4 Gig $499 and 8 Gig $599 iPhone just a Ploy to Fool the Competition?

[Chiggs]

I don't think that the iPhone models and price points Steve Jobs introduced at Macworld will ever see the light of day. For my full reasoning and analysis (including how they would still make money at the lower price points), you can check out my blog but the highlights of my thinking are as follows...

http://torants.blogspot.com/2007/01/4-gig-499-and-8-gig-599-iphone-just.html

Apple as a company is extremely protective about new product announcements. They hate to announce something until they are ready to and like to ship products as quickly as possible after announcing them to keep the competition playing catch-up. In the case of the iPhone however, Apple had to announce the product almost six months before it plans to ship the product due the need for Apple to get FCC approval for the iPhone. This gives the competition 6 months to study the iPhone and add features and functionality to their existing products before Apple even gets out of the gate. Steve Jobs would not have been very happy about that.

I believe that when Steve Jobs announced the iPhone earlier this month, he did so with a few tricks up his sleeve. He knew that as soon as he announced the iPhone that the competition would begin to develop copycat models at similar price points. I believe that the competition will spend the next few months developing these products only to see Apple lower the price points of their iPhone to $299-$349 for the 4 Gig model and $349-$399 for the 8 Gig model. This would keep the competition scrambling (and potentially losing money if they develop a phone based on an expectation of selling it for $500-$600 and are forced to immediately lower the price to $299-$399.

I also believe that the iPhone will never ship with 4 Gigs and 8 Gigs of memory. When Steve Jobs compared the price of the iPhone to a current smart phone plus an iPod Nano, he compared the price to iPod models that will be almost a year old by the time the iPhone ships. Assuming that the iPod Nano memory doubles again this fall at similar price points, the iPhone could very well ship in 8 and 16 Gig models at the price points I've outlined above. Taking this a step further, Apple enjoys some of the best (if not the best) pricing in the flash memory market due to their huge purchasing power. Why not use this to their advantage to crush the competition in the iPhone space and ship the iPhone in 16 and 32 Gig models. The competition could not come close to matching Apple prices in these configurations and Apple would have a huge advantage.

[phungy]

I'd totally snag a 16GB iPhone for $350.

[Eraserhead]

I agree, though 32GB flash is probably a bit high, I think 8 and 16GB is a better fit, it would make the phone decent for video and allow Apple to release a cheaper iPhone Nano for about $200-$300, which would really need to include at least 4GB flash memory. (2 would be OK, but a bit low especially as the OS takes up 500MB. The other reason for such a high price (currently) is that it doesn't make the current iPod's look worthless, assuming they get upgraded between now and June, then the iPhone can come down in price. The also might be pricing it high so they can recover the research costs from early adopters.

[zap2]

I'd love it to be true....but with the current cost of the iPhone, Apple making similar margins on the iPod and iMac, so I'm not to sure that will change. Not to mention the price of designing the iPhone, as its really a whole new step for Apple.


The only thing that give me hope it Flash prices dropping, 6 months is a long time, and I can see flash prices being lower then they are today.


Sure hope the either give up a price drop or storage increase. Really I'd have no problem with paying 600 for a 16GB Apple Phone( honestly I don't have a problem with pay 600 for a 8Gb Apple Phone)

[Eraserhead]

I'd love it to be true....but with the current cost of the iPhone, Apple making similar margins on the iPod and iMac, so I'm not to sure that will change. Not to mention the price of designing the iPhone, as its really a whole new step for Apple.

A 50% margin is huge and there is also the operator subsidy, this isn't $600 Unlocked (which would be a reasonable price).

[dllavaneras]

An upgrade in capacity/features and/or a drop in price would crush the competition

[MacCheetah3]

Hi
Sure hope the either give up a price drop or storage increase. Really I'd have no problem with paying 600 for a 16GB Apple Phone( honestly I don't have a problem with pay 600 for a 8Gb Apple Phone)
That's exactly what I was thinking.

[rock6079]

while i agree the amount of memory in the iphone may increase by june, the price will remain the same. apple has to price the iphone over all the other ipod models in order to keep them selling. if the iphone was priced the same as a video ipod, or close enough even, that would cause a huge rift in their product line (selling two products for almost the same price while one has much greater functionality). yes the iphone does have a huge margin, so that means two things. it allows apple to add more to it before it ships (for example greater memory) or it allows for price modification in the FUTURE (in a year from june), or the introduction of a fullscreen video ipod inbetween the pricepoint of the video ipod now and the iphone.

[Fearless Leader]

I don't know. They spent a long time in R&D 2 years I believe. That has got to be expensive.

[zap2]

while i agree the amount of memory in the iphone may increase by june, the price will remain the same. apple has to price the iphone over all the other ipod models in order to keep them selling. if the iphone was priced the same as a video ipod, or close enough even, that would cause a huge rift in their product line (selling two products for almost the same price while one has much greater functionality). yes the iphone does have a huge margin, so that means two things. it allows apple to add more to it before it ships (for example greater memory) or it allows for price modification in the FUTURE (in a year from june), or the introduction of a fullscreen video ipod inbetween the pricepoint of the video ipod now and the iphone.


Maybe...but I have about 33Gbs of Media in iTunes and even if the iPhone was 299 I'd still want a 5G and an iPhone

[Max Payne]

I believe the price is right compared to the previous mobiles i got in contracts.

[iShak]

1)This would keep the competition scrambling (and potentially losing money if they develop a phone based on an expectation of selling it for $500-$600 and are forced to immediately lower the price to $299-$399.

2)The competition could not come close to matching Apple prices in these configurations and Apple would have a huge advantage.

1) do you really believe that the competition can be that stupid? if they really are a competition then they would try to achieve a 'better' product at 'lower' price to challenge iPhone whenever it comes out ... thats just basic.

2) you will be surprised to know how a korean (for example) company can use local resources and dramatically reduce production costs of such product.

[killr_b]

^I think the competition is that stupid.

Anyway, a 32GB phone @ $599 is more along the lines I imagined due to the same reasons. Trick the competition, and the best purchasing power for flash memory. Definitely agreed.

[Maxwell Smart]

I'm really interested in an iPhone, the only problem is my music library is always around 25-30GB. Therefore I would need a regular iPod + a phone. I really hope that apple either introduces a 30+GB iPhone, or instead introduces a standard low-end phone without the storage so that I can have an iPod as well. Otherwise 4-8GB would unfortunately be a waste :(

[dllavaneras]

I'm really interested in an iPhone, the only problem is my music library is always around 25-30GB. Therefore I would need a regular iPod + a phone. I really hope that apple either introduces a 30+GB iPhone, or instead introduces a standard low-end phone without the storage so that I can have an iPod as well. Otherwise 4-8GB would unfortunately be a waste :(

How often do you find yourself listening to your whole music library? My collection's about 3 times your collection and I rarely have to upload new songs to my 2 GB nano

[madmaxmedia]

1) do you really believe that the competition can be that stupid? if they really are a competition then they would try to achieve a 'better' product at 'lower' price to challenge iPhone whenever it comes out ... thats just basic.

2) you will be surprised to know how a korean (for example) company can use local resources and dramatically reduce production costs of such product.

1. The point is not that competitors wouldn't think of the possibility, the point is to keep competitors guessing as to what the final specs and price MIGHT be.

Microsoft got caught by surprise by the last iPod price drop, and had to drop the price of the Zune right before launch.

2. Apple's production is extremely efficient, considering they make most of their stuff through huge ODM's in China.

I think we're going to see competitors announce/release products with similar specs and functions, but it will take awhile for anyone to really match the iPhone's UI.

[archurban]

I'm really interested in an iPhone, the only problem is my music library is always around 25-30GB. Therefore I would need a regular iPod + a phone. I really hope that apple either introduces a 30+GB iPhone, or instead introduces a standard low-end phone without the storage so that I can have an iPod as well. Otherwise 4-8GB would unfortunately be a waste :(

so far there is no flash memory for 30GB. even they try to make double 16GB model, phone will be more expensive. if they just add hard drive into phone, it will be very thick. you won't like it. plus, iphone is not ipod. it's a part of features. phone should be lighter, small. so you should buy ipod + iphone. well, if you have 30GB ipod now, what you need is just phone. everyday I don't carry full size ipod but like to play my nano. it's much better. iphone is top priority to get this year anyway.

[redeye be]

so far there is no flash memory for 30GB....
There is (http://www.google.com/search?client=safari&rls=en&q=32+Gb+flash&ie=UTF-8&oe=UTF-8)

My music library is too big for any current iPod, I think I'll go for an iPhone nano when it's released ;)

[Romanesq]

1. The point is not that competitors wouldn't think of the possibility, the point is to keep competitors guessing as to what the final specs and price MIGHT be.

Microsoft got caught by surprise by the last iPod price drop, and had to drop the price of the Zune right before launch.

2. Apple's production is extremely efficient, considering they make most of their stuff through huge ODM's in China.

I think we're going to see competitors announce/release products with similar specs and functions, but it will take awhile for anyone to really match the iPhone's UI.

The Iphone will have additional features when upon release that will further give competitors agita: voice commands, speed dial, GPS, new bluetooth (greater range), upgradeable battery that IS replaceable and also could have an SD expansion slot.

Oh and it will be available sooner than June.

[psychofreak]

The Iphone will have additional features when upon release that will further give competitors agita:

voice commands, speed dial, GPS, new bluetooth (greater range), upgradeable battery that IS replaceable and also could have an SD expansion slot.

Oh and it will be available sooner than June. :cool:
How do you imagine speed dial working?

[Romanesq]

How do you imagine speed dial working?

Combination of voice and/or via the UI interface.

[iShak]

1. The point is not that competitors wouldn't think of the possibility, the point is to keep competitors guessing as to what the final specs and price MIGHT be.

Microsoft got caught by surprise by the last iPod price drop, and had to drop the price of the Zune right before launch.

2. Apple's production is extremely efficient, considering they make most of their stuff through huge ODM's in China.

I think we're going to see competitors announce/release products with similar specs and functions, but it will take awhile for anyone to really match the iPhone's UI.

1. yes finally, someone who actually makes sensible replies ...
i am waiting to see how LG will react to iPhone when they launch ke850, and how it pans out for future iphone-ish devices. Apple will surely do all it can to confuse the rivals, still i expect veryinteresting 2 years.

2. its the R&D, design and planning in cuppertino that makes major contribution to the RRP of apple inc. products, and asian companies can quite easily save in those areas, samsung, panasonic and LG should do good.

[dongmin]

Keep on dreaming.

Apple may hold things close to their vest, but once they publicly announce something, they stick to it. See Apple TV.

[notjustjay]

Keep on dreaming.

Apple may hold things close to their vest, but once they publicly announce something, they stick to it. See Apple TV.

... which nobody knew had a hard drive in it, until it was announced a few months after the initial preview...

[clevin]

its a losing strategy to scare your potential customers away with a high price tag, "fool"? fool what? is this "fooling" tech can help iphone's market? no, it will only makes ppl stop think about it and not to pay attention to it at all.

other company copy apple again? u probably be fooled by Jobs for too long.
these type of phone already started to enter the market in Europe and Asia, check those posts about LG's phone in this board. As u can see, for these type of device, $700 is necessary.

http://forums.macrumors.com/showthread.php?t=272353

[bourdieu]

I cant imagine Apple initially selling the iPhone for anything less then the already anounced prices. The market would interpret that as Apple had missjudged the marketvalue of their product. Upgrading memory and adding new features (and maybe lowering the prices AFTER the product is relased and made a considerable mark on the market) is much, much more likely.

[salmon06]

... which nobody knew had a hard drive in it, until it was announced a few months after the initial preview...

The 40gb hard drive isn't there as a feature, it't there to make playback from slower networks possible by acting as a buffer.

I'd be very very surprised if the iPhone doesn't launch with the exact specs Steve mentioned, at the exact price.

The only real component that they could bank on possible price reductions is the flash memory, all the other components will reduce over time as manufacturing increases, not just because time is passing between now and launch. Besides, the cheaper Apple get's the parts the more profit they make.

With pretty much zero direct competition, for a phone of this spec, in the market Apple doesn't need to drop the price to compete. It's not a 5th gen product where competitors are finally starting to catch up.

With Apple planning to ship ten million of these in the first year they are going to have to have huge quantities available on launch. They have to get approval from the FCC before they even begin to manufacture the device in large numbers. The software for the phone isn't even finished yet. There is no chance they will upgrade a product that hasn't even gone on sale yet!

[justflie]

if they just add hard drive into phone, it will be very thick.
Probably more important than overall thickness is the power drain of a hard drive as well as the durability of a drive as opposed to flash. Cell phones get dropped a lot and could cause some big problems if the drive is writing at the time. But boy, 30+gb in this thing would be AMAZING!

[madmaxmedia]

its a losing strategy to scare your potential customers away with a high price tag, "fool"? fool what? is this "fooling" tech can help iphone's market? no, it will only makes ppl stop think about it and not to pay attention to it at all.

other company copy apple again? u probably be fooled by Jobs for too long.
these type of phone already started to enter the market in Europe and Asia, check those posts about LG's phone in this board. As u can see, for these type of device, $700 is necessary.

http://forums.macrumors.com/showthread.php?t=272353

I doubt a huge price drop is coming. But I think the overall point is valid- they probably haven't revealed everything, and could at least do a minor spec bump. Just like they're not showing all their cards with Leopard. The comments about perception of a price drop are very valid.

Yes, and Windows is just like Mac OS. The physical design is not new- it's a slab with a screen, how can it be that different or unique? It's the UI that sets the iPhone apart, and is where most all their new patents for this device apply. Everyone WILL be copying the iPhone UI, but it will take them a long time to do so.

[bigbossbmb]

The 40gb hard drive isn't there as a feature, it't there to make playback from slower networks possible by acting as a buffer.


Um.... I'd call that a feature ;)

Besides, it is not just a buffer. You can actually store the videos on there so that you don't always need your computer running to watch stuff.

[clevin]

Everyone WILL be copying the iPhone UI, but it will take them a long time to do so.

i would guess u are talking about OS UI, not hardware UI? since apparent LG's stuff has similar hardware UI, i.e. looks of the machine.

about OS UI, i don't know, just like u said, it take long time to develop an OS to compete with iphone, and the players in the market (smartphone market, palm, RIM, Samsung, etc, etc,) now all have their own OSs, before the real outcome of iphone's market future, i think of no reason for them to rush to mimic iphone's OS UI.

finally, for mac and pc, ur comparison has a point, OSX's UI looks much nicer than windows. But im not sure if u can say the same thing for smartphones, palm OS, windows Mobile, RIM's blackberry, and LG's new gadget, for such a small screen, how important is the nice OS UI? or is iphone's UI nice enough when compare to other smartphones?

I kinda feel there are a whole lot more thing ppl will consider before they think about UI when they are in the market for a smartphone.

[aricher]

How long will the iPhone be on the streets before some 3rd party starts offering memory upgrades. If some crazed hacker can figure out how to clone the OS to a new flash drive there's no reason expansion isn't possible. Of course it would void the warranty.

[eme jota ce]

I called Cingular to see what plans and phones they could offer me if I swithced now (current cell phone contract with another company expired) then upgraded to the iPhone in June. They had nothing very reasonable to fill the gap for people in my position, but the rep offere a few interesting comments.

First, cingular sales reps have started creating first-come-first-served lists and will call you as soon as they can take orders.

Second, he said the non-contract price for the 4GB iPHone will be $699 in June, as opposed to the $499 price currently advertised.

Third, he thought that the 4GB phone "may see further price reductions" below the $499 contract price "once [they] start taking orders."

Fourth, he didn't know what the monthly data plans will cost.

[clevin]

I called Cingular to see what plans and phones they could offer me if I swithced now (current cell phone contract with another company expired) then upgraded to the iPhone in June. They had nothing very reasonable to fill the gap for people in my position, but the rep offere a few interesting comments.

First, cingular sales reps have started creating first-come-first-served lists and will call you as soon as they can take orders.

Second, he said the non-contract price for the 4GB iPHone will be $699 in June, as opposed to the $499 price currently advertised.

Third, he thought that the 4GB phone "may see further price reductions" below the $499 contract price "once [they] start taking orders."

Fourth, he didn't know what the monthly data plans will cost.

this is interesting, does that mean iphone has unlocked version?

[aricher]

My guess is that the non-contract price is for Cingular customers (like me) who are currently locked into plans. That would be disappointing as I was hoping to be able to just pay a nominal fee to upgrade my phone. $200 is not a nominal fee to me.

[clevin]

My guess is that the non-contract price is for Cingular customers (like me) who are currently locked into plans. That would be disappointing as I was hoping to be able to just pay a nominal fee to upgrade my phone. $200 is not a nominal fee to me.

oh, ok. sorry to hear that, im using cingular now too, but my contract already expired, im doing month 2 month for now.

anyway, this means the real price for the machine is around $700 (4G ver)......

[eme jota ce]

this is interesting, does that mean iphone has unlocked version?

Sorry, I didn't mean to imply an unlocked price. (Also, I don't really know what "unlocked" means.) The $699 v. $499 price for a 4GB unit was not discussed in the context of locked or unlocked. It was a contractual / promotional price versus the cost to upgrade from another Cingular phone to the iPhone just 5 or six months into the 2 year contract. In other words, if I wait until June to move to Cingular, and iPhone will cost me $499 (or less!) for the 4GB unit, but if I join Cingular today and enter into a 2-year contract with them, then ask for an iPhone in June, they will charge me $699 for the 4GB unit.

[aricher]

Last August my wife wanted a Moto Razr and I wanted a Nokia 6682. Even though we were Cingular customers with no contract Cingular wanted us to pay full price for the phones. Instead of paying full price we cancelled our original numbers and bought both phones with a 2 yr contract for the total cost of .02 ¢ through Amazon.

It's ridiculous that Cingular won't cut current customers a break on upgrades. A supposed $200 mark up on the iPhone would be enough for me to cancel my # and then resubscribe - especially when I plan on buying 2 iPhones (his/hers).

[Island Dog]

I was hoping Cingular will offer some kind of rebate or price reduction when it comes out. My Sprint contract runs out in May, and I'm not going to renew until I see what the iPhone and Cingular has to offer.

[farqueue]

wht have u been smoking 32gb flash for $499