Could this be Apples strategy?

Discussion in 'iPhone' started by sparrow11, Dec 11, 2007.

  1. sparrow11 macrumors newbie

    Joined:
    Nov 28, 2007
    #1
    I think I can envisage Apples Mobile Phone World Domination Plan. And with a high initial purchase price and a steep minimum monthly tariff, I reckon they could afford it.

    Say in around 15 months in the UK and the US, Apple & 02/AT&T will offer a £100/$200 voucher trade-up. Brit customers will willingly shell out another £169 plus their voucher for a new Mark 2 phone, and will sign-up for 18 more months on O2, or whichever network provider Apple is partnered-with at that point. 18 months after that...another £100/$200 voucher for iPhone III, another £169...eighteen months later...(you get the idea.)

    That's what £799 (£630+£169) minimum from every established customer across every 18 months x how many more million 1st-time user iPhones you can sell up to the first voucher being issued? 1/3rd of the monthly subscription goes to Apple in any case, plus the £169, minus the £100 voucher - so that is £169 + £210 = £379 (minimum) and £420 going to the network provider.

    Add to that the £269 for the 1st-time buyers you gain each year, plus once again £630 minimum for the 18 months sign-up and you have invented the right to print money.

    Of course the iPhone manufacturing costs take some of that profit. I believe that is calculated at something just over $250 per unit, but the nature of mass manufacturer means that the price is likely to drop.

    Apple and the chosen network provider will be guranteed a revenue stream the likes of which their competitors will only be able to dream of - whilst they are stuck dishing-out dingy-style phones with telephone support from India.

    Guaranteed customer loyalty.

    For ever.

    The alternative is just little incremental upgrades, "nano" iPhones, dedicated "startup" iPhone users disheartened because they miss out being stuck in 18-month contracts...

    Would I pay straight out for an iPhone Mark 2 in 12-18 months time? Nope - I'd probably stick with what I've got. But the voucher, the voucher....burning a hole in my email Inbox (or a message via iTunes)...could you resist?

    I think Apple plan to re-write the rules with the iPhone; every user willing, absolutely begging to buy the next model, And they won't moan if they miss out on the launch of the next model because they will get their voucher in due course (or give their current model to their kid and buy the new one from fresh!) Even more revenue!

    Apple would have a "churn" rate of near enough 0% With users locked-in, buying iPhones for family members, all working towards their 18/24-month voucher. Tens of millions of users "locked" into a brand - a marketeers dream.

    And of course a voucher scheme means those with unlocked phones get frozen out and will "return to the fold." Even more revenue!

    Nothing less than world domination of the mobile phone market will do. They have a head-start already.

    I don't think shares in Nokia or Ericsson would be a good bet.
     
  2. tonywob, Dec 11, 2007
    Last edited: Nov 6, 2011
  3. sparrow11 thread starter macrumors newbie

    Joined:
    Nov 28, 2007
    #3
    That's the key attraction of the voucher idea; you promote brand loyalty. Even if the competitors come up with something better - and let's face it there are other phones on the market with more/better features than an iPhone (just not as useable) through the voucher scheme you can be sure that you can pin down what your minimum revenue will be.

    So in say 18 months time...your just getting a tad bored of your iPhone...thinking of that new LG model...then Apple, through say an iTunes update provides you with a one-shot voucher for the new model. Hum, what to do? $200/£100 voucher...the LG...$200/£100 voucher...er...the voucher wins every time I reckon!

    I don't think Apple will be content with just maintaining a percentage of market share - like as with iTunes they'll want to own the market in its entirety...that means denying the competitors their customers, for good.
     
  4. tonywob, Dec 11, 2007
    Last edited: Nov 6, 2011
  5. samab macrumors 6502a

    Joined:
    Mar 27, 2006
    #5
    Apple and the carriers can screw each other with their deals --- like how Apple partnered with Starbucks in the US for wifi (which is hosted by T-Mobile USA) and AT&T can do their own thing.

    O2 doesn't have to do anything. What they are saying in their terms and conditions is that your iphone is useless unless it's under o2 iphone plan (i.e. they won't unlock your iphone even after your contract is over).

    Nokia is already saying that they are thinking about the revenue share business model. In 2 years, O2 can partner with Nokia to bring out another full-priced non-subsidized handset with a long contract that you want.
     
  6. TurboSC macrumors 65816

    TurboSC

    Joined:
    Aug 4, 2007
    Location:
    California
    #6
    If the upgrade margin was worth it hardware / feature wise, and they also offered up a voucher or incentive for iPhone owners to upgrade, then I would not think twice about it.

    I think it would be a great idea for them to do a trade-in offer as well, and take all those old iPhones and turn them into very affordable refurbished units. That would increase the amount of sales on both fronts.
     
  7. samab macrumors 6502a

    Joined:
    Mar 27, 2006
    #7
    The whole voucher idea needs 1 thing --- who is going to subsidize the voucher.

    Apple gets additional bounty if they bring in new subscribers for the carriers, not keeping existing subscibers. Meanwhile, the carriers will have other "must have" phones from Nokia and other manufacturers --- that they can sell --- full priced, non-subsidized, crippled, simlocked with a long and expensive contract.
     

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