Hmm, it is certainly true that it is rational to price the iPhone at the highest price possible to maximise returns. That said, I don’t have to like it. For some reason it reminds me of Kevin Bacon in this iconic movie scene: https://youtu.be/bIZoVO8ZyyQ
I just can't agree with this opinion piece. Comparing Google and Samsung to Apple on smartphone pricing and sales is apples to oranges.
Google's main income is proprietary advertising (68%)
Samsung's income from mobile devices is roughly 21%. The rest comes from diversity of sources.
Apples revenue from iPhone sales 60%!
So if Google sells very few Pixels, no big deal. If Samsung mobile sales suffer, they'll be okay. If Apple's iPhone sales fall, it's a majority source of their income.
If people can't afford an iPhone, then what happens to the halo effect with their other products?
Will they buy an Apple Watch? NO
Will they be buying apps from their app store revenue?NO
Are they more likely to spend money on a Macwith all that cool integration with their other Apple devices?NO
Are they more likely to purchase Apple services such as Apple Music or forthcoming video streaming service?NO
While I don't believe apple needs to compete with $200 androids in India or China, they do need to provide value for what they do charge. At this point in time their devices don't provide value to most people to justify their pricing strategy. That includes Homepod, Mac line up, Apple Watches, and iPhones.
This is due to a number of factors from my viewpoint...
Competition is getting better. OnePlus 6T sells for a little over $500. It's an outstanding phone.
Apple's quality is getting worse. Software issues and hardware issues (butterfly keyboard, stagelight issues on displays, bent iPad Pros, etc.)
Don't get me wrong, Apple still makes, in my opinion, the best hardware and software integration of any advanced computing device as a whole, but it's not 200%-300% better.
Windows 10 isn't horrible, it's okay. Android isn't horrible, it's okay. Are they as good as MacOS or iOS? Heck no! But Apple just isn't worth the delta.
If they want to be an exclusive fashion brand, fine. I've never been big into fashion.
So you're trying to say they're not expensive enough, Dan? Also remember phones aren't 70% of Samsung's revenue, the iPhone is 70% of Apple's revenue - more if you include iPhone related services. Why would Cook admit their phones are too expensive? He'd have to lower the prices if he did so. And why have there been aggressive pushes with trade-ins right on Apple's homepage? Some of your articles are good Dan, but your attempts to denigrate everything that isn't 100% pro-Apple is unprofessional and tiring. I used to like reading your articles, but recently you've had your head way too far up Apple's ass.
When did Tim publicly directly said admitted "iPhones are too expensive?". If he said something different point of view in some geography and news media modified than that is not truth. Even Samsung's high end phones are expensive.
Where did I say that Tim said iPhones were too expensive?
So you're trying to say they're not expensive enough, Dan? Also remember phones aren't 70% of Samsung's revenue, the iPhone is 70% of Apple's revenue - more if you include iPhone related services. Why would Cook admit their phones are too expensive? He'd have to lower the prices if he did so. And why have there been aggressive pushes with trade-ins right on Apple's homepage? Some of your articles are good Dan, but your attempts to denigrate everything that isn't 100% pro-Apple is unprofessional and tiring. I used to like reading your articles, but recently you've had your head way too far up Apple's ass.
Absolutely no need to get nasty.
What have I said that's nasty?
In your world saying the writer has his head shoved up Apple’s ass isn’t nasty? What are you, 18?
If he's looking for three years of SUPPORT guaranteed then the Pixels are the only Android devices that qualify AFAIK. For isntance my used OG Pixel shipped with Android 7.1 (Nougat). Since then it's been updated to Oreo and now Pie. Not likely to get the next major update this coming fall but it could.
Regarding Apple I'm not aware they've guaranteed any particular number of updates and maybe you know where to find that. Obviously tho Apple has traditionally (not always) supported at least 4 years. Kudos due.
And my apologies to you. I did not read his comment as meaning OS updates guaranteed (and not certain they are) but instead device warranty. I had to read it again, but now I get what he meant. Again apologies Strangedays. Now I understand why you were asking what you did.
I was referring to iOS support. I personally don’t buy AppleCare as I am okay with the year long warranty that is provided. And as you noted, Apple does deserve kudos for continuing to support older models. I really do feel this will keep people coming back especially if they are taking longer to upgrade. The longer people wait to upgrade, the more the evidence mounts in favor of Apple. And now with the Xr, all new iPhones lack a physical home button (a big reason for product failure), I see people keeping their phones for even longer. Sure it may hurt Apple a bit, but the bottom line is that they will purchase Apple next time too.
I agree with Cmka~+ in that price is never an issue with Apple products but everything, including an iPhone, has their point of diminishing return. While to this day, I've felt my iPhone 1 to iPhone 8+ is the greatest piece of technology I've ever owned, I cannot justify the price of a newer one...the innovations are just not as appealing as larger size, TouchID, super camera, Siri, and other features were to impel me to purchase.
To be honest, I'd rather have TouchID than FaceID, I feel my 8+ camera is as good as I need, and the screen clarity & size meet my needs. Maybe XRS or XI will bring something more robust, but for now, I don't mind waiting as I'm as satisfied as I've ever been with my iPhone.
What appears to you as "diminishing returns" is that Apple delivers at every price point. You can still get an iPhone 8+ at that price point that may easily drive X series out of the equation. With other brands if you don't buy the latest and the biggest one you're screwed up. With Apple, you can even buy the cheapest one and it just works... I am as satisfied as you with my iPhone 8+ that I don't plan to upgrade for at least three years more. The reason I bought an 8+ last year was not the diminishing returns, I just couldn't afford the X at that time. For Android switchers or for those upgrading from older models there are absolutely no diminishing returns in the X series.
another great,great article in a long and hopefully continuing series,thankyou daniel, shalom alecchim,and one that tolchoks summit-jealous, paid-to-be-ignorant, deepstate ‘might makes right’ geldkissing fools-with-hearts-of-darkness right between the eyes, as usual lol. witness the arriviste scrum of sycophants’ contemptible rejoinders. bravo apple,privacy champion extraordinaire! and all the covalent dignity and prosperity!
Apple is slowly failing and the stock price reflects that. Steve Jobs said there would never be a small iPad or stylus, yet here we are. Like the article said, now there are multiple modules to choose from, instead of one. With the exception of wearables they have fallen from the path that put them on top.
Daniel, Apple missed its holiday quarter guidance by billions of dollars.
All of the gymnastics that attempt to frame iPhone as appropriately priced are unnecessary in the face of this. Customers did not respond as Apple gambled they would.
Evey new model iPhone and iPad released in Q4 was $100 overpriced.
So you're trying to say they're not expensive enough, Dan? Also remember phones aren't 70% of Samsung's revenue, the iPhone is 70% of Apple's revenue - more if you include iPhone related services. Why would Cook admit their phones are too expensive? He'd have to lower the prices if he did so. And why have there been aggressive pushes with trade-ins right on Apple's homepage? Some of your articles are good Dan, but your attempts to denigrate everything that isn't 100% pro-Apple is unprofessional and tiring. I used to like reading your articles, but recently you've had your head way too far up Apple's ass.
It is all about the pricing and Apple is overprice, if anything. It has literally no presence in India, one of the largest and fastest growing mobile market. Who the hell would pay a month's salary for a phone that barely offers any more value than a Chinese android phone, like the Poco or OnePlus. Sorry but just because something is 1k+ doesn't mean it's premium and provides better user experience. If Poco was eligible for use in USA, or some of the other Chinese phones were compatible with carriers in the USA, they would give Apple and Samsung a run for their money. Although I enjoy the pure stock Pixel 3 experience more than iOS. The iphone XR is a great phone, but for 750 dollars for a crappy LCD screen that doesn't play HD movies, sorry, but....you really are being taken for a ride to fork out that much for it.
On a separate note, I do agree with Dan that Apple is in the best situation to weather the storm should these trends continue for the next 5 years or longer. They have money in the bank and their phones will last as long as people need them to last. If I was someone who last purchased a 5s and it finally dies on me next year and I need to upgrade on a budget, I would have no problem looking to a refurbished 8 to get me through the next 3 years. I am unaware of any andriod manufacturer that can guarantee the same.
You can get newer and nicer refurbished Android phone for better price to get you through the next three years (Google, OnePlus). When it comes to refurbish phones, Android phones will always beat Apple at price and selection. I used Apple for work for a long time, but have Pixel 3 for personal. Apple can't weather the storm as well as other companies, their mobile platform provides the majority of their revenue. Hence, they either have to keep their prices high to maintain revenue, or lower it to sell more and maintain revenue. Most other companies are far more diversified, Samsung, Google, and even Huawei.
Daniel, Apple missed its holiday quarter guidance by billions of dollars.
All of the gymnastics that attempt to frame iPhone as appropriately priced are unnecessary in the face of this. Customers did not respond as Apple gambled they would.
Evey new model iPhone and iPad released in Q4 was $100 overpriced.
Not to mention that somewhere in there he tried to claim that Android was some kind of breeding ground for iOS users.
If that were the case, Apple's sales wouldn't have been flat for the last three years. There was no slump in China during those years.
Anyway, my attention waned early on when I hit this comment:
"If Apple began doing what Samsung, Huawei, Xiaomi and others were doing, it too would be performing poorly as a company, failing to introduce real innovations and forced to simply mimic the work of others."
So Huawei's AIIS and Night Mode weren't 'real innovation? And Apple won't mimic the tri-camera set-up or enable some true fast charging solution?
And while Apple rolled out FaceID at great cost (Huawei said a 2017 roll out of its own take on 3D depth sensing would make phones too expensive) and basically did nothing with it for a year (2018 refresh had no improvements to FaceID other than speed), Huawei eventually released its version and, as promised in 2017, included 3D live modelling!
Someone will have to jog my memory on where the real innovation is in the 2018 iPhone refresh.
These screeds are as predictable as the news outlets they rail against. And the solutions equally as silly. Of course price plays an important factor. If someone can’t afford an iPhone they will most likely buy an android phone. Apple sales clearly are hurting and the trade in discounts from Apple show they are concerned. It strangely seems like they havent planned for this time of market saturation, longer upgrade periods and possible political and socio-economic disruptions. They have to walk a fine line for investors between affordability and profit and right now are on the wrong side of it. Their prices on everything from dongles to ram to computers to cables to phones have veered into ripoff territory. The quality issues on keyboards, Siri, iCloud functionality and pricing, iPad pre-bent, long computer upgrade cycles, ability to upgrade basics like ram etc combined with a we always know better smugness is starting to wear thin. Are some in the media biased against Apple? Sure. But don’t try make them come off as squeaky clean!
When you say “iPad pre-bent” you betray your lack of insight and comprehension regarding the subject matter.
$50 dollar a month over 24 months that is $1200, or $25 dollars a month for 4 years. There are lots of people can afford that. So it really isn't the price., or $1000. It is the value on offering.
Imagine Apple has a iPhone XS with solid battery, giving you 2.5x the battery life, and a fast full charge in less than 30min, doesn't degrade after 3 years of use, and rise the price again by $100 to $1099, would people still bitch about it? ( They would ) but it gives lots of reason for people to buy it. It was a functional improvement that user are willing to pay.
I have argued again and again, it is not the price, but the value proposition from Apple is declining in all of their product lines.
Be sure to account for the value of the dollar over time when you work out that math. And the total cost of ownership after selling on that iPhone after one, two, three or more years. Factoring that I’m not sure you can definitively say that the value proposition is declining.
So you're trying to say they're not expensive enough, Dan? Also remember phones aren't 70% of Samsung's revenue, the iPhone is 70% of Apple's revenue - more if you include iPhone related services. Why would Cook admit their phones are too expensive? He'd have to lower the prices if he did so. And why have there been aggressive pushes with trade-ins right on Apple's homepage? Some of your articles are good Dan, but your attempts to denigrate everything that isn't 100% pro-Apple is unprofessional and tiring. I used to like reading your articles, but recently you've had your head way too far up Apple's ass.
Yes totally agree. The sad thing is that his fanatical devotion doesn’t seem to be rewarded with any inside knowledge of what is coming up with products in the near future or exclusive insight to how they are doing in the market. More respected journalists like Gruber and Panzarino were invited to Apple’s Mea Culpa talk about the MacPro 2 years ago. Gruber may be a devoted Apple fan and user but he honestly admits when Apple has problems or is at least willing to discuss with his guests without attacking their viewpoints as heresy.
I agree with Cmka~+ in that price is never an issue with Apple products but everything, including an iPhone, has their point of diminishing return. While to this day, I've felt my iPhone 1 to iPhone 8+ is the greatest piece of technology I've ever owned, I cannot justify the price of a newer one...the innovations are just not as appealing as larger size, TouchID, super camera, Siri, and other features were to impel me to purchase.
To be honest, I'd rather have TouchID than FaceID, I feel my 8+ camera is as good as I need, and the screen clarity & size meet my needs. Maybe XRS or XI will bring something more robust, but for now, I don't mind waiting as I'm as satisfied as I've ever been with my iPhone.
What appears to you as "diminishing returns" is that Apple delivers at every price point. You can still get an iPhone 8+ at that price point that may easily drive X series out of the equation. With other brands if you don't buy the latest and the biggest one you're screwed up. With Apple, you can even buy the cheapest one and it just works... I am as satisfied as you with my iPhone 8+ that I don't plan to upgrade for at least three years more. The reason I bought an 8+ last year was not the diminishing returns, I just couldn't afford the X at that time. For Android switchers or for those upgrading from older models there are absolutely no diminishing returns in the X series.
Comments
https://youtu.be/bIZoVO8ZyyQ
- Will they buy an Apple Watch? NO
- Will they be buying apps from their app store revenue? NO
- Are they more likely to spend money on a Mac with all that cool integration with their other Apple devices? NO
- Are they more likely to purchase Apple services such as Apple Music or forthcoming video streaming service? NO
While I don't believe apple needs to compete with $200 androids in India or China, they do need to provide value for what they do charge. At this point in time their devices don't provide value to most people to justify their pricing strategy. That includes Homepod, Mac line up, Apple Watches, and iPhones.All of the gymnastics that attempt to frame iPhone as appropriately priced are unnecessary in the face of this. Customers did not respond as Apple gambled they would.
Evey new model iPhone and iPad released in Q4 was $100 overpriced.
You can get newer and nicer refurbished Android phone for better price to get you through the next three years (Google, OnePlus). When it comes to refurbish phones, Android phones will always beat Apple at price and selection. I used Apple for work for a long time, but have Pixel 3 for personal. Apple can't weather the storm as well as other companies, their mobile platform provides the majority of their revenue. Hence, they either have to keep their prices high to maintain revenue, or lower it to sell more and maintain revenue. Most other companies are far more diversified, Samsung, Google, and even Huawei.
If that were the case, Apple's sales wouldn't have been flat for the last three years. There was no slump in China during those years.
Anyway, my attention waned early on when I hit this comment:
"If Apple began doing what Samsung, Huawei, Xiaomi and others were doing, it too would be performing poorly as a company, failing to introduce real innovations and forced to simply mimic the work of others."
So Huawei's AIIS and Night Mode weren't 'real innovation? And Apple won't mimic the tri-camera set-up or enable some true fast charging solution?
And while Apple rolled out FaceID at great cost (Huawei said a 2017 roll out of its own take on 3D depth sensing would make phones too expensive) and basically did nothing with it for a year (2018 refresh had no improvements to FaceID other than speed), Huawei eventually released its version and, as promised in 2017, included 3D live modelling!
Someone will have to jog my memory on where the real innovation is in the 2018 iPhone refresh.
Be sure to account for the value of the dollar over time when you work out that math. And the total cost of ownership after selling on that iPhone after one, two, three or more years. Factoring that I’m not sure you can definitively say that the value proposition is declining.