Project said:
Also amazed that the consensus on value proposition appears to be whether a phone is 3G or not. Taking no account of the screen size, PPI, built in flash, CPU and RAM.
I wouldn't say that, it's just that 3G is seen as a "standard" feature, so buying an expensive phone without it is like buying an expensive car that doesn't come with alloys or electric windows. Especially since the mobile internet is the iPhone's main selling point.
I'm just going to say that I, personally, don't really care about 2.5 vs. 3G issue. However I can see why people are criticising the iPhone over it.
Project said:
Badly as opposed to what? You have zero insight on Apples goals or targeting outside of the 1% figure. You have no insight into price sensitivity in this market - if Apple reduced the price by half, would sales double and profit increase? You also have zero insight into Apples long term strategy in the phone market. What we have now seems to be like a classic case of price skimming. Almost like a games console model. Who is to say this will not change 12-18 months down the line?
I never said it wasn't meeting Apple's goals, just that it could have a much better market penetration if it wasn't shackled to poor-value contracts. The price of the phone itself is great, I'd quite happily buy one if I could use my current SIM in it personally.
My insight comes from the people one here and the people I know. All of whom think the iPhone is a wonderful product and all of whom would like to own one. They nearly all, however, agree that the contracts that the iPhone is shackled to aren't worth it. The mass media agrees as well, Phil had to terminate and interview on the UK iPhone launch with Channel 4 news when they started asking him tough questions.
My insight also comes from the fact that I know a person who works at Carphone Warehouse who was involved with the launch and can tell me exactly how well or not well the iPhone is selling and what the people they're selling it to think about the price.
It is just my opinion that if the iPhone had competitive contracts it would sell better, but it's not a baseless one. Whether this would make more money for Apple, however, is something we can't comment on as none of us know how much money they're getting from the monthly contracts.
I'm simply talking about absolute sales and market penetration, you're taking a more pragmatic view of the industry in terms of profit and influence.
2. Rich kids at university? A couple at mine with sugar daddies but by and large the minute minority.
People at mine spend more than an iPhone contract would cost in a month on a night out drinking. Also everyone I know at Uni has a contract phone and most have iPods. So if they aren't the target for the iPhone (people who can afford it and are interested in it) I don't know who is.
If you would have said to Apple last year that they can come in with the most valuable 5% of the market (as they have with Macs as you allude to), they would snap your hands off because that's damn near $50bn. People are showing naivety by suggesting that such market share is a bad thing. Its a completely different market to MP3 players and the yardstick for success is by default completely different.
It's not a bad thing, I'm sure Apple are doing very well from the iPhone. After all they're charging customers twice for it, once when they buy it and then every month. Apple probably make many times over what each iPhone costs to make back in the long run.
For consumers it isn't a good thing but I'm sure Apple are more than happy with the revenue generated by the iPhone.
when Apple wants 1% share and prices the iPhone the way it does, are you really surprised that most people cant afford it or do not want to pay that much for a phone? It is not targeted at them right now. Its the elite product. The high end, premium phone. People will lust for it but can't afford it. Its entirely expected. The last thing they want is a free iPhone on contract like everything else and devalue the proposition at launch. Honestly, this is basic business strategy. What makes you think you are better qualified to position the iPhone in this marketplace than Apple? Do you not think they have experts from the mobile industry working with them to dictate a pricing strategy in the UK and other countries? Do you not think they thought about what people on average pay per month for contract phones? Rather, the line of thinking would be "what can we get away with". Now to you and many others, it does not present good value. But then they know this already.
I think you misunderstand where I'm coming from, I totally agree with you that Apple are trying to make as much money as possible and are probably going the best way about doing that.
But at the end of the day the iPhone isn't doing that well in terms of pure sales, which is my point, and I've already pointed out that it's raking them in the dosh. Mostly from the raping of their few customers, but how they earn their money is their prerogative.
I look at the iPhone, as a product and how much it costs, as a consumer. Which is what I am. If you're an Apple stock holder then well and good for you. If you're a consumer getting gouged then it's not so good. For Apple the iPhone is a huge success, for the consumer it's rip-off. And I guess this is why people say it isn't "doing well", it isn't dominating the mobile market (in terms of phones sold) when it has the potential to do so. For £269 it's an amazing phone and it's without a doubt the best "device" on the market overall. So people expect it to do an iPod rather than a Mac, and the way Apple talked about it initially (being the iPod for the phone market, revolutionising the industry etc) people thought it would rule. You are right to point out that they also said they'd be going after 1% of the market, but people assumed that this would be because of competition and not because Apple would price the iPhone out of the market (in the UK at least).
And I don't mean it's an expensive phone, I mean it's overpriced for what it is. The iPhone
isn't an elite phone. It lacks many of what are standard features on even mid-range phones. It has a 2MP camera, which is the bottom end as far as cameras go and it can't even take video. It can't do MMS, it doesn't have 3G all of which are standard on any kind of decent phone. You can't make video calls (useless feature I know), you can't run JAVA applications, ringtones are limited. Yes the iPhone can do other things, but most of those things the iPod touch can do and so don't validate it's relatively high price-tag.
The iPhone is an iPod touch with a low-end phone tacked on. Yet it costs way more than what a touch costs in the long run (with the contract in the equation). The sums simply don't add up.
If only Apple hadn't gotten greedy and demanded a cut of the monthly contract. As you say, I'm sure they're entire strategy is "what can they get away with".
It seems we agree that Apple are undoubtedly doing what's best for them, and that none of us could do a better job in that respect. I guess the thing that bothers me about the entire iPhone issue is that Apple seem quite happy to screw over their customers for money. I know they're a company and making money is their raison d'être, but it still leaves a sour taste in my mouth for them to be so anti-consumer.
