Phones How does Apple do this?

[bmac4]

That's incredibly interesting, because I worked at Best Buy and we made more on Apple products (macbooks and iMacs) than any other computer......

Also made more off iPads than other tablets.....

How long ago was that? Our cost for Apple products are also what we sale them at retail. Also Apple may have cut a deal with best buy because they order so much.

 

[jrswizzle]

How long ago was that? Our cost for Apple products are also what we sale them at retail. Also Apple may have cut a deal with best buy because they order so much.

I worked there end of 2011 through beginning of 2012.....

We generally sold them at a discount as well. As a salesperson I was measured by my revenue per hour and Apple products always were the highest.....

This makes sense if you think about it. Generally speaking, Apple marks their prices up to increase margins even though the cost to build the device isn't much higher than the competition. There is more "profit" to go around (I'm not saying Apple doesn't retain the lion's share of this - they definitely do, just that because of the "Apple Tax", retail outlets see higher revenue on their products as well - just not to the same degree as Apple does.)

The fact that Best Buy and Apple have a relationship could also be a factor as you suggest - I don't know. I was just a salesperson 😛

 

[bmac4]

I worked there end of 2011 through beginning of 2012.....

We generally sold them at a discount as well. As a salesperson I was measured by my revenue per hour and Apple products always were the highest.....

This makes sense if you think about it. Generally speaking, Apple marks their prices up to increase margins even though the cost to build the device isn't much higher than the competition. There is more "profit" to go around (I'm not saying Apple doesn't retain the lion's share of this - they definitely do, just that because of the "Apple Tax", retail outlets see higher revenue on their products as well - just not to the same degree as Apple does.)

The fact that Best Buy and Apple have a relationship could also be a factor as you suggest - I don't know. I was just a salesperson 😛

I always thought it was a well known fact that Apple has the highest margins. All I know is that we only see a very small discount to our cost. Also Apple is by far the hardest vendor to work with.

 

[ugahairydawgs]

You have to remember that you are also working at a college bookstore, where edu pricing is less than normal retail and the total freight ordered is generally significantly less than a big box retail place.

A lot of retail places will also use computers as loss leaders to get people in the door so they up sell the high margin products and, most importantly, get them to use in-store credit accounts. Best Buy, as it exists today, is nothing more than a credit card company with a small electronics sales business.

 

[Fernandez21]

No I do realize that people like us that post on these forums are the people that buy phones all the time, but what you and many other fail to see is how Apple goes about its business. Sure there are new customers each phone release. Also new carriers get the iphone, but that does not make up most of the sales of each year. Look at what I said before. Apple uses the same body 2 times for iphone and S model, but they just ever so much change it and a feature the one before did not have and want get. This pulls die hard Apple fans back in year after year. Using the same body saves a ton of money will still charging the same price for the phone. There margins are already ridiculous. This only gives them more money.

But that is what makes up those sales every year. The amount of people going from one iPhone to the next are small (can't find any actual proof one way or the other though). Apple isn't trying to get you to buy a new phone every year, just like they don't try to get you to upgrade your Mac every year, or your iPad every year. What they try to do is target the ones who didn't buy while maximizing margins.

 

[bmac4]

You have to remember that you are also working at a college bookstore, where edu pricing is less than normal retail and the total freight ordered is generally significantly less than a big box retail place.

A lot of retail places will also use computers as loss leaders to get people in the door so they up sell the high margin products and, most importantly, get them to use in-store credit accounts. Best Buy, as it exists today, is nothing more than a credit card company with a small electronics sales business.

The bookstore that I work at is part of a large company that has a huge account with Apple. I understand that on macs we sell them at an educational discount, but things like ipods iPads and anything Apple that is not a computer is listed at retail. Our margins are still very small.

I talked to someone that works At&t and he said the same thing. Margins are small so they try to sell large numbers of iphones to make get good sales numbers. For them it is not a problem at all, but here we have seen a decline in sales year after year on macs.

 

[bmac4]

But that is what makes up those sales every year. The amount of people going from one iPhone to the next are small (can't find any actual proof one way or the other though). Apple isn't trying to get you to buy a new phone every year, just like they don't try to get you to upgrade your Mac every year, or your iPad every year. What they try to do is target the ones who didn't buy while maximizing margins.

How can you say they don't want people buying a new iPhone each year? Why do they add something to the S that the other one does not have?

 

[Fernandez21]

How can you say they don't want people buying a new iPhone each year? Why do they add something to the S that the other one does not have?

What I am saying is they are not targeting the same people, they are target new people. If people end up upgrading to the new model after one year, then that's great for Apple, but that's not who they are targeting.

 

[bmac4]

What I am saying is they are not targeting the same people, they are target new people. If people end up upgrading to the new model after one year, then that's great for Apple, but that's not who they are targeting.

But I am saying they are. They would not add a feature to the iphone 4s that the iphone 4 would never get unless they wanted customers to buy the new one. There was no reason that the iphone 4 could not have gotten siri. Why else would they keep that off the iphone 4?

If they only want to target new customers why not just leave the iphone 5 alone? The iphone 5 is still selling so why do they need another phone for new customers? You guys keep saying most iphone users don't care about having all the features they just want a phone that works.

 

[Fernandez21]

But I am saying they are. They would not add a feature to the iphone 4s that the iphone 4 would never get unless they wanted customers to buy the new one. There was no reason that the iphone 4 could not have gotten siri. Why else would they keep that off the iphone 4?

If they only want to target new customers why not just leave the iphone 5 alone? The iphone 5 is still selling so why do they need another phone for new customers? You guys keep saying most iphone users don't care about having all the features they just want a phone that works.

Because if they don't add features then those customers will buy an android phone instead.

 

[bmac4]

Because if they don't add features then those customers will buy an android phone instead.

Yes but why can't they upgrade the older model too? The gnex gets all the updates the nexus 4 gets. The iphone 4 should have been the same.

 

[tjl3]

Yes but why can't they upgrade the older model too? The gnex gets all the updates the nexus 4 gets. The iphone 4 should have been the same.

Maybe pick another model instead of one that runs the most stripped down and basic version of Android.

 

[bmac4]

Maybe pick another model instead of one that runs the most stripped down and basic version of Android.

Is that not what the iphone is? The most basic and stripped down ios. Oh wait that is the only ios there is.

What about the Samsung s3 and the s4? The only thing the S3 want get are the IR blaster cause well the s3 does not have those things built into the phone.

 

[onthecouchagain]

Please notice the HTC One developer's edition comes with better specs, and is 64GB storage all for the same exact price of the iPhone 5 unlocked. $649.

 

[Fernandez21]

Yes but why can't they upgrade the older model too? The gnex gets all the updates the nexus 4 gets. The iphone 4 should have been the same.

To differentiate between the old model which they sell at a discount and the new model, for one. For another, some of those new features don't work as well on the old model (multi tasking was horrible on people who jailbreak and added to the older model, the mic on the iphone 4 doesn't pic up words as clearly as the 4S which makes siri even worse)

 

[bmac4]

To differentiate between the old model which they sell at a discount and the new model, for one. For another, some of those new features don't work as well on the old model (multi tasking was horrible on people who jailbreak and added to the older model, the mic on the iphone 4 doesn't pic up words as clearly as the 4S which makes siri even worse)

Poor excuses to me.

 

[ChrisTX]

People always seem to think everyone out there is on the same upgrade cycle. The people that buy in on the S upgrades usually have their upgrade around that time. I went from the OG iPhone(at full retail because there was no subsidy on the first iPhone) to the iPhone 3G, but passed on the 3GS when I saw it was the same, and proceeded to upgrade at the iPhone 4, and so on. Remember most of us are on 2 year cycles, and upgrade when our contracts are up. Most S users probably went from 3GS - 4S - and then to the 5S.

 

[bmac4]

People always seem to think everyone out there is on the same upgrade cycle. The people that buy in on the S upgrades usually have their upgrade around that time. I went from the OG iPhone(at full retail because there was no subsidy on the first iPhone) to the iPhone 3G, but passed on the 3GS when I saw it was the same, and proceeded to upgrade at the iPhone 4, and so on. Remember most of us are on 2 year cycles, and upgrade when our contracts are up. Most S users probably went from 3GS - 4S - and then to the 5S.

I do understand this, but if you split up all iphone users from cycle 1 to cycle 2 you would not get the sales numbers that iPhones get each year. People buy these phones each year. You guys can keep saying that the number of people that do that is small, but I know several people that do this. I know no one that has a nexus device those are small numbers.

Everyone can think what they want, but I believe Apple markets both models as to sell people on buying both. They know not everyone will, but if some they have just gotten a couple of million right there. The cycle idea does work for a lot of people, but it sure leaves a large about of iphones sales unaccounted for.

 

[nfl46]

Apple seems like the only company that can get away with this. The S4 is similar to the S3 but in Apple's book, that is a big upgrade like the 4S to 5 (bigger screen, slightly different external, internal upgrades). But, Apple manages to only change the internals and add a gimmick in their S upgrades. I don't think other companies have a loyal fanbase like Apple's to try that. Hopefully Apple doesn't risk it this year!

 

[Irishman]

As we all get prepared to see Apple reveal a new iPhone, and most of us believe it will be the 5s. I have a question. How does Apple sell millions upon millions of iphones, and then a year later release an S model that sales millions upon millions? No other phone manufacturer does this. The S model is aways just a spec bump with a couple of features Apple says the old phone can't do. Last year we had Siri that no other Apple device had at the time. I am a huge tech guy that loves having the latest and greatest, but even when I had my iphone 3g I saw no reason to get the 3gs. I waited until the 4 came out. Now someone in the forum told me that the only reason they has the S models was because there old iphones broke and were out of warranty. I can understand that upgrade.

Beyond the fact that the phone looks just like the older model. If you are like me with At&t you have to pay the upgrade fee plus $250 to upgrade early to an iphone. I just cannot see paying $450 on contract each year for an S model.

No other phone manufacturers have this practice. They always give us a bit of design up at the least. Let's look at the galaxy phones. Each galaxy S model has been a design change, and up until the S4 it has been a pretty big one. I understand none of these phones are as popular as the iphone, but still the companies that make them at least update the look of the phone.

Why does Apple do this? What makes you guys that do upgrade each year want to have the new S model? It kind of makes me think Apple holds out on some of the specs on the first redesign model, and them puts it all into the S model. Makes people want a new phone. I like Apple and understand a lot of what they do with the iphone, but this just kind of blows my mind. I guess more so the customers that buy into this than Apple. Apple is selling millions of each of these iphones why would they stop making S models?

Apple is very focused when it comes to product lines. They generally don't clutter up a line with variations of questionable relevance. This frees them up to be very on purpose about choices made from iteration to iteration. This is what they're very good at. Now, we can question whether or not these choices are always good ones, but we can't question their focus.

Samsung and other handset makers, on the other hand, saturate the market with phones every quarter. Samsung themselves have nearly a dozen smartphones currently available for the US market alone. HTC, LG, Sony, and Nokia, et al, do the same.

This different approach - throwing every conceivable variation into the ring to see what wins - is quite different from Apple, lacking that focus.

 

[ChrisTX]

I do understand this, but if you split up all iphone users from cycle 1 to cycle 2 you would not get the sales numbers that iPhones get each year. People buy these phones each year. You guys can keep saying that the number of people that do that is small, but I know several people that do this. I know no one that has a nexus device those are small numbers.

Everyone can think what they want, but I believe Apple markets both models as to sell people on buying both. They know not everyone will, but if some they have just gotten a couple of million right there. The cycle idea does work for a lot of people, but it sure leaves a large about of iphones sales unaccounted for.

I think you need to go back, and revisit the original iPhone keynote. When Steve Jobs was explaining why the "bottom 40" or bottom half of modern smartphones at the time was a bad idea. "What happens in 6 months from now when you think of a great idea? You can't go back, and things because they've already shipped." In other words he intended for people to keep the hardware, and just upgrade via software. Sure Apple wants people to buy new iPhone hardware because that's how it works. Any business operates on people buying more of their "stuff" per se. But with the 2 year, contracts we sign, there's a reason why phones are subsidized. In short the world is filled with TONS of people that use iPhones on contract that upgrade every 2 years as opposed to every year as you say.

 

[bmac4]

I think you need to go back, and revisit the original iPhone keynote. When Steve Jobs was explaining why the "bottom 40" or bottom half of modern smartphones at the time was a bad idea. "What happens in 6 months from now when you think of a great idea? You can't go back, and things because they've already shipped." In other words he intended for people to keep the hardware, and just upgrade via software. Sure Apple wants people to buy new iPhone hardware because that's how it works. Any business operates on people buying more of their "stuff" per se. But with the 2 year, contracts we sign, there's a reason why phones are subsidized. In short the world is filled with TONS of people that use iPhones on contract that upgrade every 2 years as opposed to every year as you say.

Yes there are iphones everywhere on contract, but why do you think carriers like At&t offer a $250 fee to upgrade early on iphone rather than make you pay full price. No other phone maker let's you do that. Apple knows a lot of people upgrade early and they want to cater to those people.

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Apple is very focused when it comes to product lines. They generally don't clutter up a line with variations of questionable relevance. This frees them up to be very on purpose about choices made from iteration to iteration. This is what they're very good at. Now, we can question whether or not these choices are always good ones, but we can't question their focus.

Samsung and other handset makers, on the other hand, saturate the market with phones every quarter. Samsung themselves have nearly a dozen smartphones currently available for the US market alone. HTC, LG, Sony, and Nokia, et al, do the same.

This different approach - throwing every conceivable variation into the ring to see what wins - is quite different from Apple, lacking that focus.

Yea I get that. They are not going to make 3 different iphones one that is good, one that middle of the pack, and one budget friendly. They know better than that I will agree with that. I just don't they they take enough the chances and play it way to conservative with updating the iphone. Why can't they change the design each year? As I have stated before they have the following to do this.

 

[ChrisTX]

Yes there are iphones everywhere on contract, but why do you think carriers like At&t offer a $250 fee to upgrade early on iphone rather than make you pay full price. No other phone maker let's you do that. Apple knows a lot of people upgrade early and they want to cater to those people.

I've never been offered a $250 upgrade fee for an iPhone only a year after using my subsidy.

 

[bmac4]

I've never been offered a $250 upgrade fee for an iPhone only a year after using my subsidy.

What carrier are you on?

 

[mattopotamus]

I've never been offered a $250 upgrade fee for an iPhone only a year after using my subsidy.

the big carries all offer it ..at&t/sprint/Verizon. For $199 plus an upgrade fee of $250 and extending out another 2 years, they will let you upgrade an iPhone every year. At&t let's you keep your unlimited plan when doing this. Verizon makes you pay full retail to keep unlimited.