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Old May 3, 2013, 10:42 AM   #1
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Apple's Lower-Cost iPhone As a 'Mid-End' Device




AllThingsD shares details on a new report from J.P. Morgan analysts Gokul Hariharan and Mark Moskowitz, who unsurprisingly argue that Apple's rumored lower-cost iPhone will still be a "mid-end" device rather than competing against the true low end of the smartphone market. The analysts point to Apple's previous introductions of the iPod nano and iPad mini as cheaper versions of their parent products that were still significantly more expensive than low-end competitors due to Apple's refusal to sacrifice quality for the sake of price.

Echoing some previous rumors, Hariharan and Moskowitz suggest that Apple's lower-cost iPhone is likely to cost $350-$400 without subsidies, significantly cheaper than the iPhone 5 that starts at $650. The analysts point out that such a device would come in at a relatively sparsely-populated midrange of a pyramid that sees strong unit sales at the top and bottom but weakness in the middle.
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Currently Samsung dominates this segment ($200-500 price range) with 35+ percent market share. [...] We believe Apple could take 20-25 percent of this market in the next 12 months (from almost no market share currently), if it prices a lower-priced product at $350-400 levels.
On a separate note, Digitimes is reporting today that Apple's lower-cost iPhone will be specifically targeted at emerging markets and will initially launch in limited volumes in order to test interest in the device. The report claims that Apple is expected to deliver only 2.5-3 million units during the device's first quarter of availability.

While Apple almost certainly has interest in bringing such a device to emerging markets, it seems more likely that Apple will offer the device on a broader basis in order to appeal to consumers in the numerous markets where subsidies are not common. Even the United States is seeing pushback against subsidies to some degree, with prepaid carriers gaining customers while also beginning to offer the iPhone, and even major carriers like T-Mobile shifting their strategies to end packaged subsidies and instead break out phone costs on separate payment plans.

Article Link: Apple's Lower-Cost iPhone As a 'Mid-End' Device
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Old May 3, 2013, 10:47 AM   #2
ka-spot
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nice.. Europe will enjoy the new cheap iPhone
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Old May 3, 2013, 10:48 AM   #3
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I'd kind of always assumed this.

Apple's "low end" Mac (the Mini) still costs more than most Dells. Their "low end" laptop (the Air) is certainly no netbook. The iPad Mini is certainly cheaper but it's no $199 Android-competitor. I expect the "low end" phone to be something similar.

The big question...will they keep selling the old phone as a cheaper alternative? Or maybe just last year's instead of the last 2 years? That's the part that will dictate where this new "cheaper" phone falls in the lineup.

** (All this is assuming it's for sale everywhere. If it's being made ONLY for emerging markets, all bets are off.)
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Old May 3, 2013, 10:50 AM   #4
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Go low, sell at cost. Claim the whole market. Recover the money from iTunes sales.

An iPhone in every pocket!
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Old May 3, 2013, 10:51 AM   #5
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I know I'm in the minority here (on MR) but $350-$400 is still alot of money for me to spend on a telephone. I'm currently on T-Mobile for their low monthly rates. I've gotten by for years with a standard feature phone + ipod touch and in a few months when faced with the choice of buying an ipad mini or iphone for basically the same price, I really think I'll stick with my current setup and just add the ipad mini. The ability to talk on one device, and browse the web or take notes or add to my calendar on another is an advantage to me. Plus ironically a cell data plan for my ipad is $10, while it's $30 for a phone. I'm excited by the idea of a lower cost iphone but when you look at the price and consider they will likely be shaving off features, it doesn't compare very well to either the touch or the ipad mini in cost / benefit.
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Old May 3, 2013, 10:54 AM   #6
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AllThingsD shares details on a new report from J.P. Morgan analysts Gokul Hariharan and Mark Moskowitz, who unsurprisingly argue that Apple's rumored lower-cost iPhone will still be a "mid-end" device rather than competing against the true low end of the smartphone market.
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Old May 3, 2013, 10:55 AM   #7
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Originally Posted by spicynujac View Post
I know I'm in the minority here (on MR) but $350-$400 is still alot of money for me to spend on a telephone. I'm currently on T-Mobile for their low monthly rates. I've gotten by for years with a standard feature phone + ipod touch and in a few months when faced with the choice of buying an ipad mini or iphone for basically the same price, I really think I'll stick with my current setup and just add the ipad mini. The ability to talk on one device, and browse the web or take notes or add to my calendar on another is an advantage to me. Plus ironically a cell data plan for my ipad is $10, while it's $30 for a phone. I'm excited by the idea of a lower cost iphone but when you look at the price and consider they will likely be shaving off features, it doesn't compare very well to either the touch or the ipad mini in cost / benefit.
If the iPad mini had a phone on it, then it would be all I need. I could use iPhone ear buds or a blutooth device. I have read that you can use skype or other apps to make phone calls with the mini but I would like a dedicated phone number. I would also like data plans to be cheaper.
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Old May 3, 2013, 10:55 AM   #8
hydr
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"only 1.5-2millions" oh how the times have changed :-)
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Old May 3, 2013, 10:55 AM   #9
ThunderSkunk
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Bean Counters: Apple should spend its time creating versions of products they already make to fill out every possible niche in the price category.

Product Designers & Design Engineers: We have a million cool futuristic technologies we could be developing and putting into products that'd blow everyone away with innovation instead.

Customers: This is all boring, this is just more of the same product they've been making since the iphone came out in 2006.

Who wins?

In most companies, the bean counters. Thankfully, Apple isn't headed by a bean c... oh. crap.
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Old May 3, 2013, 10:58 AM   #10
alq
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Originally Posted by ka-spot View Post
nice.. Europe will enjoy the new cheap iPhone
either I did not understand the article or you don't know what emerging markets are.

One for sure - Europe isn't.
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Old May 3, 2013, 10:59 AM   #11
M-O
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'Mid-End' makes no sense.
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Old May 3, 2013, 10:59 AM   #12
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Originally Posted by phillipduran View Post
Go low, sell at cost. Claim the whole market. Recover the money from iTunes sales.

An iPhone in every pocket!
Well the problem is that there isn't enough production capacity to produce all those profit-less devices.
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Old May 3, 2013, 11:00 AM   #13
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pointless, i can get an iPhone 5 for 1€ on a 29€ plan and it will be too expensive for emerging markets still
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Old May 3, 2013, 11:01 AM   #14
Porco
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"Mid-End"?! That's a non sequitur if ever I saw one.
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Old May 3, 2013, 11:01 AM   #15
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is there a sexual hint in this or is it just me?
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Old May 3, 2013, 11:03 AM   #16
Elbon
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Originally Posted by spicynujac View Post
I'm currently on T-Mobile for their low monthly rates. I've gotten by for years with a standard feature phone + ipod touch...
For me, it isn't the cost of the device that is prohibitive - it is the recurring cost of the voice/text/data plan. A typical "individual" plan runs about $75 a month these days. I'm obviously in the minority, but I think that's crazy. I'd be happy to pay, say, $35 a month for a limited voice/no text/2GB data plan, but no one is currently offering that.

So, I have a pre-paid voice plan with T-Mobile that costs me 10 cents per minute (which, for me, translates to about $6 a month) and a $30 T-Mobile data plan with a wi-fi hotspot. I use my feature phone for voice calls and my laptop/iPod Touch/iPad with the hotspot for everything else.
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Old May 3, 2013, 11:04 AM   #17
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They should make it unlocked without any carrier and sell it in apple store. it will sell like hotcakes if it will be good.
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Old May 3, 2013, 11:04 AM   #18
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Originally Posted by Big Dave View Post
If the iPad mini had a phone on it, then it would be all I need. I could use iPhone ear buds or a blutooth device. I have read that you can use skype or other apps to make phone calls with the mini but I would like a dedicated phone number. I would also like data plans to be cheaper.
I have a skype acct with a dedicated number. Number costs $30/yr, and the unlimited phone service is $2/mo. It runs just fine on my mini. About half the time, I use the iPhone earbuds & mic, & the other half, I just speakerphone it. ...& it doesn't sound like speakerphone. Works great.

Apple has a decent service for every method of communications possible except voice (only). What's weird is, they used to, with iChat, and the only reason I can think they ditched it in their communications suite is to appease the cell providers they were trying to get to carry the iPhone.

So, now we're stuck using Skype, which might be the worst app in the appstore, now that MS bought it and made a damn disaster out of the UI.
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Old May 3, 2013, 11:04 AM   #19
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This is so stupid. It's like, "People are not buying a lot of phones in the $425-450 price range. Therefor, there's a great untapped market of people with $425-450 in their pocket who want to buy phones at that price range! DEPLOY THE CHEAP iPHONE!!!"

Maybe I'm eager to mock this stuff because I still can't see myself buying in to the smartphone craze any time in the near future and would much rather listen to some real mac rumors about the new Mac Pro or something instead of all these iToys. But even then, I still think the attempt at logic is pretty poor here.
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Old May 3, 2013, 11:04 AM   #20
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'Mid-End' makes no sense.
To the analysts, it does.
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Old May 3, 2013, 11:04 AM   #21
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is there a sexual hint in this or is it just me?
Just you.
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Old May 3, 2013, 11:04 AM   #22
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What's wrong with saying 'mid-range'?

This tech newspeak has gone too far...
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Old May 3, 2013, 11:04 AM   #23
Four oF NINE
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So where's the news about the iPhone 5S ? I'd be more interested in that one.
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Old May 3, 2013, 11:07 AM   #24
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Originally Posted by Porco View Post
"Mid-End"?! That's a non sequitur if ever I saw one.
"Mid-level" or "mid-range" would be the correct term.

----------

Quote:
Originally Posted by bungiefan89 View Post
This is so stupid. It's like, "People are not buying a lot of phones in the $425-450 price range. Therefor, there's a great untapped market of people with $425-450 in their pocket who want to buy phones at that price range! DEPLOY THE CHEAP iPHONE!!!"
Could be because nobody is selling a phone at that price for some reason. My suggestion: Blown-up iPhone 3GS. A bit modernised, big screen, big battery.


Quote:
Originally Posted by Elbon View Post
For me, it isn't the cost of the device that is prohibitive - it is the recurring cost of the voice/text/data plan. A typical "individual" plan runs about $75 a month these days. I'm obviously in the minority, but I think that's crazy. I'd be happy to pay, say, $35 a month for a limited voice/no text/2GB data plan, but no one is currently offering that.
Sounds like US customer. Compared to the UK for example, the phones in the USA are dirt cheap but the contracts are ridiculously expensive. In the UK, iPhone 5 is £529; two year plan at O2 costs £37 per month, which works out to be £20 for the phone and £17 for the plan. Looks like the opposite of the US. So here a £300 phone would be some very significant saving.

Last edited by gnasher729; May 3, 2013 at 11:22 AM.
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Old May 3, 2013, 11:08 AM   #25
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This is similar to Apple's strategy with the iPod. Start out with a premium device, then create new devices to fill lower price points.

I am curious with the iPhone as to how they would differentiate the lower priced device from the higher price.

I'd guess a different form factor and a screen the size of the 4S - Plastic or some sort of non-conductive metal shell in a few different colors. Maybe leave out LTE for the first generation. iPhone nano? iPhone mini? And I wonder how thin they can make it...
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