Apple Requiring an 'Innovative, Category-Killer Experience' for Potential Low-End iPhone

[Juan007]

This is amazing, it will double iPhone's profit within 1-2 years I predict. Here is what they will cut: WiFi, flash storage, DRAM. Also Apple will see additional savings because they have been making the iPhone 4 for over a year now so components are cheaper and the manufacturing process is streamlined.

Apple is going to OWN the low end of the cell phone market just like it owns the high end. It is a tragic day for Nokia and others, a great day for Apple.

 

[wickerman1893]

I'm fine with just making the 4 $99 and 3GS Free while the 5 comes out at the normal pricing. Makes a lot more sense.

 

[acidfast7]

Regarding the US market, I think cheaper phones are kind of silly. You are going to pay the same per month regardless of what phone you get. Sure some people may not be able to spend $200 on a phone, but chances are they will likely get an Android over a last gen iPhone. Maybe a cheaper "entry level" iPhone that isn't last gens model might make some inroads.

Two quick things:

1. The US market is small on a global level.
2. The majority of users outside the US do not purchase subsidized phones with 2-year contracts (it's about 50% in the EU and much less in the Asia.)

Therefore, Apple needs a killer product in the area to expand into China.

 

[paul4339]

in china, if can be copied, it probably will be copied...

making a phone indispensable (to kill the competition and hard to clone) may also mean tying it to another killer service (and not only itune or appstore), something that they can't easily do in north america. For example, teaming up with carriers to popularize the 'mobile wallet' like what they use in Japan, and which is currently becoming more popular in China.

A inexpensive iPhone may just be a way to begin to proliferate the use and create a greater 'stickiness' into the Apple ecosystem. (I just believe that Apple will set it's goals a lot higher than the $9B chinese smartphone market).

.

 

[JerzeyLegend]

What would a cheaper iPhone consists of?

What I think:

plastics like the iPhone 3GS but perhaps lesser grade
non-retina LCDs
less precise machining of parts during assembly (ex: not fusing glass and lcd like on ipt4 and ip4 models)
even lower res camera, and only rear facing (no facetime support)
cheaper radios, just 3G but like EVDO or something
lower capacities on storage (ex: 4GB, 8GB)

I would hope they don't switch out the capacitive screen for a resistive one (UGH! *shivers*)

what do you guys think?

 

[Lesser Evets]

Apple should be releasing a very limited function iPhone in the states. Call it a NANO or whatever, but just a camera/mp3/phone. Something that complements the iPad with function, instead of the competing functions with iPhone and iPad.

There is a huge, palpable low-end phone market in the US, and world of course.

 

[ctdonath]

iPhone Shuffle!

OB old lame joke, yes, but at the same time could be the starting point for a new popular product. Some of us "just want a phone", but the "free" phones are still lame annoying POS things with lousy interfaces; I've got an iPad with me 99% of the time, so I don't need or want a full iPhone but do want a minimal slick device which could sync with the iPad.

OK, what could we do with a "iPhone Shuffle" design? or "iPhone Nano"?
Tiny, minimal size. Smaller the better so long as physical usability remains. Already use the mic-enabled earbuds so that covers most use; add a minimal speaker & mic in the case for "sufficient" usage.
Auto-sync with other iOS device. Bluetooth interface, keeps up with my iPad Contacts list. (I get tired of having to re-enter or transfer lists some hard/annoying way for every new phone.)
Voice dialing - GOOD speech recognition. My Verizon/Samsung POS claims to have it, but is obnoxious to set up & use. Bounce voice sample to a cloud server if need be.
Everyone has tiny pet peeves about phone calling that are too small to whine about yet are still there & nagging - apply the Apple paradigm of interface perfection and people will flock.
A screenless "Shuffle" design would not be a huge hit, yet would have a solid following. A minimal "Nano" design would help without much more bulk.

Apps? Could do without. That's why I'm dragging an iPad everywhere.

I need a PHONE. Not another smart device with 90% overlap on what I already have. Strip it down to bare essentials, get the user interface right, and apply seamless wireless integration with my other iDevices.

And yes, there are times I just want to call some random person from a "just want to yak" list - call it a "shuffle" feature.

 

[Agent OrangeZ]

I can't wait for the next refresh of iMacs.

There will be no disc drive and it will be thinner (redesigned probably).

Yeah.... because a stationary... non-mobile computer NEEDS to be thinner and have less features.

 

[cvaldes]

Apple should be releasing a very limited function iPhone in the states. Call it a NANO or whatever, but just a camera/mp3/phone. Something that complements the iPad with function, instead of the competing functions with iPhone and iPad.

There is a huge, palpable low-end phone market in the US, and world of course.

And what sort of gross margin do you think Apple should have on such a device?

Remember, their primary duty as a publicly-traded company is to increase shareholder value.

 

[FriarNurgle]

Two quick things:

1. The US market is small on a global level.
2. The majority of users outside the US do not purchase subsidized phones with 2-year contracts (it's about 50% in the EU and much less in the Asia.)

Therefore, Apple needs a killer product in the area to expand into China.

US market is not small. Agreed, it does differ greatly in how phones/service plans are purchased.
If the other global markets have a substantial unsubsidized/prepaid market and offering last gen iPhones cheaply isn't working, then it makes perfect sense for Apple to attempt a cheaper "entry" level model... but it just doesn't seem like something Apple will do. However given the huge emphasis on expanding in the China Market, it only makes sense Apple would adjust accordingly.

 

[MrWillie]

Aside from just offering a 3GS or iphone 4 (with plastic instead of glass) for Prepaid markets, i dont see how Apple can pull this off. If they introduce a Low Cost iPhone that is a new device It seems the device may be crippled in some sense which, of course, will be fuel for apple-bashing due to the phone lacking the ability to run iOS5 or be hindered by only certain apps functioning on the phone. Offering, lets say, a 4GB iphone without expansion capabilities would defeat the purpose of it being an iphone at this point. Apps and movies and music would simply fill up the phone way to quickly. removing Wifi would cripple certain OS functions that rely on wifi and most prepaid phones include bluetooth as a standard so im not sure what they could leave out.

iPod for music, iPad for movies, good apps, and suppliment the laptop. I am currently not using a smartphone because with 5 phones on my plan, the bill is outragous.

Universal iPone would let me switch to Virgin Mobile and pay $35 for what ATT charges $80 for. (Except I would have 'unlimited' data). Right now it's looking like the BB on VM.

 

[DTphonehome]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_3 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8J2 Safari/6533.18.5)

What would a cheaper iPhone consists of?

What I think:

plastics like the iPhone 3GS but perhaps lesser grade
non-retina LCDs
less precise machining of parts during assembly (ex: not fusing glass and lcd like on ipt4 and ip4 models)
even lower res camera, and only rear facing (no facetime support)
cheaper radios, just 3G but like EVDO or something
lower capacities on storage (ex: 4GB, 8GB)

I would hope they don't switch out the capacitive screen for a resistive one (UGH! *shivers*)

what do you guys think?

I think that what you're proposing makes sense if you dont consider the imminent release of a new model that will likely have a faster proc, better cameras, and a bigger screen. So if they simply rehash the current iPhone 4 with the same A4, 8-16 GB flash, the same lower-quality retina display they use on the iPod touch, and a less expensive/more durable plastic body, I think they can easily hit the $300-349 price point. They don't need to gut the current iPhone; just make it slightly cheaper and intro a new high-end model.

 

[PeterPanMac]

iCloud

iCloud changes everything, You don't need to have local storage for anything other then the os and apps. Whatever this cheaper iPhone is it will rely heavily on cloud services to mitigate the cost of the device.

 

[ComputersaysNo]

I'm making a wild guess here, as i don't see Apple make something low-end or budget just because of the assumptions it would get. I think that the new phone will not be able to download stuff at all or very little. Basically going back to the pre-smartphone era. But, this phone you will not be ashamed of due to it superb design.

Imaging pulling out your phone, and people would recognize it as 'the budget iphone'... You don't want that. Now on the other hand, showing your beautifully handcrafted piece of minimalistic technology...

With selling every iphone4 they can make, i don't see the need for a simplified version, but i do see a huge market for another type of phone.

/brainwave

 

[carlgo]

Surely there is a huge world-wide market for a small and of course stylish and easy to operate iPhone that makes nice clear phone calls cheaply on actually existing networks. Small, nice screen just big enough for the simplest of apps and family photos, modest memory, a modest camera, blue tooth hopefully.

Millions of people have absolutely no desire for the super-phone that people on these forums want. And they would never, ever pay $55 a month.

 

[paul4339]

What would a cheaper iPhone consists of?

What I think:

plastics like the iPhone 3GS but perhaps lesser grade
non-retina LCDs
less precise machining of parts during assembly (ex: not fusing glass and lcd like on ipt4 and ip4 models)
even lower res camera, and only rear facing (no facetime support)
cheaper radios, just 3G but like EVDO or something
lower capacities on storage (ex: 4GB, 8GB)

I would hope they don't switch out the capacitive screen for a resistive one (UGH! *shivers*)

what do you guys think?

Most expensive parts is screen and storage... so cheaper screen (ie, no IPS, like iPod touch), and less storage 8GB. Using existing iPod touch components and existing iPhone 4 body (maybe plastic back), is much easier than doing something new.


.

 

[silentnite]

A smartphone with all the goodies capable of competing with any smart phone on the market. I forgot to add, prepaid or at least affordable by people with a little less disposable income will knock the socks off of them

 

[ctdonath]

And what sort of gross margin do you think Apple should have on such a device?

iSuppli says the Nano cost about $59 in parts. With a SWAG at manufacture and distribution, they've got maybe a 100% markup. That's a pretty good gross margin.

With Nanos running $149, Apple could sell a lot of iPhone Nanos for $199 and make stupid huge profits, or maybe $179 and gain better market penetration for still the same profits. How much does a cell module cost? and bigger battery? As they squeeze down costs, maybe even $149 - and take over the low-end market in both "free" and "unlocked" forms.

 

[acidfast7]

US market is not small. Agreed, it does differ greatly in how phones/service plans are purchased.
If the other global markets have a substantial unsubsidized/prepaid market and offering last gen iPhones cheaply isn't working, then it makes perfect sense for Apple to attempt a cheaper "entry" level model... but it just doesn't seem like something Apple will do. However given the huge emphasis on expanding in the China Market, it only makes sense Apple would adjust accordingly.


Image

To me, 25% is quite small. As a scientist, I'd say it's bordering on insignificant when compared to other 75% market share remaining. Also, you haven't considered that the US market is asymptotically saturating when compared to the nascent Asian markets.

Apple will adjust accordingly. They have no chance of drawing customers into high-cost two-year contracts like in the US. They really need to have something that can entice the average consumer in emerging markets, which would be a reasonably priced unlocked phone without a contract. The iP3Gs at 3999 RMB (450€) isn't cutting it. They need some less than half that price (maybe between 99 and 199€).

 

[entatlrg]

Does anyone here know of any harmless weed I can smoke till September ("Fall") ? This wait is killing me.

Just vaporize it

 

[Wolfpup]

Oh man, if Sprint offered an iPhone on Boost or Virgin.... not sure I could resist :-D

In fact I KNOW I'd buy one...worst case I could turn service on and off, best case, I'd switch to it as my phone.

Their stuff already seems to be subsidized though, actually, and their phones seem to go up to $300 in price...that seems very workable.

 

[theOtherGeoff]

first off, most foreign markets are prepaids plans (you buy your service month to month, no lockin). Mostly because the culture there is to 'buy minutes' (and I assume then GB of 3G as well) I also know part of that is turning on/off services such as data, and the other is floating between a myriad of wireless companies.

So, To get into that market, you need a less expensive phone because no subsidy (and the 2 year lockin to pay off the subsidy) exists, or is tolerated by the market.

2nd, Apple stated up front that they will be aggressive with pricing and models to keep from being undersold. They learned from the Mac Experience, that you must be ready to aggressively protect the brand. The iPod Shuffle is just that device... it's the gateway to the nano, to the touch, to the phone (why... iTunes... no loss of time investment in media management). The term they used early was 'price umbrella' They want that umbrella as low to the floor as possible, to keep other brands from engaging in customer brand loyalty lockin.

Android is to some extent under the umbrella now, however, their capabilities and 'emotional investment' at that level is so low, that it's just a 'cheap phone.' If Apple closes that gap, the brand value ("I can get an iPhone for _almost_ the same price"), That drives for the long term 'halo' (app store, music store, upgrades, iCloud, iPads), which when you have a 'family' of products, is bound to happen.

I know I'd buy my 20 yo daughter a iPhone 4'lite' if it was under $200 and not locked into ATT/Verizon. In a Minute. She has a MacBook, She has a iPod nano. She's graduating from college (poor ATT coverage there, no VZN), and is about to move. a 2 year contract is silly. She has WiFi everywhere. I don't think she needs an iPad (she's a writer... needs a good keyboard). But when she gets a job (hope hope), then she can go get an iPad and not lose her 'investment'

So... a $<300 prepaid solves a lot of problems.
1) it can be the 'free' or $9.99 iPhone for ATT, Sprint, VZN, TMoble in the US
2) it becomes the 'iphone shuffle' (phone, web, 4GB of mem for apps/songs/media,a nice display, and a
3) it lowers that umbrella (you can own an iPhone... or one of those no name android phones that has no experience, and limited support)

Apple's cash allows them to make almost nothing on the shuffle... but it drives the long term (2 years, they'll buy an iPhone) plan. Thats the real beauty of Apple's cash account. They can invest in the future, and make decisions that are focused only on this quarter.

 

[JAT]

I can tell you exactly what a category killer would be:
Make carriers offer it without data. It can be a phone, it can message, and use wifi for data instead of cellular.

You wouldn't even have to change the price or size or anything. Just offer that deal with a smartphone and watch the sales increase.

 

[Wolfpup]

I can tell you exactly what a category killer would be:
Make carriers offer it without data. It can be a phone, it can message, and use wifi for data instead of cellular.

You wouldn't even have to change the price or size or anything. Just offer that deal with a smartphone and watch the sales increase.

I've been wanting this since "Smartphones" were first released! I don't have a smartphone, and I have no idea when I'll get one...because of the dumb data plans. If I could buy one and just keep my current plan, it would have been a no brainer years ago. It's not the phone price that's been the barrier...

 

[acidfast7]

I can tell you exactly what a category killer would be:
Make carriers offer it without data. It can be a phone, it can message, and use wifi for data instead of cellular.

That's why prepaid plans are great. You pay per SMS/MMS/min/MB. With a smartphone, I can disable data usage and still use public/stolen wifi for free. Of course, the costs per min are huge (like 0.09 €cent/min), but then I talk less as well. If I get stuck, I can just turn the data option on the smartphone on and browse for what I want without a monthly fee.

I get so irritated when I head back to the states and can't find good local prepaid SIMs/uSIMs.