People may already have a cellphone contract, but purchasing an iPhone requires starting a NEW two-year agreement, and paying off any existing contract (i.e., paying an early termination fee to another carrier, or paying an extra $200 to AT&T if you're not yet eligible for a new iPhone contract).
The fact is, when you enter into any new two-year phone contract, most of the money you pay each month is for the service, but part of it is your "mortgage" on the phone. You pay the $200 down payment on your $400+ phone, and then you continue paying off the rest of the phone's cost (plus interest) each month.
To get out of your contract, you have to pay an early termination fee -- you're basically paying off the rest of the principal on your phone mortgage (no jokes about subprime phone mortgages, please).
People may already have a cellphone contract, but purchasing an iPhone requires starting a NEW two-year agreement, and paying off any existing contract (i.e., paying an early termination fee to another carrier, or paying an extra $200 to AT&T if you're not yet eligible for a new iPhone contract).
The fact is, when you enter into any new two-year phone contract, most of the money you pay each month is for the service, but part of it is your "mortgage" on the phone. You pay the $200 down payment on your $400+ phone, and then you continue paying off the rest of the phone's cost (plus interest) each month.
To get out of your contract, you have to pay an early termination fee -- you're basically paying off the rest of the principal on your phone mortgage (no jokes about subprime phone mortgages, please).
I don't understand your point. People buy new cell phones, they sign up for new contracts. Their contracts expire after x-many months. Why is the iPhone somehow different than other cellphones in this case?
There is a reason why the notoriously secretive Apple announced and demonstrated the iPhone 6 months before its release. Most people in the US seem to go from contract to contract in the US. They often don't get a special rate plan if they buy the phone outright so it makes it little sense to do so.
I don't understand your point. People buy new cell phones, they sign up for new contracts. Their contracts expire after x-many months. Why is the iPhone somehow different than other cellphones in this case?
It's not. The point is that the iPhone is not cheaper than an iPod touch.
They 'blew it' compared to what? There isn't any other product which does what the iPod Touch does, and so well, aside from the iPhone (or, arguably, other smart phones). If people want that functionality without a cellular contract, they can get the iPod Touch. It is progressing as surely as the iPhone is and, collectively, they are some of the most revolutionary consumer electronics we've seen in an extremely long time.
I think perspective is important here.
Really? How about the Archos 5 and the Nokia 810n? Look at their specs. They are great models for Apple. In many ways, they do more than the iPod Touch. I think Apple should have an iPod Touch Pro...bigger pixel resolution screen so it can be a true micro computer. Not a one-size-fits-all (screen size like laptop sizes) philosphy for the iPod Touch.
It's not. The point is that the iPhone is not cheaper than an iPod touch.
I don't recall saying it was, and have many posts pointing out the $599/$699 is full retail price of the handset. My original reply was to Denton who commented that the iPhone would cost $1000-$2000 more than the iPod Touch, but failed to point out that people are already paying most of that for their current cellphone plan, as if that wasn't a consideration. Since most iPhone customers are new to smartphones there would be paying a data premium that they were not used to under their basic phone. Again, I'm pointing out that the iPhone's TCO is more expensive than the Touch, even when you subtract the regular calling plan from the equation.
Wu: his concern, however, is that the new touch models are not priced aggressively enough for today's consumers, who may see more value in a $199 subsidized iPhone.
Um....
Um: We continue to think Apple will benefit from further product refreshes, price elasticity and continued ramp of the iPhone.
Because AT&T pay Apple as well when the iPhone in sold.
It is said that AT&T pay Apple around $300 for each iPhone sold, they are subsidising the cost of the handset to the user, just like many other phone companies.
Apple get $499 for the iPhone and $229 for the iPod - simple.
I didn't mean that. I meant how do they expect people to pay for a more expensive iPod when there are many things you don't get with it that you do with iPhone. Not everyone uses their iPhone as a phone.
I didn't mean that. I meant how do they expect people to pay for a more expensive iPod when there are many things you don't get with it that you do with iPhone. Not everyone uses their iPhone as a phone.
Have you not read this thread? Quite a lot of people have pointed out, in quite a few different ways, that the iPod is not more expensive than the iPhone. You know what? They're right, so there is no problem; people are not expected to pay more in order to get less. They pay less and get less. Seems fair enough to me.
IMO, I don't think Apple "forgot to include cannibalization of the iphone" when they set prices.
The perceived price discrepancy between the touch and the iPhone provides pressure to switch to AT&T for their exclusive hardware. Simple - if "consumer sees more value in $199 iphone", they're still switching to the iphone _platform_, so of course Apple wins.
Does anyone actually think that Apple will sell so many iPhones at $199 that touch's will start overflowing from the warehouse? No - if they do at all, there'll just be enough of a price cut before Christmas to keep the flow moving; they obviously have room in their margins.
Since the touch has no competition _outside_ of Apple, the fact that you can do _almost_ everything iphone on a touch, means that there's an outlet for every potential customer that can't get (or hates) AT&T (or their global analogs).
If the Touch was $100 more, I could maybe see price strat problem, but this really seems like Shawn just needing to say "something".
The plural of "iPod Touch" is "iPod Touches"; "iPod Touch's" means "belonging to iPod touch" or "iPod Touch is" or "iPod Touch has".
Yeah, thanks; I've got most of that. Don't know why apostrophes occasionally look right on acronyms & proper names to me.
Maybe I thought that if I wrote "I'm writing iPod Touches improperly," the profanity filter would flag "Touches improperly." ha. Thanks again! (we now return to topic)
How much is the subsidy and why isn't it posted like any other phone when discounted by any other carrier?
I've never seen carrier list their subsidy. They list the retail price and the subsidized price. They don't tell what the subsidy is. AT&T PR announced the retail price the day after the iPhone 3G was announced, but since you can't buy it unsubsidized (read: without a contract) at this point there is no reason for AT&T to post a retail price that isn't current valid since they aren't yet selling it as such. Check out other carriers where they do sell it at full price and subsidized.
When they announced price cuts I was surprised Apple didn't go down to the $199 price point for the touch.
I originally thought Apple would hit the $199 point, but in hindsight, the $229 makes iPhone at $199 look more attractive, which is what Apple really wants, as iPhone clearly has higher margins than iPod touch. (I know iPhone is not really $199 since you need to pay the monthly service fee but it seems many people ignore that cost when comparing and choosing to make a purchase. I think it's clearly psychological.)
Comments
People may already have a cellphone contract, but purchasing an iPhone requires starting a NEW two-year agreement, and paying off any existing contract (i.e., paying an early termination fee to another carrier, or paying an extra $200 to AT&T if you're not yet eligible for a new iPhone contract).
The fact is, when you enter into any new two-year phone contract, most of the money you pay each month is for the service, but part of it is your "mortgage" on the phone. You pay the $200 down payment on your $400+ phone, and then you continue paying off the rest of the phone's cost (plus interest) each month.
To get out of your contract, you have to pay an early termination fee -- you're basically paying off the rest of the principal on your phone mortgage (no jokes about subprime phone mortgages, please).
Thank you. Best post to this thread so far.
Since when is explaining advertising "arguing economics", Rodney Dangerfield?
A: Since you either don't understand the difference between "up-front price" and "total cost of ownership" or think we don't.
B: Since you apparently expect Apple to be the only one advertising TCOS while everyone else quotes prices such as "FREE!!!"
C: Since you did use "price" and "cost" interchangeably in the same sentence.
Thanks for the comparison to my late, lamented hero, though! Hopefully I can get you mad enough to call me George Carlin. That would make my day!
People may already have a cellphone contract, but purchasing an iPhone requires starting a NEW two-year agreement, and paying off any existing contract (i.e., paying an early termination fee to another carrier, or paying an extra $200 to AT&T if you're not yet eligible for a new iPhone contract).
The fact is, when you enter into any new two-year phone contract, most of the money you pay each month is for the service, but part of it is your "mortgage" on the phone. You pay the $200 down payment on your $400+ phone, and then you continue paying off the rest of the phone's cost (plus interest) each month.
To get out of your contract, you have to pay an early termination fee -- you're basically paying off the rest of the principal on your phone mortgage (no jokes about subprime phone mortgages, please).
I don't understand your point. People buy new cell phones, they sign up for new contracts. Their contracts expire after x-many months. Why is the iPhone somehow different than other cellphones in this case?
There is a reason why the notoriously secretive Apple announced and demonstrated the iPhone 6 months before its release. Most people in the US seem to go from contract to contract in the US. They often don't get a special rate plan if they buy the phone outright so it makes it little sense to do so.
I don't understand your point. People buy new cell phones, they sign up for new contracts. Their contracts expire after x-many months. Why is the iPhone somehow different than other cellphones in this case?
It's not. The point is that the iPhone is not cheaper than an iPod touch.
They 'blew it' compared to what? There isn't any other product which does what the iPod Touch does, and so well, aside from the iPhone (or, arguably, other smart phones). If people want that functionality without a cellular contract, they can get the iPod Touch. It is progressing as surely as the iPhone is and, collectively, they are some of the most revolutionary consumer electronics we've seen in an extremely long time.
I think perspective is important here.
Really? How about the Archos 5 and the Nokia 810n? Look at their specs. They are great models for Apple. In many ways, they do more than the iPod Touch. I think Apple should have an iPod Touch Pro...bigger pixel resolution screen so it can be a true micro computer. Not a one-size-fits-all (screen size like laptop sizes) philosphy for the iPod Touch.
It's not. The point is that the iPhone is not cheaper than an iPod touch.
I don't recall saying it was, and have many posts pointing out the $599/$699 is full retail price of the handset. My original reply was to Denton who commented that the iPhone would cost $1000-$2000 more than the iPod Touch, but failed to point out that people are already paying most of that for their current cellphone plan, as if that wasn't a consideration. Since most iPhone customers are new to smartphones there would be paying a data premium that they were not used to under their basic phone. Again, I'm pointing out that the iPhone's TCO is more expensive than the Touch, even when you subtract the regular calling plan from the equation.
You aren't acknowledging that people tend to already pay for a cellphone contract.
People tend not to pay for data -- fine: $700 more over the course of the two year contract.
Well, you agree with my point anyway...
Again, I'm pointing out that the iPhone's TCO is more expensive than the Touch, even when you subtract the regular calling plan from the equation.
Think of the iphone as a extremely attractive woman...
Did we need this metaphor?
Wu: his concern, however, is that the new touch models are not priced aggressively enough for today's consumers, who may see more value in a $199 subsidized iPhone.
Um....
Um: We continue to think Apple will benefit from further product refreshes, price elasticity and continued ramp of the iPhone.
Wu!!
...no ....can't stop....
Because AT&T pay Apple as well when the iPhone in sold.
It is said that AT&T pay Apple around $300 for each iPhone sold, they are subsidising the cost of the handset to the user, just like many other phone companies.
Apple get $499 for the iPhone and $229 for the iPod - simple.
I didn't mean that. I meant how do they expect people to pay for a more expensive iPod when there are many things you don't get with it that you do with iPhone. Not everyone uses their iPhone as a phone.
I didn't mean that. I meant how do they expect people to pay for a more expensive iPod when there are many things you don't get with it that you do with iPhone. Not everyone uses their iPhone as a phone.
Have you not read this thread? Quite a lot of people have pointed out, in quite a few different ways, that the iPod is not more expensive than the iPhone. You know what? They're right, so there is no problem; people are not expected to pay more in order to get less. They pay less and get less. Seems fair enough to me.
Did we need this metaphor?
Good point. Everyone knows Apple products are like cars.
The perceived price discrepancy between the touch and the iPhone provides pressure to switch to AT&T for their exclusive hardware. Simple - if "consumer sees more value in $199 iphone", they're still switching to the iphone _platform_, so of course Apple wins.
Does anyone actually think that Apple will sell so many iPhones at $199 that touch's will start overflowing from the warehouse? No - if they do at all, there'll just be enough of a price cut before Christmas to keep the flow moving; they obviously have room in their margins.
Since the touch has no competition _outside_ of Apple, the fact that you can do _almost_ everything iphone on a touch, means that there's an outlet for every potential customer that can't get (or hates) AT&T (or their global analogs).
If the Touch was $100 more, I could maybe see price strat problem, but this really seems like Shawn just needing to say "something".
Apostrophes are simple - they are used to indicate either missing letters or possession. Missing letters take precedence. So:
* it's = it is / it has, its = belonging to it.
* Non-possessive plurals don't have apostrophes.
Apostrophes: is the plural of iPod Touch "iPod Touches"? I went with "Touch's" 'cuz "Touches" seemed overly verb-y. Thanks in advance.
Apostrophes: is the plural of iPod Touch "iPod Touches"? I went with "Touch's" 'cuz "Touches" seemed overly verb-y. Thanks in advance.
The plural of "iPod Touch" is "iPod Touches"; "iPod Touch's" means "belonging to iPod touch" or "iPod Touch is" or "iPod Touch has".
e.g.
"My iPod Touch's case" means "The case belonging to my iPod Touch".
"My iPod Touch's great" means "My iPod Touch is great."
"My iPod Touch's been scratched" means "My iPod Touch has been scratched."
The plural of "iPod Touch" is "iPod Touches"; "iPod Touch's" means "belonging to iPod touch" or "iPod Touch is" or "iPod Touch has".
Yeah, thanks; I've got most of that. Don't know why apostrophes occasionally look right on acronyms & proper names to me.
Maybe I thought that if I wrote "I'm writing iPod Touches improperly," the profanity filter would flag "Touches improperly." ha. Thanks again! (we now return to topic)
How much is the subsidy and why isn't it posted like any other phone when discounted by any other carrier?
I've never seen carrier list their subsidy. They list the retail price and the subsidized price. They don't tell what the subsidy is. AT&T PR announced the retail price the day after the iPhone 3G was announced, but since you can't buy it unsubsidized (read: without a contract) at this point there is no reason for AT&T to post a retail price that isn't current valid since they aren't yet selling it as such. Check out other carriers where they do sell it at full price and subsidized.
When they announced price cuts I was surprised Apple didn't go down to the $199 price point for the touch.
I originally thought Apple would hit the $199 point, but in hindsight, the $229 makes iPhone at $199 look more attractive, which is what Apple really wants, as iPhone clearly has higher margins than iPod touch. (I know iPhone is not really $199 since you need to pay the monthly service fee but it seems many people ignore that cost when comparing and choosing to make a purchase. I think it's clearly psychological.)