iPod touch Low cost iPhone > cannibalization touch sales?

The iPod touch sales are already small, but if a (very) cheap iPhone comes along then expect them to drop even more.

All depends on the price. IMHO, the new LC iPhone would have to compete against the refurb 5th gen 32G iPod Touch for $249. IS the new LC iPhone going to be $299? That would be the only price range I can see that would make me think twice. $329, $350, $399 = not an option.

robertosh said:

Today while driving i was thinking abut how the lc iphone introduction will affect to the Touch sales. I know that most of the people that buy an ipod touch is people that can't afford to getting an iPhone. I expect the lc iphone the same price range than the touch, what do you think about?

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What makes you think that? I'd say they are people who know what they want, and an iPhone is not what they want.

In the USA, the cost of owning an iPhone is hugely dominated by the cost of the service contract that goes with it. In the UK, if you buy an iPhone 5 with a 24 month contract, 2/3rd of the cost is paying for the phone; in the USA, it is less than a quarter. So in the UK (and many other countries) an iPhone sold at half the price of the iPhone 5 would greatly reduce the cost of using an iPhone; in the USA it wouldn't actually make much difference.

Even if the iPhone were free, it's still far more expensive than the iPod Touch once you factor in the monthly charges.

For me:
iPod Touch -- $300. Free cell phone, for which I pay $15/year for service. Total $330 over two years, $345 over three years. No taxes.

Most people seem to be paying about $100 a month for an iPhone on contract (especially with taxes included). If phone were free, that would be $2400 for two years, $3600 for three years. A truly free iPhone, which will never happen unless you steal it, coupled with prepaid T-Mobile service (the cheapest available) is $30/month or $720 over two years, $1050 over three.

This is why I don't own an iPhone.

The iPod touch has the major advantage of coming without a contract or monthly bills.

gnasher729 said:

What makes you think that? I'd say they are people who know what they want, and an iPhone is not what they want.

In the USA, the cost of owning an iPhone is hugely dominated by the cost of the service contract that goes with it. In the UK, if you buy an iPhone 5 with a 24 month contract, 2/3rd of the cost is paying for the phone; in the USA, it is less than a quarter. So in the UK (and many other countries) an iPhone sold at half the price of the iPhone 5 would greatly reduce the cost of using an iPhone; in the USA it wouldn't actually make much difference.

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Exactly.

Smartphone plans cost the same whether you have an iphone or a cheap crappy phone.


I have a Galaxy s III and I paid 200 bucks for it and the iphone 5 costs the same and the monthly service does too,

If I wanted another iphone I would have bought that.

I bought an ipod touch to be my music player and use the free ios apps that aren't on Android.

thehustleman said:

Smartphone plans cost the same whether you have an iphone or a cheap crappy phone.

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For many people, there is no need for a smartphone / smartphone plan if you have a Touch and good WiFi coverage most places you go. An iPod Touch 5 and a cheap pay as you go non-smartphone FTW.

an iphone of any kind will have little bearing on ipod touch sales.

Apple has been pretty good with differentiating their products to avoid cannibalizing their sales.

They were smart to make the iPod Touch not include GPS, to have a lower grade chip, ram, and camera.

I'm sure the same will be the case for a low end iPhone.

What it could do is de-value the brand perceptually.

I do think the age of "focusing on making a great product, and not worrying about the competition" may have died with Jobs.

cnev3 said:

Apple has been pretty good with differentiating their products to avoid cannibalizing their sales.

They were smart to make the iPod Touch not include GPS, to have a lower grade chip, ram, and camera.

I'm sure the same will be the case for a low end iPhone.

What it could do is de-value the brand perceptually.

I do think the age of "focusing on making a great product, and not worrying about the competition" may have died with Jobs.

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Well considering the competition is so far ahead of Apple in terms of products I think it's time to try to outdo them

thehustleman said:

Well considering the competition is so far ahead of Apple in terms of products I think it's time to try to outdo them

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In what alternative universe did that happen?

gnasher729 said:

In what alternative universe did that happen?

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None, only in the real world.

Apple is playing catch up in technology

thehustleman said:

None, only in the real world.

Apple is playing catch up in technology

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I have to disagree. While the competition has phones with a handful of features iOS doesn't, bigger screens, and some better hardware, the iPhone still offers things the competition does not. An experience that is more user friendly, and intuitive. The best build materials. A library of content that is best in both quality and quantity. The best warranty and support, as well as integration with other iDevices and other users of iOS that you can't get with Android.

They both have areas they can improve on. Having owned and used both platforms extensively, I wouldn't say one is superior to the other.

robertosh said:

Today while driving i was thinking abut how the lc iphone introduction will affect to the Touch sales. I know that most of the people that buy an ipod touch is people that can't afford to getting an iPhone. I expect the lc iphone the same price range than the touch, what do you think about?

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How would the performance and specifications of a low cost iPhone compare to an iPod touch? Also, what would be the maximum storage on a low cost iPhone? I bet the answers to both of these questions will mean the iPod touch will not be in trouble from it.

And the most important reason for there being no real effect on iPod touch sales? There are reasons people get an iPod touch over an iPhone and those reasons won't go away with a low cost iPhone.

Apple just released a lower cost iPod touch, and it's disappointing as they removed the rear camera. Now a low cost iPhone may be missing some of the features that make the iPhone great. Who wants that. If they charge $400 for an 8gb low cost iPhone, who would want that.

robertosh said:

Today while driving i was thinking abut how the lc iphone introduction will affect to the Touch sales. I know that most of the people that buy an ipod touch is people that can't afford to getting an iPhone. I expect the lc iphone the same price range than the touch, what do you think about?

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Why do you think that most people who bought ipod touch can't afford Iphone? I see many who owned ipod touch with a Galaxy S3 or Note 2. Those 2 phones are as same price as Iphone but with larger battery and lot bigger screen. Open source, easy for adding new pictures and songs. Ipod touch is mainly just for games and they dont have to worry about battery running out.

IPod touch is not an alternative to the iphone or any smart phone. If I want an iPhone I'll get one, regardless of what the touch has to offer. The cost of iPhone ownership is the same as the cost of ownership of most smart phones.

617aircav said:

Apple just released a lower cost iPod touch, and it's disappointing as they removed the rear camera. Now a low cost iPhone may be missing some of the features that make the iPhone great. Who wants that. If they charge $400 for an 8gb low cost iPhone, who would want that.

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There's nothing wrong with having choices. People who want a rear camera can have one. People who don't need it and would rather save $60 can do so.

cnev3 said:

There's nothing wrong with having choices. People who want a rear camera can have one. People who don't need it and would rather save $60 can do so.

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save $60 if dont want camera PLUS another 16gb of memory.

Apple is cheap for doing this. They could have made it 32gb but without camera and price at 239 or even lower the 32gb with camera to 269.

I watch youtube unbox and the new 16gh also change the volume/lock button to low cost (plastic) as well. IMO, they can price it at $199 which would make more sense for a small capacity no camera and plasticky feel device.

I think the premise of this thread is wrong. I don't believe people choose an iPod Touch because they can't afford an iPhone, unless the point of that is that they can't afford the iPhone contract. You can get an existing "full" iPhone now for less out of pocket cost than an iPod Touch or even free* but then there's the contract.

A "cheaper" iPhone doesn't change the contract cost. And "cheaper" can't beat "free" if one is going to sign up for a phone contract. If one can get a free* (full) iPhone now with 2-year contract, how much better can the deal be with a cheaper iPhone than free*?

So, a cheaper iPhone really only flies well against the iPod Touch for those who want the phone functionality built in but don't want a phone contract. Then, we might have 2 similarly-priced Apple devices from which to choose. Of course, if one is not going to get phone service, why would they want to buy the phone hardware built in? Especially if it comes at a higher price than the iPod Touch? I'm guessing for the other benefits that come with having the phone hardware platform over the touch hardware platform (GPS, etc)... or maybe the idea of buying phone service on the fly (prepaid/on demand) only when needed.

I suspect a cheaper iPhone is not really about giving consumers a cheaper piece of hardware to buy outright but giving the 3G/4G partners a lower-subsidy product, as they are vocally griping every quarter about the relative cost of the subsidy they pay to sell an iPhone vs. other smart phones.

Otherwise, I think a cheaper iPhone is about emerging markets where the money is just not there to pay up for the "full" iPhone. I even wonder if the cheaper iPhone will be sold in the U.S. (unless there's something to that last paragraph).

I think the ideal "cheaper" iPhone would be to merge the on-demand iPad 3G/4G data plans within an iPod Touch. The kiddies could then have an approx. $20/month cell phone plan and use VOIP software to text their fingers off. The parents who are not willing to give them $100/month toys could probably be moved to a $20/month Touch "phone". But what do I know?

robertosh said:

Sorry, i didn't remember that in USA yo cant buy the iPhone free-contract. Here in Spain, for example, if you buy the LC iPhone free-contract, then you can get a 750mb plan for 10$/month. And if you think that the owners of the ipod touch will have a phone too, it's make no sense for me to go for the touch.

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Well, you have the monthly bill of your phone too. As i've said, i didn't remember that you can't buy the iphone free-contract in USA. But, i think that in a near future this will happen, maybe with the LC iPhone? I have to say that i'm a touch fan, i had the 1g for 3 years and now the 4g for another 3 years and i never had the iPhone (due the high monthly bills and free-contract price) but i think that when the LC comes out, (i expect 300-349€ range) the touch won't have sense for me anymore.

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Who said you can't buy the iphone contract free?

It's 650 +tax here.

You can get a lower monthly rate when you buy contract free but you can't get 4G without signing some type of contract.

Most people buy on contract because they want the benefit of 4G so they can use their phone to its full potential.

Also you don't have to put much upfront for it

racoonboy said:

save $60 if dont want camera PLUS another 16gb of memory.

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Actually it's $70. You think that taking away a rear camera and using previous gen volume buttons warrants a $70 price difference? Because if they made it 32GB that would be the only difference. I think it would hurt the sales of their dual camera models as well.

Anyways, I think it's silly to complain about being offered a lower price model and given more choices. It's not like they raised the price of the other models.

If you think that the $199 price is unfair, then see if you can find an android mp3 player with better hardware for a cheaper price.