This makes a lot of sense, particularly with the structure of having a two-tiered polycarbonate model + premium model (5s), and will address many psychological aspects of iPhone purchasing:
-Emphasize and point out the "pro" aspects of the iPhone 5s, increasing premium feel, exclusivity, and incentivizing the upsell from the polycarbonate iPhone (especially as there won't be a black version of the polycarbonate variety).
-People who want a new phone but "don't need" the iPhone 5s (in my experience there are a lot out there that think like this).
-People who can can only afford the cheapest phone, but won't feel insecure about this, as it will be outwardly indistinguishable from the higher end polycarb iPhone.
-It allows Apple to diversify the line up (thus allowing people to chose a version/color compatible with their sense of identity), while maintaining its characteristic simplicity/focus.
-Parents don't want to give their kids luxurious aluminum and glass phones for them to stomp on at a Justin Beiber concert.
It also makes sense economically:
-Improved margins compared to selling the 5 and 4s (polycarb will be easier to manufacture and will benefit from larger scale pricing of homogeneous components).
-This year's mid tier poly carb iPhones will be next year's refurbs, thus covering the budget of the vast majority of worldwide smartphone buyers.
That's why I keep hoping this is a $200 off-contract phone. If it isn't, Apple is entering into a world of complexity and confusion like never before with their product lineup. At minimum, it would give them three iPhone models this year (no change) and four each year for the years after that (or more).
A world of complexity on a 3 models line up? So the macbook line is a world of complexity too?
Maybe someone else said it already and I missed it...
But what's dumb about that reasoning is that the touchscreen tech is not suitable for low volume production. Well it wouldn't. The S versions are always the same form factor and screens and the previous generations, with just internal upgrades like processor and memory chips, cameras, etc.
Following their history, the 5S screen will be the same as the 5 so there will be no "Low Volume" because the 5S will keep the volume up. Then by next year the production costs should be lower.
This makes a lot of sense, particularly with the structure of having a two-tiered polycarbonate model + premium model (5s), and will address many psychological aspects of iPhone purchasing:
-Emphasize and point out the "pro" aspects of the iPhone 5s, increasing premium feel, exclusivity, and incentivizing the upsell from the polycarbonate iPhone (especially as there won't be a black version of the polycarbonate variety).
I have notice that too. There will be no low cost iphone that looks like the high end one. They really nailed that aspect of it. I am worry that the high end phone sales will drop hard, but we can already see they really taught about the image factor and the social aspect of it.
Actually the reality is they have. 20% overall according to yesterday's report.
20% which is definitely lower than the high end, but the unanswered question is whether Apple could produce a new, compelling iPhone "lite" at the lower price point which would attract consumer attention at the same or similar rate as the current offerings with a higher than 20% profit margin. Do you know that they could do that? The current rumours are predicated on that idea, but no one has any solid evidence that they can.
P.S. I must admit I was a little surprised to see just how much the iPhone contributes to Apple's business and also, how little the iPod is now contributing.
Wait until they get into wearable devices, you will see even more ipod sales drop.
They could also save money on production if there was only one model instead of multiple memory sizes, or if the manufacturing itself was simpler and therefore cheaper. I agree it's kind of dubious, because to replace the current program of selling the old ones, the "iPhone lite" needs to be in the $200 range off contract and the starting price of a new iPhone is more like $700.
So if it's a "mid-range" phone, then it isn't replacing the older iPhones, and they've just confused their line up with even *more* models. If on the other hand it's a cheap iPhone to replace the older models thing, then it has to be so cheap as to make us wonder how the hell it can be that cheap.
That's why I keep hoping this is a $200 off-contract phone. If it isn't, Apple is entering into a world of complexity and confusion like never before with their product lineup. At minimum, it would give them three iPhone models this year (no change) and four each year for the years after that (or more).
That price would do away with the iPod Touch, but they may be trying to do that.
I don't think they would go that low only because they want to be seen as at least a somewhat high end brand. $350 off contract is my guess. It's still $100 lower than the 4, it would give them a high enough margin, and they could say it's worth the cost because of the added benefit over the older models of either how much lighter or slimmer it is.
20% which is definitely lower than the high end, but the unanswered question is whether Apple could produce a new, compelling iPhone "lite" at the lower price point which would attract consumer attention at the same or similar rate as the current offerings with a higher than 20% profit margin. Do you know that they could do that? The current rumours are predicated on that idea, but no one has any solid evidence that they can.
Depends how they do it. Did you see the plastic case video? The case will cost a lot less than the aluminum/glass/chrome one in both material and manufacturing. I think the colour options will compensate the lost of deluxe materials and even appeal more to mid range consumers. They could also tweak the internals, maybe put a cheaper camera and lower the cost of some components.
Now they have 3 choices, they can drop the unlock price or just rise margins, or both. The current gross margins are ip4 30%, ip4s 40% and ip5 50%. I think since Apple expects to sell a lot more low cost phones, they will normalize margins on all low cost phones at 40%.
The problem with offering something like the ip4 at low cost is it hurts margins. The lower you drive the price down, the more the shell cost compare to the rest of the components to a point it doesn't makes any sense. Also since it was a high end model, maybe a few components are still to high end for the target segment. By repackaging and tweaking, they will put up a more appropriate product, lower the price and increase margins.
Also, according to some rumors, the low cost phones wont be made at Foxconn. Apple is setting up a completely new chain. They will be low cost phone specialist and workers will always be on those models years after years. Apple will have diversification at the same time.
This is such a load of nonsnense becauase Apple would put itself in the situation of having millions of unsold iPhone5's in the pipeline and on shelves which they would not be able to sell! Again the moron that thought this one up is a total dochebag and cannot see past his 80 IQ
I should have said a lower cost iPhone 5S Lite might have *some* newer technology like a fingerprint scanner. But you're right, overall the iPhone 5S Lite would probably be less capable than an "older" iPhone 5.
Dude, one thing you can count on is that (if the flagship iPhone does indeed happen to have a fingerprint reader) the second tier iphone will definitely not have a fingerprint reader.
iPhone 5 fit and finish is amazing and is labor intensive to assemble right? the flagship phone gets a premium sell price but the last gen phone doesn't, so if the last gen phone is just as labor intensive to assemble as the flagship but without the price premium, then ...
I was thinking of waiting for the iPhone 5 to be the old phone and get it cheaper, off contract yo, but whatever.
And the lower-cost iPhone could, in theory, allow Apple to stop production of old iPhones entirely. This would reduce support overhead by eliminating the need to support 2 year old hardware with the latest version of iOS. Right now, you can buy three different generations of iPhones, each with the latest iOS 6.x pre-installed. Meaning Apple needs to test each release of iOS on three different generations of iPhone. That costs money, and tends to slow down adoption of the latest hardware and software.
A lower-cost iPhone might replace previous years' high-end iPhone models. Want a cheap iPhone? Buy the latest "iPhone Lite." It won't have all the features of the high-end model, so if the rumors of a fingerprint sensing screen are true, you probably would need to buy the high-end iPhone to get that. (And it would be worth it.) This scheme would allow to reduce production from three iPhone models to just two, and they would always be producing the current model of each line. Each year the production lines would retool for the new model.
One trick to making this work would be to move last year's high-end iPhone components into this year's low-cost iPhone. So the low-cost iPhone wouldn't require as much development effort. So, this year, Apple would put the iPhone 5 components into the first low-cost iPhone. And this year's new high-end iPhone would have some new hardware features (improved camera plus fingerprint sensing touchscreen maybe.) Next year, the low-end iPhone would have some of this year's high-end iPhone components (camera) minus features that are high-end iPhone-only (fingerprint sensing touchscreen.)
So what about the "free" model? The 2-year old iPhone that's $0 with carrier subsidy? Apple might be able to sell two different "iPhone Lite" models: a 32GB model for $99, and another with 16 GB for $0. There might never even be a "last year's iPhone" of either the high-end or low-cost model.
All of which would tend to allow Apple to move iOS ahead faster, without the burden of backward compatibility and/or testing on older model iPhones. Apple could only allow each release of iOS to run on the current high-end iPhone and last year's high-end iPhone. Of course, there's the matter of reduced economy of scale because each year's iPhone development costs would be amortized over only one year's unit volume. And there would surely be some unhappy users who were accustomed to running the latest iOS on 2-generation old hardware.
Apple has all the numbers plugged into a Numbers spreadsheet somewhere in Cupertino. Just my $0.02. We'll see what happens.
Comments
This makes a lot of sense, particularly with the structure of having a two-tiered polycarbonate model + premium model (5s), and will address many psychological aspects of iPhone purchasing:
-Emphasize and point out the "pro" aspects of the iPhone 5s, increasing premium feel, exclusivity, and incentivizing the upsell from the polycarbonate iPhone (especially as there won't be a black version of the polycarbonate variety).
-People who want a new phone but "don't need" the iPhone 5s (in my experience there are a lot out there that think like this).
-People who can can only afford the cheapest phone, but won't feel insecure about this, as it will be outwardly indistinguishable from the higher end polycarb iPhone.
-It allows Apple to diversify the line up (thus allowing people to chose a version/color compatible with their sense of identity), while maintaining its characteristic simplicity/focus.
-Parents don't want to give their kids luxurious aluminum and glass phones for them to stomp on at a Justin Beiber concert.
It also makes sense economically:
-Improved margins compared to selling the 5 and 4s (polycarb will be easier to manufacture and will benefit from larger scale pricing of homogeneous components).
-This year's mid tier poly carb iPhones will be next year's refurbs, thus covering the budget of the vast majority of worldwide smartphone buyers.
Normaly a name war is a popcorn event. So far its pretty quiet on that subject.
Quote:
Originally Posted by Tallest Skil
Because they weren't, probably.
lol, you're too much.
Actually the reality is they have. 20% overall according to yesterday's report.
A world of complexity on a 3 models line up? So the macbook line is a world of complexity too?
But what's dumb about that reasoning is that the touchscreen tech is not suitable for low volume production. Well it wouldn't. The S versions are always the same form factor and screens and the previous generations, with just internal upgrades like processor and memory chips, cameras, etc.
Following their history, the 5S screen will be the same as the 5 so there will be no "Low Volume" because the 5S will keep the volume up. Then by next year the production costs should be lower.
This doesn't make any sense.
Quote:
Originally Posted by PatchyThePirate
This makes a lot of sense, particularly with the structure of having a two-tiered polycarbonate model + premium model (5s), and will address many psychological aspects of iPhone purchasing:
-Emphasize and point out the "pro" aspects of the iPhone 5s, increasing premium feel, exclusivity, and incentivizing the upsell from the polycarbonate iPhone (especially as there won't be a black version of the polycarbonate variety).
I have notice that too. There will be no low cost iphone that looks like the high end one. They really nailed that aspect of it. I am worry that the high end phone sales will drop hard, but we can already see they really taught about the image factor and the social aspect of it.
20% what overall?
Quote:
Originally Posted by Ingela
lol, you're too much.
Actually the reality is they have. 20% overall according to yesterday's report.
20% which is definitely lower than the high end, but the unanswered question is whether Apple could produce a new, compelling iPhone "lite" at the lower price point which would attract consumer attention at the same or similar rate as the current offerings with a higher than 20% profit margin. Do you know that they could do that? The current rumours are predicated on that idea, but no one has any solid evidence that they can.
Quote:
Originally Posted by christopher126
P.S. I must admit I was a little surprised to see just how much the iPhone contributes to Apple's business and also, how little the iPod is now contributing.
Wait until they get into wearable devices, you will see even more ipod sales drop.
Quote:
Originally Posted by Gazoobee
They could also save money on production if there was only one model instead of multiple memory sizes, or if the manufacturing itself was simpler and therefore cheaper. I agree it's kind of dubious, because to replace the current program of selling the old ones, the "iPhone lite" needs to be in the $200 range off contract and the starting price of a new iPhone is more like $700.
So if it's a "mid-range" phone, then it isn't replacing the older iPhones, and they've just confused their line up with even *more* models. If on the other hand it's a cheap iPhone to replace the older models thing, then it has to be so cheap as to make us wonder how the hell it can be that cheap.
That's why I keep hoping this is a $200 off-contract phone. If it isn't, Apple is entering into a world of complexity and confusion like never before with their product lineup. At minimum, it would give them three iPhone models this year (no change) and four each year for the years after that (or more).
That price would do away with the iPod Touch, but they may be trying to do that.
I don't think they would go that low only because they want to be seen as at least a somewhat high end brand. $350 off contract is my guess. It's still $100 lower than the 4, it would give them a high enough margin, and they could say it's worth the cost because of the added benefit over the older models of either how much lighter or slimmer it is.
Quote:
Originally Posted by Crowley
20% which is definitely lower than the high end, but the unanswered question is whether Apple could produce a new, compelling iPhone "lite" at the lower price point which would attract consumer attention at the same or similar rate as the current offerings with a higher than 20% profit margin. Do you know that they could do that? The current rumours are predicated on that idea, but no one has any solid evidence that they can.
Depends how they do it. Did you see the plastic case video? The case will cost a lot less than the aluminum/glass/chrome one in both material and manufacturing. I think the colour options will compensate the lost of deluxe materials and even appeal more to mid range consumers. They could also tweak the internals, maybe put a cheaper camera and lower the cost of some components.
Now they have 3 choices, they can drop the unlock price or just rise margins, or both. The current gross margins are ip4 30%, ip4s 40% and ip5 50%. I think since Apple expects to sell a lot more low cost phones, they will normalize margins on all low cost phones at 40%.
The problem with offering something like the ip4 at low cost is it hurts margins. The lower you drive the price down, the more the shell cost compare to the rest of the components to a point it doesn't makes any sense. Also since it was a high end model, maybe a few components are still to high end for the target segment. By repackaging and tweaking, they will put up a more appropriate product, lower the price and increase margins.
Also, according to some rumors, the low cost phones wont be made at Foxconn. Apple is setting up a completely new chain. They will be low cost phone specialist and workers will always be on those models years after years. Apple will have diversification at the same time.
Why do you believe the rumor?
But what if they are wearable iPods?
Quote:
Originally Posted by Suddenly Newton
But what if they are wearable iPods?
Funny thing is we had the nano wearable trend at some point, when it was a square.
Dude, one thing you can count on is that (if the flagship iPhone does indeed happen to have a fingerprint reader) the second tier iphone will definitely not have a fingerprint reader.
Quote:
Originally Posted by SockRolid
Apple has all the numbers plugged into a Numbers spreadsheet somewhere in Cupertino. Just my $0.02. We'll see what happens.
Tim uses Excel. Just my $0.02.
iPhone 5 fit and finish is amazing and is labor intensive to assemble right? the flagship phone gets a premium sell price but the last gen phone doesn't, so if the last gen phone is just as labor intensive to assemble as the flagship but without the price premium, then ...
I was thinking of waiting for the iPhone 5 to be the old phone and get it cheaper, off contract yo, but whatever.
Quote:
Originally Posted by SockRolid
And the lower-cost iPhone could, in theory, allow Apple to stop production of old iPhones entirely. This would reduce support overhead by eliminating the need to support 2 year old hardware with the latest version of iOS. Right now, you can buy three different generations of iPhones, each with the latest iOS 6.x pre-installed. Meaning Apple needs to test each release of iOS on three different generations of iPhone. That costs money, and tends to slow down adoption of the latest hardware and software.
A lower-cost iPhone might replace previous years' high-end iPhone models. Want a cheap iPhone? Buy the latest "iPhone Lite." It won't have all the features of the high-end model, so if the rumors of a fingerprint sensing screen are true, you probably would need to buy the high-end iPhone to get that. (And it would be worth it.) This scheme would allow to reduce production from three iPhone models to just two, and they would always be producing the current model of each line. Each year the production lines would retool for the new model.
One trick to making this work would be to move last year's high-end iPhone components into this year's low-cost iPhone. So the low-cost iPhone wouldn't require as much development effort. So, this year, Apple would put the iPhone 5 components into the first low-cost iPhone. And this year's new high-end iPhone would have some new hardware features (improved camera plus fingerprint sensing touchscreen maybe.) Next year, the low-end iPhone would have some of this year's high-end iPhone components (camera) minus features that are high-end iPhone-only (fingerprint sensing touchscreen.)
So what about the "free" model? The 2-year old iPhone that's $0 with carrier subsidy? Apple might be able to sell two different "iPhone Lite" models: a 32GB model for $99, and another with 16 GB for $0. There might never even be a "last year's iPhone" of either the high-end or low-cost model.
All of which would tend to allow Apple to move iOS ahead faster, without the burden of backward compatibility and/or testing on older model iPhones. Apple could only allow each release of iOS to run on the current high-end iPhone and last year's high-end iPhone. Of course, there's the matter of reduced economy of scale because each year's iPhone development costs would be amortized over only one year's unit volume. And there would surely be some unhappy users who were accustomed to running the latest iOS on 2-generation old hardware.
Apple has all the numbers plugged into a Numbers spreadsheet somewhere in Cupertino. Just my $0.02. We'll see what happens.
+1
Best post I've seen on this topic so far.