More affordable iPhone predicted to grab Apple 11% share of low-end market in 2014

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  • Reply 21 of 103
    gwmacgwmac Posts: 1,797member

    Quote:

    Originally Posted by Richard Getz View Post


    I still don't get this, please help! 


     


    "He expects Apple to launch a $300 iPhone as soon as September of this year."


     


    Currently you can get an iPhone for free with 2-year contract. Not sure how much cheaper that could be and better than $300. The question is, how many people in the world don't contract with their carrier? Does anyone have a link? This seems like a really good deal. Sign up for 2 years and get a free smart phone. Or do some carriers not offer this in the world? Or is it the data plan that gets people? 


     


     



     


    How many times does it need to be explained that over 80% of the world market do not get any subsidies for a new smart phone. Zero, zilch, nada. That free iPhone 4 here in the U.S. on contract isn't an option for 80% of the customers of the world for free. It will cost them $450 and even much higher than that after you include tariffs. Same goes with the iPhone 4S which will cost $550 and higher. These older models are not a free or cheap option in most of the world. 


     


    The reason Apple would consider a cheaper but not cheap or low quality phone it because it makes sense. If they buy a cheaper iPhone they will be far more likely to buy a higher end iPhone in a few years when they have more money. Get them used to iOS and invested in the ecosystem and they are far more likely to stay Apple customers. Apple simply can't afford to ignore that huge market and get all these hundreds of millions of people used to Android with more reason to stay with that platform because they are familiar with it. That is a recipe for disaster in the future. I seriously doubt it will cannibalize higher end iPhone sales very much at all. It will simply allow people that wanted an iPhone but couldn't afford one to now be able to join the party. 

  • Reply 22 of 103
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by SolipsismX View Post

    That's for a contract, presumably in the US. His point stands. Apple does make less expensive iPhones. The iPhone 4 is $450 USD, the iPhone 4S is $550 USD, and iPhone 5 starts at $650.


     


    Drop the 4S to $300 off-contract and keep the other two prices the same and boom: there's the low-cost iPhone and everyone gets to shut up. 

  • Reply 23 of 103

    Quote:

    Originally Posted by TeaEarleGreyHot View Post


     


    Yes, many folks don't want a contract which locks them into a plan that subsidizes a phone long after the subsidy is paid off.  Hence the popularity (in the USA) of T-Mobile's new offering, or of the options made available by StraightTalk and VirginMobileUSA.


     


    You need a link?  In these very pages...


    http://appleinsider.com/articles/13/04/14/t-mobile-touts-gangbusters-first-day-of-iphone-sales


     


    Nevertheless, I don't see how it behoves Apple to flood the market with a cheap phone returning little to nil profit, and which may cannibalize sales of higer-margin products.



     


    Who are these many folks? I see the links showing T-Mobile as offering payment plans with 20 payments which is almost 2 years on a contract. 

  • Reply 24 of 103
    trumptmantrumptman Posts: 16,461member

    Quote:

    Originally Posted by icoco3 View Post


    Why would someone who builds high end condos want to become a slum lord?? image  A bit of /s in that comment

     



     


    What happens if everyone builds high end condos and there are still plenty of people who can't afford them? We already saw this in the housing market. The highest profits were in the McMansion department. Every builder, bank and purchaser focused there and the market collapsed. The choice can't be $450 or nothing. There are plenty of people that can't afford $450. This is especially true when you are talking about third or fourth smartphones for a family.


     


    Quote:

    Originally Posted by charlituna View Post




    Quote:

    Originally Posted by icoco3 View Post



    Why would someone who builds high end condos want to become a slum lord?? image   A bit of /s in that comment



     




    They generally don't. And Apple has said they don't build to be cheap. So add that to this whole 30% of current iPhone buyers would go cheap and you have to wonder why, if they want the iPhone bad enough to buy the expensive one, would the company give them the choice to go cheap and lose that money.


     


    They lose it anyway. That is the point. If Apple refuses to service the market, the consumers and their money go else where. Then later when they can afford the $650 phones, they go with what they know and already have versus something they never experienced. Thus they lose future purchases. It is a reverse halo effect. People bought iPhones and Macs because they already knew iTunes and iPod. They didn't just know iPod though if they had several hundred dollars. They knew it even if they had $50. Did Shuffles possibly cannibalized from iPod Touches or Nanos? Yes but those folks came back for more Apple products later.


     


    Right now that iPod Touch generation are putting their information, understanding and data into cheap Android tablets or cheap Android phones. When they can afford expensive items, they are more likely to go with what they know and have already purchased. Apple needs to address this.


     


    Quote:

    Originally Posted by TeaEarleGreyHot View Post




    Quote:


    Currently you can get an iPhone for free with 2-year contract. Not sure how much cheaper that could be and better than $300. The question is, how many people in the world don't contract with their carrier? Does anyone have a link?



     


    Yes, many folks don't want a contract which locks them into a plan that subsidizes a phone long after the subsidy is paid off.  Hence the popularity (in the USA) of T-Mobile's new offering, or of the options made available by StraightTalk and VirginMobileUSA.


     


    You need a link?  In these very pages...


    http://appleinsider.com/articles/13/04/14/t-mobile-touts-gangbusters-first-day-of-iphone-sales


     


    Nevertheless, I don't see how it behoves Apple to flood the market with a cheap phone returning little to nil profit, and which may cannibalize sales of higer-margin products.



     


    Exactly and it seems like most people think like they are alone and have to purchase for no one else. Imagine a family going off-contract. Their choices are four phones starting at a minimum of $450. That is $1800 for a family of four. The prepaid companies are offering plenty of Android phones at the lower price points ($100-150). Sure maybe Mom and Dad get an iPhone but if the kids get Android then what might they want in the future?


     


    Having iPods and Macs at different price points never hurt Apple. Apple never died from having an iMac along with their Power Mac. They've not suffered from having MacBook Air in addition to MacBook Pro.


     


    Apple needs to get a lower price iPhone out there.

  • Reply 25 of 103

    Quote:

    Originally Posted by gwmac View Post


     


    How many times does it need to be explained that over 80% of the world market do not get any subsidies for a new smart phone. Zero, zilch, nada. That free iPhone 4 here in the U.S. on contract isn't an option for 80% of the customers of the world for free. It will cost them $450 and even much higher than that after you include tariffs. Same goes with the iPhone 4S which will cost $550 and higher. These older models are not a free or cheap option in most of the world. 


     


    The reason Apple would consider a cheaper but not cheap or low quality phone it because it makes sense. If they buy a cheaper iPhone they will be far more likely to buy a higher end iPhone in a few years when they have more money. Get them used to iOS and invested in the ecosystem and they are far more likely to stay Apple customers. Apple simply can't afford to ignore that huge market and get all these hundreds of millions of people used to Android with more reason to stay with that platform because they are familiar with it. That is a recipe for disaster in the future. I seriously doubt it will cannibalize higher end iPhone sales very much at all. It will simply allow people that wanted an iPhone but couldn't afford one to now be able to join the party. 



     


     


    Okay, so most of the world does not have a contract option. And these people are going to pay, what, $300 for a phone? $200? $199? $99? How cheap do developing nations need a smart phone to be? 


     


    Also, what would you do to make the iPhone less expensive? 


     


    How do you say Apple can't afford? They are one of the largest companies in the world with over $140 BILLION dollars in cash and has the highest profit margins of any phone manufacturer. Does Apple need to be twice the largest company in the world? Thrice? 


     


    How many times does it need to be explained that Apple never has gone after quantity but quality and higher margins? 

  • Reply 26 of 103
    solipsismxsolipsismx Posts: 19,566member
    How many times does it need to be explained that Apple never has gone after quantity but quality and higher margins? 

    There are many caveats here. The selling of older iPhones and the selling of less-expensive, less functional products within a category (iPod Shuffle and iPad mini) come to mind. Then you also have the plastic MacBook which isn't a cheap machine but it does cost less, does less, and in comparison to the MBP feels less quality. Apple is clearly willing to chase a low-price point if and when they can 1) find a way to make a product that still affords them a healthy profit per unit, 2) find a way to make that product without hurting their brand or their net profits for the category.
  • Reply 27 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    There are many caveats here. The selling of older iPhones and the selling of less-expensive, less functional products within a category (iPod Shuffle and iPad mini) come to mind. Then you also have the plastic MacBook which isn't a cheap machine but it does cost less, does less, and in comparison to the MBP feels less quality. Apple is clearly willing to chase a low-price point if and when they can 1) find a way to make a product that still affords them a healthy profit per unit, 2) find a way to make that product without hurting their brand or their net profits for the category.


     


    Apple no longer has a plastic MB. They did, but fazed it out for the better quality MBA which is opposite of what many are suggesting Apple to do. 


     


    I disagree that Apple chases low-price points. What I see is Apple offering new products into a growing family as needs warrants. Such as people saying I don't want to carry that huge iPod when I go jogging, thus smaller iPods are made. This is not to chase a price, but a market need. 


     


    Again, what would you take way from the current iPhone line to make a cheaper iPhone? 

  • Reply 28 of 103
    gwmacgwmac Posts: 1,797member

    Quote:

    Originally Posted by Richard Getz View Post


     


     


    Okay, so most of the world does not have a contract option. And these people are going to pay, what, $300 for a phone? $200? $199? $99? How cheap do developing nations need a smart phone to be? 


     


    Also, what would you do to make the iPhone less expensive? 


     


    How do you say Apple can't afford? They are one of the largest companies in the world with over $140 BILLION dollars in cash and has the highest profit margins of any phone manufacturer. Does Apple need to be twice the largest company in the world? Thrice? 


     


    How many times does it need to be explained that Apple never has gone after quantity but quality and higher margins? 



    Never put all your eggs in one basket. They are not guaranteed to continue dominating profits in the high end sector. That could quickly change and then where would that leave Apple?  They have around 20% of the market but only in affluent countries. In China, India, and other countries they are less than 5%. Have you ever heard of a company called Coolpad? You will in a few years. It is a Chinese company, and other companies like Lenovo, ZTE, Huawei are bigger threats to Apple than Samsung in the future. Apple will never make cheap junk like those companies nor should they, but a high quality less expensive iPhone is necessary to continue growth and gain market penetration in these countries. apple doesn't need to dominate any of these BRIC type countries but they do need to stay relevant. The article said Apple could achieve 30 percent gross margins with a $300 iPhone, that is hardly chump change if they could suddenly sell to 100 million or more new customers that would never be able to afford the current model plus it had the added advantage of taking that profit away from companies like Samsung. It is make or break time for Apple. I don't see how they can expand any further with their current model for many more years. Eventually they will have to have differentiate their product line and price points to maintain growth. People like to compare them to BMW, well right now Apple only sell a 7 series, they need a 3 series if they want to grow. 

  • Reply 29 of 103

    Quote:

    Originally Posted by bleh1234 View Post



    The whole world doesn't get a free phone. Majority needs to buy it outright.


    this.


     


    11% of the current feature phone market is big.   Therefore if Gene has data that lends itself to bolstering a profitable market for Apple in these markets, then it's news. 


     


    but...


     


    11% of the 'low end PC market' is big too.   


     


    Part of Apple's Market is not cannabilizing their own lines when there is no competition.   they want to set a quality/capability level, and make others slice their margins to zero to meet that price/perf point, then when met, come in and deliver more for less.     They could make a $499 computer... but it would be crap... so they created a new market, the iPad market, and have complementary products  (iPod, iPhone, iPad, iMac/MacBook, AppleTV can all be bought for different 'jobs', to borrow from asymco), yet have a (relatively) tight synergy/halo.


     


    Delivery less for a lot less is not Apple's MO.   Delivery of more usefulness for less than others is their MO.


     


    The iPod argument notwithstanding (an iPod has several use cases, there should not be 'one' price/perf point).  An iPHONE is a mobile computing device, and has specific visual, audible, network perf, touch, and functional requirements to be 'the state of the art.'     Even the iPad Mini, looks at 2 distinct usecases based on portability, not necessarily price points/regional markets, where to reduce prices will be to reduce core capabilities.


     


    My view on this is how do they make a functional iPHONE that meets a 'minimum' iOS experience, without cannabalizing the latest version.   I can't see the math working out, and therefore, I still see the normal 3 year progression (current, last, last+1) pricing model, and look at a method to drive efficiencies in manufacturing/distribution (moving distribution closer?, bulk packaging?) to drive prices down.

  • Reply 30 of 103
    kdarlingkdarling Posts: 1,640member


    First comment:  Tim Cook pointed out that Apple was not going to leave a price umbrella over its tablets.  That's why they were willing to cut cash profits to make the iPad mini, and make it up on quantity.


     


    Seems quite possible that he'd be willing to do the same thing with the iPhone.


     


    Quote:

    Originally Posted by Richard Getz View Post


    So really, all Apple would have to do is offer their oldest gen phone with 2GB of storage and 512 RAM (I think the 4 already is 512, no?), with the dies that don't meet the highest specs and call it the iPhone [whatever]. 


     


    Thoughts please. 



     


    One thought: Competing low priced devices do often come with similar low memory, however they also usually have a microSD slot so the user can cheaply expand to at least 32GB.


     


    Still, the low-priced iPhone could appeal to lots of buyers who never intend to expand.

  • Reply 31 of 103

    Quote:

    Originally Posted by gwmac View Post


    Never put all your eggs in one basket. They are not guaranteed to continue dominating profits in the high end sector. That could quickly change and then where would that leave Apple?  They have around 20% of the market but only in affluent countries. In China, India, and other countries they are less than 5%. Have you ever heard of a company called Coolpad? You will in a few years. It is a Chinese company, and other companies like Lenovo, ZTE, Huawei are bigger threats to Apple than Samsung in the future. Apple will never make cheap junk like those companies nor should they, but a high quality less expensive iPhone is necessary to continue growth and gain market penetration in these countries. apple doesn't need to dominate any of these BRIC type countries but they do need to stay relevant. The article said Apple could achieve 30 percent gross margins with a $300 iPhone, that is hardly chump change if they could suddenly sell to 100 million or more new customers that would never be able to afford the current model plus it had the added advantage of taking that profit away from companies like Samsung. It is make or break time for Apple. I don't see how they can expand any further with their current model for many more years. Eventually they will have to have differentiate their product line and price points to maintain growth. People like to compare them to BMW, well right now Apple only sell a 7 series, they need a 3 series if they want to grow. 



     


     


    I hardly think Apple has their eggs in one basket as they have 3 phones on the market right now. 


     


    Nothing is a guarantee regardless of what you do, so that point is moot.  


     


    No, I have not heard of Coolpad. Have you heard of Apple? Why do people act like Apple is some young start up? 


     


    *is necessary to continue growth* says who? And how much further above $140BILLION in cash should they grow? Apple does not have a cheap PC and that seems to be doing them REALLY good right now. Furthermore, they removed their cheaper, plastic PC for the MBA so they are moving opposite to your logic and are doing a great job! 


     


    *100 million or more* how about Apple to be able to fill current demand before adding 100 million more? 


     


    *It is make or break time for Apple.* Oh, how many times have we heard this over the years. Make or break what? Apple does not believe in fast nickels over slow dimes. Never has. 


     


    *Eventually they will have to have differentiate their product line and price points to maintain growth.* Or what? How many people said this in the PC era and now look. Apple intros the iPad and the PC error evaporates. I think I'll stick with Apple knows what it is doing. 


     


    The ONLY times when Apple did not know what it was doing is when it compromised their DNA. 


     


    *People like to compare them to BMW, well right now Apple only sell a 7 series, they need a 3 series if they want to grow. *  Apple has the iPhone 4 and 4s on the market also so there are options. And what growth are you talking about? Apple sells more new models over old every time. They make more profit than anyone else. They have $140 BILLION in cash. What the hell else do people want?! 

  • Reply 32 of 103

    Quote:

    Originally Posted by KDarling View Post


    First comment:  Tim Cook pointed out that Apple was not going to leave a price umbrella over its tablets.  That's why they were willing to cut cash profits to make the iPad mini, and make it up on quantity.


     


    Seems quite possible that he'd be willing to do the same thing with the iPhone.


     


     


    One thought: Competing low priced devices do often come with similar low memory, however they also usually have a microSD slot so the user can cheaply expand to at least 32GB.


     


    Still, the low-priced iPhone could appeal to lots of buyers who never intend to expand.



     


     


    Apple will never add a SD slot to their phones. Perhaps iPads, but that I would say is a 20% chance. 


     


    Apple has never been in the business to beg people to buy their products. Apple is a high end manufacturer where people pay (and are happy to pay and stand in line to pay) the premium price. 


     


    Let the bottom feeders feed off the bottom, Apple does not have to. 

  • Reply 33 of 103
    solipsismxsolipsismx Posts: 19,566member
    Apple no longer has a plastic MB. They did, but fazed it out for the better quality MBA which is opposite of what many are suggesting Apple to do. 

    I disagree that Apple chases low-price points. What I see is Apple offering new products into a growing family as needs warrants. Such as people saying I don't want to carry that huge iPod when I go jogging, thus smaller iPods are made. This is not to chase a price, but a market need. 

    Again, what would you take way from the current iPhone line to make a cheaper iPhone? 

    1) So what that they don't have one now? They use to. Same size display as the 13" MBP with the same basic functions. Why not acknowledge this was a lower cost option from Apple? Same thing with the iBooks over the PowerBooks before that.

    2) I never said they chase low prices. Apple chases profits which I've given many examples to show that an include a lower cost decice.

    3) How does one reduce the cost of anything? Lower costs. Only Apple knows exactly how they could or effectively do it.
  • Reply 34 of 103

    Quote:

    Originally Posted by Richard Getz View Post


     


    Who are these many folks? I see the links showing T-Mobile as offering payment plans with 20 payments which is almost 2 years on a contract. 



     






    True that T-Mobile will give you 20 months of free financing but the point is that once your iPhone is paid for, you are left with a much less costly service plan.  The other major USA carriers keep your monthly plan at the same rate as if  you were subsidizing a handset, even after your contract is expired.  They offer NO cheaper "service-only" plan. 


     


    That said, I do begin to appreciate the point made by others about 80% of the world market for smartphones not having to deal with this issue at all--they pay upfront for the phone.  And likely not just in the developing nations, either.  In those circumstances, I think Apple may be able to profit from taking the Gillette approach (give away razors to sell blades; give away phones to sell iTunes/apps and build the developer ecosystem).

  • Reply 35 of 103
    mj webmj web Posts: 918member

    Quote:

    Originally Posted by Rogifan View Post



    How in the world are Gene Munster comments newsworthy? Good grief AI. I know you're hard up for things to report as all is quiet in Cupertino but that doesn't mean you have to fill up your pages with this nonsense.


    You're joking, right? The collective musings of every Apple fanboi that opines on AI is easily eclipsed by Gene Munster's understanding of Apple and his recorded track record. Pull you pea brains out of the sand, please! 

  • Reply 36 of 103
    asdasdasdasd Posts: 5,330member
    Drop the 4S to $300 off-contract and keep the other two prices the same and boom: there's the low-cost iPhone and everyone gets to shut up. 

    Lol. Your continued hostility to Apple doing anything they haven't done before is amusing.

    There is a precedent for Apple having different models at different price levels cf the Mac.

    Selling last years stuff is sub optimal.

    1) it's not supported for as long as a model produced this year.
    2) you are competing with your own secondary market. If its cheaper on eBay you lose a sale.
    3) last years model doesn't have the sexiness of this years model regardless of configuration.
    4) Apple doesn't have to have one BIG IPHONE EVENT a year.
  • Reply 37 of 103
    gatorguygatorguy Posts: 21,302member

    Quote:

    Originally Posted by MJ Web View Post


    You're joking, right? The collective musings of every Apple fanboi that opines on AI is easily eclipsed by Gene Munster's understanding of Apple and his recorded track record. Pull you pea brains out of the sand, please! 



    It's not necessary to wrap your posts in insults. If you had a valid point the juvenile taunting made sure very few saw it. It's really not helpful.

  • Reply 38 of 103

    Quote:

    Originally Posted by SolipsismX View Post





    1) So what that they don't have one now? They use to. Same size display as the 13" MBP with the same basic functions. Why not acknowledge this was a lower cost option from Apple? Same thing with the iBooks over the PowerBooks before that.



    2) I never said they chase low prices. Apple chases profits which I've given many examples to show that an include a lower cost decice.



    3) How does one reduce the cost of anything? Lower costs. Only Apple knows exactly how they could or effectively do it.


     


    1) So what that they don't have one now? They use to. Same size display as the 13" MBP with the same basic functions. Why not acknowledge this was a lower cost option from Apple? Same thing with the iBooks over the PowerBooks before that.


     


    And my point stands. They removed that product for one of higher quality unlike what you suggest which is to take a higher quality and reduce it down. 


     


     


    2) I never said they chase low prices. Apple chases profits which I've given many examples to show that an include a lower cost decice.


    Apple is clearly willing to chase a low-price point if and when they Quote from your earlier post. 


     


    3) How does one reduce the cost of anything? Lower costs. Only Apple knows exactly how they could or effectively do it.


     


    Apple reduces cost all the time by buying larger (or all) quantities, and buying early. Manufacturing processes and designing in-house also help. But this has nothing to do with going cheaper. All manufacturers reduce cost when they can, but they never reduce margin unless forced to by competition and currently in the high-end space, there is not competition to Apple. This is why they are always rated tops by consumers and why people stand in long lines for hours to get the next new thing from Apple. 


     


    How to increase cost it to lower the quality of an item thus increasing service, repairs/replaces and customer confidence. 

  • Reply 39 of 103

    Quote:

    Originally Posted by TeaEarleGreyHot View Post


     




    True that T-Mobile will give you 20 months of free financing but the point is that once your iPhone is paid for, you are left with a much less costly service plan.  The other major USA carriers keep your monthly plan at the same rate as if  you were subsidizing a handset, even after your contract is expired.  They offer NO cheaper "service-only" plan. 


     



     


     


    So that is a carrier issue, not an iPhone price issue. Both instances the iPhone is paid for. 


     


    That said, I do begin to appreciate the point made by others about 80% of the world market for smartphones not having to deal with this issue at all--they pay upfront for the phone.  


     


    You can pay for your iPhone upfront from any carrier right now. 


     


    And likely not just in the developing nations, either.  In those circumstances, I think Apple may be able to profit from taking the Gillette approach (give away razors to sell blades; give away phones to sell iTunes/apps and build the developer ecosystem).


     


    Sure, Apple can flood the market anytime it wants to. With $140 BILLION in cash, I'm sure they can wipe out any competition they want. But Apple is not Gellette as so many want them to be, but more like Braun. 


     


    I have said that if Apple sees a market for a new iPhone they will meet that, but not on the basis of price, they never have, why would they now? And why do so many people insist the HAVE to? 

  • Reply 40 of 103
    bleh1234bleh1234 Posts: 146member

    Quote:

    Originally Posted by Richard Getz View Post


    I still don't get this, please help! 


     


    "He expects Apple to launch a $300 iPhone as soon as September of this year."


     


    Currently you can get an iPhone for free with 2-year contract. Not sure how much cheaper that could be and better than $300.



     


     


    Quote:

    Originally Posted by Richard Getz View Post


     


     


    So that is a carrier issue, not an iPhone price issue. Both instances the iPhone is paid for. 


     


    That said, I do begin to appreciate the point made by others about 80% of the world market for smartphones not having to deal with this issue at all--they pay upfront for the phone.  


     


    You can pay for your iPhone upfront from any carrier right now. 


     


     





    Contradiction on your part?

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