Just because analyists *want* it to happen, doesn't mean it's going to. Is any one at Apple really thinking, "Gosh if only we could see more iPhones! But for a lower profile margin, with brand diluting features!"
Yeah, a mid-range iPhone would be a re-packaged 3GS.
How else would Apple make a midrange model? Less features? Like what — less touch enabled? No Bluetooth/WiFi radio? 4GB Memory? At the volume Apple buys, NAND memory and BT/WiFi chips have got to be dirt cheap — so removing those would have minimal impact on costs, and severely impact the usability.
A smaller screen would have to have the same pixel dimensions as the iPhone 3G or iPhone 4 — which would mean smaller icons and UI elements to touch.
A less capable iPhone simply isn't an iPhone!
As you suggest: It would be the iPhone 3GS repackaged.
in spetmber they will have
an iPhone 5 ( or 4S)
An iPhone 4.
a 3GS - all capable of running iOS 5.
When they moved to the iPhone 4 this wasn't possible, because the iPhone 3G was really just the first gen with a new radio chip. It wasn't capable of much. I have a 3GS and it runs fine. Nobody would use speed as a reason to update to the iPhone 4. However the next iPhone will have the processor power of the iPad 2.
So the "crippled" iPhone would be the 3GS, or something like it.
Apple will finally address the huge pre-paid mobile phone market in September when the company releases a mid-range, contract-free iPhone...
iPhone is and will always be a smartphone. This device would still be force to have a data plan. There would be nothing 'mid-range' about this device except for its utter lack of features from the real iPhone. No one would buy it when they have the option of the real iPhone. Case in point, the first-gen iPhone 4 GB. Discontinued in two months because people bought the eight. And a "mid-range, contract-free" iPhone would lack even more.
Quote:
"It's time for a mid-range iPhone," analyst Chris Whitmore... ...declared...
It's time for all analysts to be jailed.
Quote:
Originally Posted by anonymouse
Predicting what Apple will do based on market analysis is like forecasting the weather based on whether it rained last week.
I have a better one: Predicting what Apple will do based on market analysis is like forecasting the weather based on what you ate last week.
HEY. IDIOTS. (Sorry, talking to the analysts now). You want Apple to release a "mid-range" phone? Hound the carriers to make data plans OPTIONAL. The EXISTING iPhone instantly becomes mid-range, you get millions more subscribers from the people who couldn't care less about/don't need/couldn't afford a data plan, and Apple keeps their massive revenue stream because they're selling even more of the "expensive version" of the iPhone.
Just smack a 3G + GSM sim card on an iPod Touch.. Done!
That will worth around $400 I guess.
The problem is that those folks doesn't have purchasing power to benefit the App store, maybe, they need to coordinate to carriers to enable direct purchasing of apps through a prepaid card?
HEY. IDIOTS. (Sorry, talking to the analysts now). You want Apple to release a "mid-range" phone? Hound the carriers to make data plans OPTIONAL. The EXISTING iPhone instantly becomes mid-range, you get millions more subscribers from the people who couldn't care less about/don't need/couldn't afford a data plan, and Apple keeps their massive revenue stream because they're selling even more of the "expensive version" of the iPhone.
The markets we are talking about have optional pre-paid plans. And people who want an iPhone would mostly want a data plan. The US centric nature of this site makes me have to continue to want to beat my head against the wall.
Here is a sample of pre-paid options in the Three store in the UK - an established market.
None are the iPhone for reasons of price. Prices range from £169 to £89. The top two options are a Blackberry and an Android phone.
At the top it says
For £15; all you can eat data, 300 minutes, 3,000 texts. When that runs out - in general that talk time will run out first - you get another £15. It lasts a maximum of a month.
Every single shop in the land has the ability to buy a top up. Whats fairly common in the UK is the vast majority of plans in most countries.
The problem is that those folks doesn't have purchasing power to benefit the App store, maybe, they need to coordinate to carriers to enable direct purchasing of apps through a prepaid card?
Thats a good idea - before the app store people on cheap phones used to pay £3-5 for ringtones.The used sms to pay and it reduced their balance. I think that if people have already spent money - i.e. bought a pre-paid card, or it is about to run out in a few days anyway, they are much more likely to spend on something trivial.
Thats a good idea - before the app store people on cheap phones used to pay £3-5 for ringtones.The used sms to pay and it reduced their balance. I think that if people have already spent money - i.e. bought a pre-paid card, or it is about to run out in a few days anyway, they are much more likely to spend on something trivial.
This exists. You can buy iTunes pre-paid cards that tie to your Apple ID.
Apple isn't going to introduce a cheaper iPhone, they are going to introduce a line of iPods that allow you to make phone calls with a prepaid calling card.
I really hope iPod touch just becomes iPod. iPod nano is now touch screen, iPod touch doesn't makes sense anymore. This way an iPod name gets a makeover as a communication, gaming and media device.
Apple isn't going to introduce a cheaper iPhone, they are going to introduce a line of iPods that allow you to make phone calls with a prepaid calling card.
It's two very different markets.
The new device? The ipod touch phone.
No, if Apple were to "phoneitize" their iPod line, they'd simply combine iMessage, iChat (for audio), and FaceTime and have THAT be the way they do calls.
Quote:
Originally Posted by iVlad
I really hope iPod touch just becomes iPod. iPod nano is now touch screen, iPod touch doesn't makes sense anymore. This way an iPod name gets a makeover as a communication, gaming and media device.
This year's the tenth anniversary of the iPod. I see the classic being discontinued and the iPod touch being renamed.
Predicting what Apple will do based on market analysis is like forecasting the weather based on whether it rained last week.
My feelings exactly.
Apple's goals are rarely market/business-related at all. The goal is the product.
They may make all iPhones cheaper, and they may make a cheaper lower-end phone, but to make a "cheap iPhone" to sell alongside the current iPhone is not very Apple-like at all.
It would just be a slightly slower, crappier iPhone for less money.
You really think AT&T is paying Apple $500 ($450 subsidy + $49 subsidized price) for an 8GB iPhone 3GS?
Of course, minus some volume discounts possibly. Apple sells the iPhone 4G (16 GB) in the UK unlocked for £510 (£425 pre-tax or $677, ie, a 4% premium compared to the US' $649). It sells the 3GS 16 GB for £428 (£357 pre-tax or $568). Correcting again for this 4% premium, Apple would sell the 3GS 16 GB unlocked in the US for a predicted $545.
Which means AT&T is giving you a $494 subsidy (assuming the same wholesale prices for the Apple Store division of Apple and AT&T and same retail margins, which is only approximately true). This whole subsidy business is one of the biggest scams going on at the moment and only it allows for 70% gross profit margins.
Three years ago, I bought an iPhone 3G 16 GB through an authorised Apple reseller in Switzerland. The box was marked with CHF1100 (about $1000 at that time), the store then subtracted the carrier subsidy (which it was getting reimbursed for by the carrier) of CHF750, and I only had to pay CHF350. That was in the days of carrier exclusivity and gives you an idea how big a loan the carriers were willing to extend to their customers.
iPhone is and will always be a smartphone. This device would still be force to have a data plan.
There are enough people who own an iPod touch + dumbphone. Were it not for the insane premium an iPhone carries compared to a comparable iPod touch, these people would happily dump that dumbphone and switch their iPod touch to an iPhone with a voice plan only.
The problem with the "cheap" iPhone is this: which features get scrapped to differentiate the pre-paid iPhone from the "full-featured" iPhone? What can Apple do to cut costs while maintaining the user experience?
I think the harder part is differentiating and not the actual cost (though that naturally is also a factor). How can Apple sell a phone with a 40-50% profit margin alongside a phone with a 70% profit margin without threatening that 70% margin business too much.
This whole subsidy business is one of the biggest scams going on at the moment and only it allows for 70% gross profit margins.
I still don't entirely understand why this is such a scam. Without the 2 year contract I take to get a subsidy, the carrier plans remain the same price. I will strongly agree that those plans are ridiculously inflated, but they aren't any better from carrier to carrier, so how am I being scammed? What am I missing?
My best guess is that the existance of contracts somehow help to keep absurd carrier plans afloat... ??
I think the harder part is differentiating and not the actual cost (though that naturally is also a factor). How can Apple sell a phone with a 40-50% profit margin alongside a phone with a 70% profit margin without threatening that 70% margin business too much.
I agree; similar thoughts ran through my head when I wrote that post. So they're not only diluting the product image, but revenue and profits as well, as a direct correlation.
... How ... would Apple make a midrange model? Less features? Like what ? less touch enabled? No Bluetooth/WiFi radio? 4GB Memory? At the volume Apple buys, NAND memory and BT/WiFi chips have got to be dirt cheap ? so removing those would have minimal impact on costs, and severely impact the usability.
A smaller screen would have to have the same pixel dimensions as the iPhone 3G or iPhone 4 ? which would mean smaller icons and UI elements to touch.
A less capable iPhone simply isn't an iPhone!
I've been thinking/saying this for many months now. It just doesn't make sense for Apple to build a second, slightly crappier iPhone to sell either alongside of, or instead of, the original.
The low end of the market doesn't even want an iPhone IMO, they want a feature phone. Smartphones are attractive, but it's a mistake to think that every goat-herder and tour boat operator with a flip phone secretly really wants a full-blown smartphone computer in their pocket because they just have to join Twitter. This is a conceit of the technorati.
If this hypothetical phone didn't do apps at all, but instead just did the basic phone functions, plus texts, music and picture taking like any feature phone, it would sell like hotcakes. Give it a tiny little square screen like the iPod nano, hell, maybe it even runs iPod nano games. It doesn't need a keyboard if it has (virtual) T9 like any flip phone, it doesn't need a contract, and it won't suck data.
It will be a little piece of Apple magic in your hand and you will be able to buy it in India and Africa and all the other places where the feature phone is still king for next to nothing. It could be the iCloud gateway drug.
There are enough people who own an iPod touch + dumbphone. Were it not for the insane premium an iPhone carries compared to a comparable iPod touch, these people would happily dump that dumbphone and switch their iPod touch to an iPhone with a voice plan only.
This is exactly the market Apple needs to address. I have an AT&T Family Plan with 2 iPhones and 2 dumb phones. The dumb phones are for my children. The only reason they have dumb phones is that I don't want them to have a data plan which could get expensive. Now, if Apple were to make a phone that did not require a data plan, I would get it for my children. With iMessage, I may even be able to dump the unlimited family texting plan that costs $30 per month.
Making the overall cost of ownership lower is the way Apple can keep the growth of its phones going.
Comments
Just because analyists *want* it to happen, doesn't mean it's going to. Is any one at Apple really thinking, "Gosh if only we could see more iPhones! But for a lower profile margin, with brand diluting features!"
Yeah, a mid-range iPhone would be a re-packaged 3GS.
How else would Apple make a midrange model? Less features? Like what — less touch enabled? No Bluetooth/WiFi radio? 4GB Memory? At the volume Apple buys, NAND memory and BT/WiFi chips have got to be dirt cheap — so removing those would have minimal impact on costs, and severely impact the usability.
A smaller screen would have to have the same pixel dimensions as the iPhone 3G or iPhone 4 — which would mean smaller icons and UI elements to touch.
A less capable iPhone simply isn't an iPhone!
As you suggest: It would be the iPhone 3GS repackaged.
in spetmber they will have
an iPhone 5 ( or 4S)
An iPhone 4.
a 3GS - all capable of running iOS 5.
When they moved to the iPhone 4 this wasn't possible, because the iPhone 3G was really just the first gen with a new radio chip. It wasn't capable of much. I have a 3GS and it runs fine. Nobody would use speed as a reason to update to the iPhone 4. However the next iPhone will have the processor power of the iPad 2.
So the "crippled" iPhone would be the 3GS, or something like it.
Apple will finally address the huge pre-paid mobile phone market in September when the company releases a mid-range, contract-free iPhone...
iPhone is and will always be a smartphone. This device would still be force to have a data plan. There would be nothing 'mid-range' about this device except for its utter lack of features from the real iPhone. No one would buy it when they have the option of the real iPhone. Case in point, the first-gen iPhone 4 GB. Discontinued in two months because people bought the eight. And a "mid-range, contract-free" iPhone would lack even more.
"It's time for a mid-range iPhone," analyst Chris Whitmore... ...declared...
It's time for all analysts to be jailed.
Predicting what Apple will do based on market analysis is like forecasting the weather based on whether it rained last week.
I have a better one: Predicting what Apple will do based on market analysis is like forecasting the weather based on what you ate last week.
HEY. IDIOTS. (Sorry, talking to the analysts now). You want Apple to release a "mid-range" phone? Hound the carriers to make data plans OPTIONAL. The EXISTING iPhone instantly becomes mid-range, you get millions more subscribers from the people who couldn't care less about/don't need/couldn't afford a data plan, and Apple keeps their massive revenue stream because they're selling even more of the "expensive version" of the iPhone.
That will worth around $400 I guess.
The problem is that those folks doesn't have purchasing power to benefit the App store, maybe, they need to coordinate to carriers to enable direct purchasing of apps through a prepaid card?
HEY. IDIOTS. (Sorry, talking to the analysts now). You want Apple to release a "mid-range" phone? Hound the carriers to make data plans OPTIONAL. The EXISTING iPhone instantly becomes mid-range, you get millions more subscribers from the people who couldn't care less about/don't need/couldn't afford a data plan, and Apple keeps their massive revenue stream because they're selling even more of the "expensive version" of the iPhone.
The markets we are talking about have optional pre-paid plans. And people who want an iPhone would mostly want a data plan. The US centric nature of this site makes me have to continue to want to beat my head against the wall.
Here is a sample of pre-paid options in the Three store in the UK - an established market.
http://threestore.three.co.uk/payg/default.aspx?ID=1184
None are the iPhone for reasons of price. Prices range from £169 to £89. The top two options are a Blackberry and an Android phone.
At the top it says
For £15; all you can eat data, 300 minutes, 3,000 texts. When that runs out - in general that talk time will run out first - you get another £15. It lasts a maximum of a month.
Every single shop in the land has the ability to buy a top up. Whats fairly common in the UK is the vast majority of plans in most countries.
[B]
The problem is that those folks doesn't have purchasing power to benefit the App store, maybe, they need to coordinate to carriers to enable direct purchasing of apps through a prepaid card?
Thats a good idea - before the app store people on cheap phones used to pay £3-5 for ringtones.The used sms to pay and it reduced their balance. I think that if people have already spent money - i.e. bought a pre-paid card, or it is about to run out in a few days anyway, they are much more likely to spend on something trivial.
Thats a good idea - before the app store people on cheap phones used to pay £3-5 for ringtones.The used sms to pay and it reduced their balance. I think that if people have already spent money - i.e. bought a pre-paid card, or it is about to run out in a few days anyway, they are much more likely to spend on something trivial.
This exists. You can buy iTunes pre-paid cards that tie to your Apple ID.
It's two very different markets.
The new device? The ipod touch phone.
Apple isn't going to introduce a cheaper iPhone, they are going to introduce a line of iPods that allow you to make phone calls with a prepaid calling card.
It's two very different markets.
The new device? The ipod touch phone.
No, if Apple were to "phoneitize" their iPod line, they'd simply combine iMessage, iChat (for audio), and FaceTime and have THAT be the way they do calls.
I really hope iPod touch just becomes iPod. iPod nano is now touch screen, iPod touch doesn't makes sense anymore. This way an iPod name gets a makeover as a communication, gaming and media device.
This year's the tenth anniversary of the iPod. I see the classic being discontinued and the iPod touch being renamed.
This exists. You can buy iTunes pre-paid cards that tie to your Apple ID.
We know that, but it's troublesome to buy a different card for purchasing apps.
Wouldn't be great if your prepaid plan can deal directly with it? although Apple needs some carrier cooperation and that's a pain.
Predicting what Apple will do based on market analysis is like forecasting the weather based on whether it rained last week.
My feelings exactly.
Apple's goals are rarely market/business-related at all. The goal is the product.
They may make all iPhones cheaper, and they may make a cheaper lower-end phone, but to make a "cheap iPhone" to sell alongside the current iPhone is not very Apple-like at all.
It would just be a slightly slower, crappier iPhone for less money.
Does that really sound like Apple?
You really think AT&T is paying Apple $500 ($450 subsidy + $49 subsidized price) for an 8GB iPhone 3GS?
Of course, minus some volume discounts possibly. Apple sells the iPhone 4G (16 GB) in the UK unlocked for £510 (£425 pre-tax or $677, ie, a 4% premium compared to the US' $649). It sells the 3GS 16 GB for £428 (£357 pre-tax or $568). Correcting again for this 4% premium, Apple would sell the 3GS 16 GB unlocked in the US for a predicted $545.
Which means AT&T is giving you a $494 subsidy (assuming the same wholesale prices for the Apple Store division of Apple and AT&T and same retail margins, which is only approximately true). This whole subsidy business is one of the biggest scams going on at the moment and only it allows for 70% gross profit margins.
Three years ago, I bought an iPhone 3G 16 GB through an authorised Apple reseller in Switzerland. The box was marked with CHF1100 (about $1000 at that time), the store then subtracted the carrier subsidy (which it was getting reimbursed for by the carrier) of CHF750, and I only had to pay CHF350. That was in the days of carrier exclusivity and gives you an idea how big a loan the carriers were willing to extend to their customers.
iPhone is and will always be a smartphone. This device would still be force to have a data plan.
There are enough people who own an iPod touch + dumbphone. Were it not for the insane premium an iPhone carries compared to a comparable iPod touch, these people would happily dump that dumbphone and switch their iPod touch to an iPhone with a voice plan only.
The problem with the "cheap" iPhone is this: which features get scrapped to differentiate the pre-paid iPhone from the "full-featured" iPhone? What can Apple do to cut costs while maintaining the user experience?
I think the harder part is differentiating and not the actual cost (though that naturally is also a factor). How can Apple sell a phone with a 40-50% profit margin alongside a phone with a 70% profit margin without threatening that 70% margin business too much.
This whole subsidy business is one of the biggest scams going on at the moment and only it allows for 70% gross profit margins.
I still don't entirely understand why this is such a scam. Without the 2 year contract I take to get a subsidy, the carrier plans remain the same price. I will strongly agree that those plans are ridiculously inflated, but they aren't any better from carrier to carrier, so how am I being scammed? What am I missing?
My best guess is that the existance of contracts somehow help to keep absurd carrier plans afloat... ??
I think the harder part is differentiating and not the actual cost (though that naturally is also a factor). How can Apple sell a phone with a 40-50% profit margin alongside a phone with a 70% profit margin without threatening that 70% margin business too much.
I agree; similar thoughts ran through my head when I wrote that post. So they're not only diluting the product image, but revenue and profits as well, as a direct correlation.
... How ... would Apple make a midrange model? Less features? Like what ? less touch enabled? No Bluetooth/WiFi radio? 4GB Memory? At the volume Apple buys, NAND memory and BT/WiFi chips have got to be dirt cheap ? so removing those would have minimal impact on costs, and severely impact the usability.
A smaller screen would have to have the same pixel dimensions as the iPhone 3G or iPhone 4 ? which would mean smaller icons and UI elements to touch.
A less capable iPhone simply isn't an iPhone!
I've been thinking/saying this for many months now. It just doesn't make sense for Apple to build a second, slightly crappier iPhone to sell either alongside of, or instead of, the original.
The low end of the market doesn't even want an iPhone IMO, they want a feature phone. Smartphones are attractive, but it's a mistake to think that every goat-herder and tour boat operator with a flip phone secretly really wants a full-blown smartphone computer in their pocket because they just have to join Twitter. This is a conceit of the technorati.
If this hypothetical phone didn't do apps at all, but instead just did the basic phone functions, plus texts, music and picture taking like any feature phone, it would sell like hotcakes. Give it a tiny little square screen like the iPod nano, hell, maybe it even runs iPod nano games. It doesn't need a keyboard if it has (virtual) T9 like any flip phone, it doesn't need a contract, and it won't suck data.
It will be a little piece of Apple magic in your hand and you will be able to buy it in India and Africa and all the other places where the feature phone is still king for next to nothing. It could be the iCloud gateway drug.
This exists. You can buy iTunes pre-paid cards that tie to your Apple ID.
We know that, but it's troublesome to buy separate prepaid cards for purchasing apps. Plus, it's availability too.
Wouldn't be great if your carrier's prepaid card can directly deal with it? Although Apple needs some carrier cooperation again which is a pain.
There are enough people who own an iPod touch + dumbphone. Were it not for the insane premium an iPhone carries compared to a comparable iPod touch, these people would happily dump that dumbphone and switch their iPod touch to an iPhone with a voice plan only.
This is exactly the market Apple needs to address. I have an AT&T Family Plan with 2 iPhones and 2 dumb phones. The dumb phones are for my children. The only reason they have dumb phones is that I don't want them to have a data plan which could get expensive. Now, if Apple were to make a phone that did not require a data plan, I would get it for my children. With iMessage, I may even be able to dump the unlimited family texting plan that costs $30 per month.
Making the overall cost of ownership lower is the way Apple can keep the growth of its phones going.