This is actually quite interesting. People wont switch to newer phones since their iphones will get iOS support for the next 2years which means that apple will become victim of its own policy when it comes to OS updates and support
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Is the iPhone 5S worth $650?
- Thread starter UBS28
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This is actually quite interesting. People wont switch to newer phones since their iphones will get iOS support for the next 2years which means that apple will become victim of its own policy when it comes to OS updates and support
I will usually pay nothing or even pocket some cash each time I purchase a new iPhone because I sell my old one and buy on subsidy.
Last year I was able to sell my 32 GB iPhone 5 for $525 - my 5S cost me $299 + tax.
iPhones may be somewhat expensive (though most every flagship runs the same price save for the Nexus phones), but they also hold their value incredibly well.
I can upgrade every year because:
(1) Apple offers early upgrade pricing - usually $200 off the unsubsidized price.
(2) I can sell my year old device for 60%+ of what it cost brand new.
So for instance - if I were to get a 6, it would cost me $550 for a 32GB. I can sell my 32GB 5S for roughly $500 (conservative). In the end, I'm only out $50, AND I'm upgrading every year.
If you don't mind doing some leg work and take care of your device, it really isn't terribly expensive to stay up to date. Even on an iPhone.
Last year I was able to sell my 32 GB iPhone 5 for $525 - my 5S cost me $299 + tax.
iPhones may be somewhat expensive (though most every flagship runs the same price save for the Nexus phones), but they also hold their value incredibly well.
I can upgrade every year because:
(1) Apple offers early upgrade pricing - usually $200 off the unsubsidized price.
(2) I can sell my year old device for 60%+ of what it cost brand new.
So for instance - if I were to get a 6, it would cost me $550 for a 32GB. I can sell my 32GB 5S for roughly $500 (conservative). In the end, I'm only out $50, AND I'm upgrading every year.
If you don't mind doing some leg work and take care of your device, it really isn't terribly expensive to stay up to date. Even on an iPhone.
You made the assertion, you can prove the point. As far as I know the number of iPhones in use is larger than any other manufacturer and has in fact grown.
I think more consumers are holding onto their phones because the 'improvements' of newer models aren't as alluring.
No idea if used prices will go up. I'm hoping the Nexus 5 and Moto G are signs that more quality off-contract phones at reasonable prices will come. But we are talking a big unknown on that front. Rumors of the Nexus being discontinued, Motorola being sold to Lenovo. Nobody knows what will happen. I can tell you just from my personal viewpoint that I'm never signing a contract again.
http://www.fiercemobileit.com/story...-share-dominance-erodes-ios-closes/2013-09-03
Again, Apple is holding steady in the USA for now. Let's re visit this subject IF all the big carriers end the subsidies. We all know how dominant Android is in non USA, non China territories already. Apple is a non factor in China altogether at this point.
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I am making the assertion on the future sales. Not the current sales. And my assertion is that Apple cannot maintain it's 40-45% USA market share if carriers go the no subsidy route.
How well is the iPhone doing in Europe? In Asia, In Australia? In Brazil? where subsidies are a big player relative to Android.
"Apple has made some moves in Brazil, such as opening a Brazilian iTunes store, hiring a Brazilian to oversee its Latin American operations, and more recently, cutting the prices on the iPhone 4 and 4S by 25% and 15%, respectively.
Still, Apple remains far behind.
According to research firm Gartner, Samsung sold 42.4% of the smartphones in Brazil last year, followed by LG with 13.3% and Apple with 9.1%, just barely ahead of Nokia and Motorola."
http://articles.latimes.com/2013/jul/04/business/la-fi-apple-brazil-20130628
The notion that somehow consumers aren't price sensitive is nonsensical, unless one is part of the super rich. If that's the case, then what price an average consumer pays has no bearing.
The gist is here is that in prior years, a consumer didn't have a choice, other than to pay the contract price. Until now, ATT had never before offered an off-contract price. Moreover, in the past, even if you were out of contract, it made no sense not to upgrade, since there was no discount for not doing so. Hence, everyone was forced to upgrade at 2 years.
Without contracts (VZN still charges the same regardless) on ATT and T-Mobile, the consumer now has an incentive to forgo the upgrade, bring a phone from elsewhere, or purchase outright with the full transparency of a respective phone's retail price.
None of this suggests Apple can't continue selling phones at $650 retail price. The implication is that once prices (perceived or otherwise) goes up, then demand must necessarily go down. Simple supply vs. demand. Of course, if Apple were an inelastic good (such as medical care), where the forces of supply and demand no longer apply, they'd be a Monopoly. Remember MSFT 10 years ago? They were close.
In my view, future trends will depend exclusively on iPhone 6. If Apple makes a product, which it has many times in the past, that completely out classes the competition, then they can move the goal posts, and command the $650 - $800 range for their new phones, with all the rest plummeting in price.
What happens will depend on iPhone 6. And, should iPhone 6 redefine the industry, you'll see AAPL shoot through the roof, since we've all priced in slower growth with decreasing profit margins.
Personally, I hope iPhone 6 will shock the world with innovation. Not because I'm partial to Apple, but because I like the world that's created by competition and practical innovation.
If Apple can do this, then iPhone 6 at $650 will sell like hotcakes.
The gist is here is that in prior years, a consumer didn't have a choice, other than to pay the contract price. Until now, ATT had never before offered an off-contract price. Moreover, in the past, even if you were out of contract, it made no sense not to upgrade, since there was no discount for not doing so. Hence, everyone was forced to upgrade at 2 years.
Without contracts (VZN still charges the same regardless) on ATT and T-Mobile, the consumer now has an incentive to forgo the upgrade, bring a phone from elsewhere, or purchase outright with the full transparency of a respective phone's retail price.
None of this suggests Apple can't continue selling phones at $650 retail price. The implication is that once prices (perceived or otherwise) goes up, then demand must necessarily go down. Simple supply vs. demand. Of course, if Apple were an inelastic good (such as medical care), where the forces of supply and demand no longer apply, they'd be a Monopoly. Remember MSFT 10 years ago? They were close.
In my view, future trends will depend exclusively on iPhone 6. If Apple makes a product, which it has many times in the past, that completely out classes the competition, then they can move the goal posts, and command the $650 - $800 range for their new phones, with all the rest plummeting in price.
What happens will depend on iPhone 6. And, should iPhone 6 redefine the industry, you'll see AAPL shoot through the roof, since we've all priced in slower growth with decreasing profit margins.
Personally, I hope iPhone 6 will shock the world with innovation. Not because I'm partial to Apple, but because I like the world that's created by competition and practical innovation.
If Apple can do this, then iPhone 6 at $650 will sell like hotcakes.
Not about price. About value. Consumers are VALUE sensitive - doesn't matter how much something costs as long as the perceived value justifies it.
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Market share and phone sales aren't linear in their relationship. Apple continues to sell more and more phones each quarter (relative to the year before quarter). Yet their market share continues to stay stagnant or decrease.
You make the mistake of assuming market share is a factor for Apple. It's not. If Apple were playing the market share game, they could easily lower prices, offer the 5C at $350 off contract and gobble up percentage points.
But they don't. It isn't consistent with their model. The smartphone market only just last year surpassed dumb phones as far as total global usage. There are plenty of potential customers out there. The smartphone market is MATURE, not SATURATED.
Mark my words, Q4 2014 will yet again be Apple's "biggest quarter ever" but tightening profit margins will cause small profit growth, despite record sales and revenue and investors and financial pundits will continue to perpetuate the story that Apple is doomed.
All the while Android OEMs are selling off contract devices at cost in developing countries and countries without subsidy, gobbling up market share, but making little-to-no profit.
The Nexus is an Android device. Android runs most of its code in a virtual machine, whereas iOS run its code natively. For that reason Android will never be as fast or as smooth as iOS. Anyone who is familiar with VM's will know they are inherently slower than native execution.
Android devices are cheap, the manufacturers have to flood the market with as many cheap devices as possible because they really aren't worth the higher prices that we see attached to iOS devices - it's the only way they can make a lot of money. iOS devices are made from quality materials and the OS is specifically designed to work with the hardware.
That old saying "you get what you pay for" holds true for Android and iOS devices.
Regards,
An ex-Android themer/developer
You havn't heard of ART then which will address the non-native code drawback.
Then you seem to be comparing budget Android phones to iPhones, there are premium Android phones you know.
I'm sorry but if you think a Nexus 5 is somehow half the phone because it is half the price then you don't know what you're talking about.
Astute consumers are value oriented with the principle that price is what we pay, but value is what we get.
The majority of consumers are price sensitive. For example, ever see a study on how a consumer chooses, say, auto insurance? Medium priced premiums may have more risk-transferance value, but consumers always choose the lesser premium, even if the risk-transferred value proposition is inferior.
For the majority, I would assume this will hold true for phones, just as it would in the above example, and for any other product with price transparency.
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I acknowledge your opinion. There is a reason you don't see the "buy one, get one free" deals on iOS devices like you do with Android phones. The reason is that companies can afford to give away low-end devices, such as Android, but they cannot afford to give away high-end devices such as the latest iPhones/iPads.
There is no opinion involved in my statement about ART you obviously have never heard of it and you're throwing out you're "developer" like it carrys some weight. You comparing budget Android phones to an iOS device, where are these Galaxy S 4 buy one get one free deals?
Is ART standard in Android? It has been a while since I developed for Android, so I could be in error here.
The Galaxy S4 is too new for a deal like that. I feel we'll see the SGS4 buy one get one free deals at some point. Perhaps after the manufacturer designates the device EOL (no further upgrades) but the carriers are still selliing it - which happens often.
But the reason for the choice, in your analogy, is the value of more expensive coverage isn't adequately communicated to the consumer.
I know I haven't the foggiest ALL the things my insurance pays for or takes care of. I also know I will (God willing) never (or rarely) use it. The value for me is not there so I go cheap.
Value is always the driving factor. I use my smartphone constantly. Same with my tablet. Therefore I'm much more willing to pay a higher price for a smartphone or tablet. In addition to the fact that a big part of value is what use one will get out of the product, there's also stability, efficiency, speed, quality etc that go into it.
So right off the bat, I'm willing to spend more because I will use the product more (higher value proposition). Then, things like the criteria I mentioned above when found in a certain device add to the value I see in a certain product.
My pricing ceiling is usually set by how much I'll use the product. That is - it's value to my everyday life.
I'm not saying consumers AREN'T price conscious. Just saying, if one can properly match value propositions with a customer, its very likely you can get them to pay more than they originally thought.
Good point, I didn't take this into consideration.
I agree, and I do the same. For products I use daily, nothing I use more than my smartphone these days, I will pay a premium for better experience, just as I would pay more for a nicer and larger screen, since I have to look at all the time.
ART came with Android 4.4 and is disabled by default as it is in beta stage but can be switched on in the settings, it will eventually be the default compiler so will fix the non native code issue once Google decide it is ready for primetime.
Why are you comparing budget Android phones to iOS devices, compare premium phones to premium phones.
I ran into a lot of the "give me the cheapest laptop you have" customers when I worked at Best Buy.
To your point, there are lots of people who just want the cheapest. But then, no amount of value positioning will sell them, so why bother? See Apple doesn't compete for those people. And there are plenty out there - which is partially why Android's market share is so large.
Apple wants the 30-40% of the market who care about experience and value and are willing to pay for them. They done well thus far grabbing about half this group. They are fine leaving the other 60% of the world who either don't/won't have the financial resources to spend or don't/won't care to Android.
Apple isn't and has never been about market share. Which is why you won't see a "cheap" iPhone. We can hope and wish, but it won't happen. Whether that reason is because Apple feels it would cheapen their brand or they truly believe they couldn't put together a decent enough device at the cheap price range, I don't know.
But think about this - profit margins are shrinking due to the cheaper devices getting stronger. Apple continues to lose on Wall Street because, despite record revenues and sales, their profits have dropped or remained flat. What would happen to those margins if they released an "at-cost" priced iPhone? What would the market do to them?
At this point - even if Apple wanted to change, there is a certain perception of them and their goals. They are the premium OEM - whether or not that is actually true. And as someone famous once said - perception is reality.
Disabled by default. Beta. Sounds about right for Google products. I wonder how long it will be until Google gets tired of Android and trashes it like they do with other Google products that milliions of people were using - the latest being Google Reader.
I had been using Android devices since the release of the HTC Dream (G1) and it is my opinion that there are no truly "premium" Android devices. The hardware on some of the Android devices is impressive, but sticking Android in it significantly reduces its value.
Depends what you're comfortable paying. I'd go with the Nexus 5 if I had to pay the price in full up front. The iPhone is nice, but I'd rather get something cheaper. Would be a good excuse to go and try something new.
There are also a group of vocal people on car forums who don't believe BMW vehicles are worth it. BMW had a banner year.