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

C

Chiggs

macrumors member
Original poster
Jan 4, 2007
76
0
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.
 
Eraserhead

Eraserhead

macrumors G4
Nov 3, 2005
10,434
12,250
UK
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

zap2

macrumors 604
Mar 8, 2005
7,252
8
Washington D.C
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

Eraserhead

macrumors G4
Nov 3, 2005
10,434
12,250
UK
zap2 said:
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.
Click to expand...

A 50% margin is huge and there is also the operator subsidy, this isn't $600 Unlocked (which would be a reasonable price).
 
MacCheetah3

MacCheetah3

macrumors 68020
Nov 14, 2003
2,095
1,073
Central MN
Hi
zap2 said:
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)
Click to expand...
That's exactly what I was thinking.
 
R

rock6079

macrumors 6502
Jan 6, 2004
428
149
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.
 
zap2

zap2

macrumors 604
Mar 8, 2005
7,252
8
Washington D.C
rock6079 said:
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.
Click to expand...


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
 
I

iShak

macrumors 6502
Dec 26, 2006
320
0
Chiggs said:
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.
Click to expand...

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

killr_b

macrumors 6502a
Oct 21, 2005
906
444
Suckerfornia
^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

Maxwell Smart

macrumors 6502a
Jan 29, 2006
525
0
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

dllavaneras

macrumors 68000
Feb 12, 2005
1,948
2
Caracas, Venezuela
Maxwell Smart said:
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 :(
Click to expand...

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
 
M

madmaxmedia

macrumors 68030
Dec 17, 2003
2,932
42
Los Angeles, CA
iShak said:
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.
Click to expand...

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

archurban

macrumors 6502a
Aug 4, 2004
918
0
San Francisco, CA
Maxwell Smart said:
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 :(
Click to expand...

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.
 
Romanesq

Romanesq

macrumors 6502a
Jun 16, 2003
914
90
Hoboken
Iphone additional features before release

madmaxmedia said:
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.
Click to expand...

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.
 
7

72930

Retired
May 16, 2006
9,060
4
Romanesq said:
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:
Click to expand...
How do you imagine speed dial working?
 
I

iShak

macrumors 6502
Dec 26, 2006
320
0
madmaxmedia said:
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.
Click to expand...

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

dongmin

macrumors 68000
Jan 3, 2002
1,709
5
Keep on dreaming.

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

clevin

macrumors G3
Aug 6, 2006
9,095
1
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.

https://forums.macrumors.com/threads/272353/
 
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