider headline ("iPhone could make or break Apple's bank") was also overstated and sensationalist. Don't get too desperate for hits, guys.
The headline suggests the the iPhone has the potential to bankrupt Apple. That's absurd at face value.
MAYBE IT IS POSSIBLE... hmmm
SCENARIO:
Apple iPHONE goes on sale. 30 people buy them and start talking crap about the iPHONE which spreads like WILD FIRE. Next thing you know, everybody is talking crap about Apple in general. They have the first APPLE HATERS CLUB (aka... the AHC). They have their first meeting at Commiskey Park (now U.S. Cellular Field) in Chicago where they create a huge pile of Apple products, in fact, a huge pile of EVERY apple product.
They set fire to iPILE and the whole world forgets Apple ever existed... just like disco.
And I here that the French have put together a Renault and a Zune.
I would hope so, but since it uses a different OS I have no way of knowing if they were able to keep it that simple. I've considered that they found it easier to make all the software changes in iTunes instead of altering how the iPhones transmits/recieves audio info.
The iPhone actually has an emulation layer built in; it emulates the pixio stuff. Rest easy. All taken care of.
I would hope so, but since it uses a different OS I have no way of knowing if they were able to keep it that simple. I've considered that they found it easier to make all the software changes in iTunes instead of altering how the iPhones transmits/recieves audio info.
The audio and video is currently sent as an analog signal out certain pins, that's not hard to get that right. Keeping the control system shouldn't be that hard, I don't think the signalling is that difficult to reproduce on a different piece of hardware.
it is reported that battery life is a bit on the low side (40 min). Why? power loss (static leak)? LCD driven to black all the time? Is the phone hot? (shouldn't be if it is handheld)...any idea? thx.
it is reported that battery life is a bit on the low side (40 min). Why? power loss (static leak)? LCD driven to black all the time? Is the phone hot? (shouldn't be if it is handheld)...any idea? thx.
Where did you read that? I don't think anyone outside of Apple and Cingular's CEO have had any real time with the phone. The official remarks are that the battery lasts for up to 5 hours for talk, video and browsing & up to 16 hours for audio playback.
In years past Apple tended to exaggerate the longevity of their batteries, but the last 2-3 years Apple has been very accurate, often being slightly under the actual time.
The iPhone will have voice dialing. Cingular offers voice dialing through an online server access. You just speed dial *8 (or say voice dial) and you asked to speak the person's name and phone number (mobile, work, home or whatever). The address book info is updated on their website. The information can be uploaded or updated by exporting the data from Address Book to the site.
Pretty nice feature. Hopefully they'll improve upon the updating feature before iPhone arives - it's a little cumbersome.
Where did you read that? I don't think anyone outside of Apple and Cingular's CEO have had any real time with the phone. The official remarks are that the battery lasts for up to 5 hours for talk, video and browsing & up to 16 hours for audio playback.
In years past Apple tended to exaggerate the longevity of their batteries, but the last 2-3 years Apple has been very accurate, often being slightly under the actual time.
Anything written about Apple in The Inquirer or by John Dvorak about Apple should be taken with a ton of salt. Dvorak has admitted to writing negative things about Apple for the attention.
Early adopters will pay he full whack price but that will only be a few.
Unless the price comes down significantly the iphone will flop and they wont even meet half their target let alone 1%.
Sorry. But that's crap. I've talked to WAY too many people I know personally who can't wait to buy the iPhone.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Just because you're broke and can't afford one doesn't mean you should whine about it.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Are you trying to make a point that's the opposite of what you are saying here? There is no $400 iPod right now. $400 was the original price for the only model, now there are six models. In functionality and capacity, the closest comparable model to the original is the $200 nano.
Anything written about Apple in The Inquirer or by John Dvorak about Apple should be taken with a ton of salt. Dvorak has admitted to writing negative things about Apple for the attention.
Dvorak is a putz. He's like the Ann Coulter of tech.
Sorry. But that's crap. I've talked to WAY too many people I know personally who can't wait to buy the iPhone.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Just because you're broke and can't afford one doesn't mean you should whine about it.
"Nancy GohringFri Feb 23, 11:47 AM ET
Consumers aren't willing to pay what Apple may ask for the iPhone, but if the price drops they'll switch their mobile service to AT&T in order to get it, according to results of a survey released Thursday.
Online market research firm Compete Inc. surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the U.S. in June.
Among the 26 percent of respondents who said they're likely to buy an iPhone, only 1 percent said they'd pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.
Forty-two percent of those who said they're likely to buy the phone said they'd pay $200 to $299.
The iPhone will be available only to subscribers of Cingular Wireless, now part of AT&T. In a blow to the operator's competitors, 60 percent of those in the survey who said they were likely to buy the phone said they'd switch their mobile operator in order to get it.
While the iPhone has been discussed as a competitor to other handsets like Research In Motion's BlackBerry, the two serve very different markets, said Andy Neff, an analyst at Bear Stearns who participated in a conference call to discuss the results of the study. "Even though there's talk about this as an alternative to RIM, it's not a corporate product," he said. Instead, the iPhone is an indication of a broad shift toward smartphones and the emergence of niches within the category, he said.
The analysts were split on what price they think the device will ultimately retail for. Operators recently haven't been discounting phones in the similar price range as the iPhone, said Phil Cusick, an analyst at Bear Stearns.
However, Apple has been known to announce a product with one price and ultimately sell it for less. Apple TV, for example, was expected to cost $399 but sells for $299, he said.
The phone may start out around $500 because early adopters will pay that, said Neff. But pricing will likely drop by $100 to $200 to target the mass market, he said"
Dvorak is a putz. He's like the Ann Coulter of tech.
No, he's not that bad. He hasn't gotten near the point of writing a book on how to talk to Mac users or books suggesting that Mac users are a conspiracy of evil.
I think the problem is that too many Mac users were painting targets onto themselves by having this psychological need to defend their platform whenever it's being ridiculed. Anyone that wants page hits can just write a story ridiculing the platform and the page hits just roll in when dozens of mac sites link to it. I don't think Dvorak can be faulted too much for exploiting those that make themselves so easily exploitable.
Anything written about Apple in The Inquirer or by John Dvorak about Apple should be taken with a ton of salt. Dvorak has admitted to writing negative things about Apple for the attention.
Even worse than that or funnier depending on your point of view . Dvorak the Maverick (DTM) often reverses his position. He loves to bust Mac chops. Never quote DTM to support an argument because someone else can always find a diametrically opposing quote from him.
Comments
What is being said here doesn't make sense, as many others have mentioned. Here's a few simple reasons why.
1) If you cannabilize one of your other products with one that makes you more money, then you are doing your job. If you do it with one that makes you less money, then you have problems. Cannabilization can hurt you if a lower margin product eats away at your higher margin products. I mean geez, is this stuff really that hard for analyst to figure out?
2) As stated, they expect the iPhone to maybe gain 1% of the mobile phone market? Doesn't that like leave 99% of the mobile phone market as potential iPod customers even if you make the poor assumption that every iPhone customer won't buy an iPod? How do they lose here, because the only way they could eat away more iPod market share is to grow the 1% to so 5%, and if they do that (which they won't) then they'll nearly own the world.
Am I missing something here?
IQ78
Well said. The term is UP-SELL. Marketing folks know it, you should too. iPods are commodity items with commodity profit margins. Apple is looking to increase their profit margins while expanding the total market size. Everyone has a cell phone. If apple can deliver on the hype, they will have a market leading high profit high volume phone. Win-win-win.
This isn't any underpants-gnome marketing plan. Apple want to sell to a larger market and cell phones are where it's at.
I'm just wondering - how many people out there currently have either a smartphone or a phone that has "decent" music playback features, AS WELL AS an iPod? Chances are, there's a good piece of the market that will end up having an iPod (especially once the widescreen iPod comes out) as well as an iPhone. They're similar devices, and there will likely be some cannibalization, but I don't think it'll be significant.
Besides, do these "analysts" REALLY think that Steve didn't consider this yet?
Apple themselves could be aware of risk. Companies don't always take the safe path.
They could be thinking that the upside is more than the downside.
But, they could be wrong.
The UBS specialist used this reasoning to justify issuing a "hold" rating on the stock, as the promise of the future gadget was offset by its potentially volatile side-effects.
I am tired of hearing the same old analyst's canard that company X's new product B is a mixed blessing because it might cannibalize sales of their other product A. This refrain has been played so often that people have started to believe it. The fact is, successful manufacturers are constantly seeking to cannibalize their own sales with new product because if they aren't doing it, then somebody else will beat them to it. Cannibalizing your own sales means that you're consistently developing new, more advanced, and more desirable products.
You want a company that doesn't do a good job of cannibalizing its own product? Take a look at Motorola and it's boom and bust cell phone cycle.
BINGO! You hit the nail exactly on the head.
And you're right, it is SO very tiresome to hear some idiot analyst get panicky because Apple is doing the EXACT RIGHT THING here. While it's very debatable as to what extent the iPhone will cannibalize iPod sales (my guess is 'not that much', especially once a touchscreen 6G iPod comes out), it's crystal clear, as you state, that if Apple didn't cannibalize it's own products, someone else would do it for them. Duhhh, analysts.
The sad thing? If Apple DIDN'T come out with the iPhone, we'd likely have this exact same UBS halfwit crying about how Apple is "blind to threat of multifunction devices" and we'd be hearing about how music cellphones are going to eat the iPod's lunch. In fact, we WERE hearing that before the iPhone was announced. So to cry about iPhone potentially hurting Apple is just dumb, REALLY dumb 'analysis'.
I personally am all too happy to point out when Apple's straying off the path, but this is so obviously not one of those times. The iPhone had to be made, so that Apple had a presence in both dedicated players and multifunction devices, and Apple created a damn good, game-changing product, every bit the equal of the iPod. Just ask Motorola, Nokia, Samsung, Microsoft, and all the others that are scrambling to respond to it.
I put a 'Hold' on accepting any more advice this particular UBS dumbass.
PS- The AppleInsider headline ("iPhone could make or break Apple's bank") was also overstated and sensationalist. Don't get too desperate for hits, guys.
.
The headline suggests the the iPhone has the potential to bankrupt Apple. That's absurd at face value.
MAYBE IT IS POSSIBLE... hmmm
SCENARIO:
Apple iPHONE goes on sale. 30 people buy them and start talking crap about the iPHONE which spreads like WILD FIRE. Next thing you know, everybody is talking crap about Apple in general. They have the first APPLE HATERS CLUB (aka... the AHC). They have their first meeting at Commiskey Park (now U.S. Cellular Field) in Chicago where they create a huge pile of Apple products, in fact, a huge pile of EVERY apple product.
They set fire to iPILE and the whole world forgets Apple ever existed... just like disco.
Dear God,
Do not let the AHC form.
Love,
ME
And I here that the French have put together a Renault and a Zune.
I would hope so, but since it uses a different OS I have no way of knowing if they were able to keep it that simple. I've considered that they found it easier to make all the software changes in iTunes instead of altering how the iPhones transmits/recieves audio info.
The iPhone actually has an emulation layer built in; it emulates the pixio stuff. Rest easy. All taken care of.
I would hope so, but since it uses a different OS I have no way of knowing if they were able to keep it that simple. I've considered that they found it easier to make all the software changes in iTunes instead of altering how the iPhones transmits/recieves audio info.
The audio and video is currently sent as an analog signal out certain pins, that's not hard to get that right. Keeping the control system shouldn't be that hard, I don't think the signalling is that difficult to reproduce on a different piece of hardware.
The iPhone actually has an emulation layer built in; it emulates the pixio stuff. Rest easy. All taken care of.
If we weren't talking about an Apple product, I wouldn't be taking your word at face value.
it is reported that battery life is a bit on the low side (40 min). Why? power loss (static leak)? LCD driven to black all the time? Is the phone hot? (shouldn't be if it is handheld)...any idea? thx.
Where did you read that? I don't think anyone outside of Apple and Cingular's CEO have had any real time with the phone. The official remarks are that the battery lasts for up to 5 hours for talk, video and browsing & up to 16 hours for audio playback.
In years past Apple tended to exaggerate the longevity of their batteries, but the last 2-3 years Apple has been very accurate, often being slightly under the actual time.
http://www.apple.com/iphone/technology/specs.html
Pretty nice feature. Hopefully they'll improve upon the updating feature before iPhone arives - it's a little cumbersome.
Where did you read that? I don't think anyone outside of Apple and Cingular's CEO have had any real time with the phone. The official remarks are that the battery lasts for up to 5 hours for talk, video and browsing & up to 16 hours for audio playback.
In years past Apple tended to exaggerate the longevity of their batteries, but the last 2-3 years Apple has been very accurate, often being slightly under the actual time.
http://www.apple.com/iphone/technology/specs.html
=======
http://www.theinquirer.net/default.aspx?article=38757
Unless the price comes down significantly the iphone will flop and they wont even meet half their target let alone 1%.
Early adopters will pay he full whack price but that will only be a few.
Unless the price comes down significantly the iphone will flop and they wont even meet half their target let alone 1%.
Sorry. But that's crap. I've talked to WAY too many people I know personally who can't wait to buy the iPhone.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Just because you're broke and can't afford one doesn't mean you should whine about it.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Are you trying to make a point that's the opposite of what you are saying here? There is no $400 iPod right now. $400 was the original price for the only model, now there are six models. In functionality and capacity, the closest comparable model to the original is the $200 nano.
Anything written about Apple in The Inquirer or by John Dvorak about Apple should be taken with a ton of salt. Dvorak has admitted to writing negative things about Apple for the attention.
Dvorak is a putz. He's like the Ann Coulter of tech.
Sorry. But that's crap. I've talked to WAY too many people I know personally who can't wait to buy the iPhone.
And the price is never going drop. The features and capacity will continue to rise in order to keep the pricing the same. Have iPods really ever dropped in price? It was $400 when it debuted and it's $400 today. That's always been Apple's M.O.
Just because you're broke and can't afford one doesn't mean you should whine about it.
"Nancy GohringFri Feb 23, 11:47 AM ET
Consumers aren't willing to pay what Apple may ask for the iPhone, but if the price drops they'll switch their mobile service to AT&T in order to get it, according to results of a survey released Thursday.
Online market research firm Compete Inc. surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device to produce the uncommissioned report. The iPhone is a combined music player and cell phone that Apple plans to start selling in the U.S. in June.
Among the 26 percent of respondents who said they're likely to buy an iPhone, only 1 percent said they'd pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.
Forty-two percent of those who said they're likely to buy the phone said they'd pay $200 to $299.
The iPhone will be available only to subscribers of Cingular Wireless, now part of AT&T. In a blow to the operator's competitors, 60 percent of those in the survey who said they were likely to buy the phone said they'd switch their mobile operator in order to get it.
While the iPhone has been discussed as a competitor to other handsets like Research In Motion's BlackBerry, the two serve very different markets, said Andy Neff, an analyst at Bear Stearns who participated in a conference call to discuss the results of the study. "Even though there's talk about this as an alternative to RIM, it's not a corporate product," he said. Instead, the iPhone is an indication of a broad shift toward smartphones and the emergence of niches within the category, he said.
The analysts were split on what price they think the device will ultimately retail for. Operators recently haven't been discounting phones in the similar price range as the iPhone, said Phil Cusick, an analyst at Bear Stearns.
However, Apple has been known to announce a product with one price and ultimately sell it for less. Apple TV, for example, was expected to cost $399 but sells for $299, he said.
The phone may start out around $500 because early adopters will pay that, said Neff. But pricing will likely drop by $100 to $200 to target the mass market, he said"
-------------------------------------------------------------------------------------------------------
Dont assume what I can and cant afford. You only go to make yourself look childish and demeaning. (and dumb)
Go to a forum for younger iphone fans and when you learn some manners then come back here.
Dvorak is a putz. He's like the Ann Coulter of tech.
No, he's not that bad. He hasn't gotten near the point of writing a book on how to talk to Mac users or books suggesting that Mac users are a conspiracy of evil.
I think the problem is that too many Mac users were painting targets onto themselves by having this psychological need to defend their platform whenever it's being ridiculed. Anyone that wants page hits can just write a story ridiculing the platform and the page hits just roll in when dozens of mac sites link to it. I don't think Dvorak can be faulted too much for exploiting those that make themselves so easily exploitable.
Anything written about Apple in The Inquirer or by John Dvorak about Apple should be taken with a ton of salt. Dvorak has admitted to writing negative things about Apple for the attention.
Even worse than that or funnier depending on your point of view . Dvorak the Maverick (DTM) often reverses his position. He loves to bust Mac chops. Never quote DTM to support an argument because someone else can always find a diametrically opposing quote from him.
Here he is on YouTube
http://www.youtube.com/watch?v=gOHzHVF-4Mg