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Low-Cost iPhone to Use Plastic or Hybrid Plastic/Metal Design, Due in Late 2013
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In theory that makes sense.
If Person A simply cannot afford an iPhone... Apple will get ZERO dollars from them. In that case it's better to sell them a cheaper iPhone instead of nothing at all.
The danger is if Person B can afford an iPhone... but they opt for the cheaper iPhone anyway because it's good enough. That would be a loss of potential revenue.
Still though... it's better to cannibalize yourself instead of letting someone else doing it. It will be a delicate battle.
Apple doesn't race to the bottom on price. Of course nobody can rule out a 180 shift in strategy, but I can't think of any Apple products competing in the lower price range. Even the cheaper iPad mini is still more expensive than similar speced tablets.
The thing is, is when everyone compares Apple time and time again to luxury car makers, they fail to realize that these luxury car makers aren't experiencing high growth. They never really have, and they never really will: Because they're niche manufactures. And their shareholders know & understand that. However Apple isn't a niche manufacturer - Every western high schooler sports an iPhone these days, every 10 yr old an iPod Touch, every teacher an iPad or MacBook, etc etc... Making it the opposite of niche. Apple products are common. So common, in fact, that Apple have almost run out of room to grow in the west (especially the U.S). Apple's shareholders are used to high growth - They bought into Apple for high growth, and they expect Apple to keep delivering high growth. And since every American that's going to buy an iPhone has already bought one, the growth will slow dramatically unless they break into another massive market. If they break into China & India, they will make ********s of money, as even if the profit margins are smaller, they'll make it up in sheer numbers.
I think it will depend on how inexpensive they go.
If the iPhone 4 goes for $450... is $300 low enough?
Or are we talking about a $200 phone?
Like I said earlier... it's better to get some money from people instead of no money at all. Apple is definitely leaving a lot of money on the table by not offering an entry-level phone.
But like you said... Apple has never played that game before. It will be interesting to watch.
In response to my argument for Apple retooling their $0 iPhone, and to all of the "it's needed for developing nations" arguments, there's the fact that above all else, Apple is an engineering company.
Look at the last few years, 2012 especially. Just about every product they introduced was the best product Apple ever designed. Not just in it's product line, but in all of Apple. The iPad 3 was the best designed and manufactured, the Retina MBP was then the best designed and manufactured with the best screen they've ever used, then the iPhone 5, by far and away the best designed and manufactured and (just a few months after the rMBP) the best screen they've ever used. The iPad mini had many of the design and manufacturing elements from the iPhone 5. The iMac came out at the same time and was one of the best designed and manufactured products they've done.
If you also look at the elements in each of Apple's products, they carry many of the same design attributes, and not just aesthetically. The unibody, the screen lamination, while it wasn't discussed I'm sure the iPad mini now uses the same case to part matching that was described in the iPhone 5 intro. I'm sure that the friction stir welding will be used in upcoming product refreshes as well. These things cost a lot of money, and are a mark of pride for Apple. To release a new product (and to Apple the iPad 2, and 3 were entirely new products though I'm sure the 4 wasn't) without at the very least incorporating the most sophisticated design elements they know how would hurt their pride.
They don't care about catering to emerging markets nearly as much as they do making the best product they know how. They are making money hand over fist, and therefor can afford to concern themselves with what they've been concerned about for the last decade, what they reiterate in every single video they release, to make the best product they can.
Apple's margins on current iPhones are north of $300 per phone.
On a $149 phone, they'd be lucky to pocket $10.
There aren't enough smarphone buyers on the planet to make up for a 30x headwind.
B will always be there if you offer a choice of any kind.
Only way to prevent is to offer 1 model and that's it. No 16/32/64 sizes.
Or a simpler solution is to just restrict the market. There are plenty of items that are market restricted.
The new iPhone is not going to be $149 - I can tell you that. It's going to be a midrange phone, not a Samsung Galaxy Y. Think maybe, $450 for the 8GB model, $500 for the 16GB model. With feature and hardware reductions, there's enough there for a pretty decent profit.
That'd be a good move - If they only sell the budget iPhone in Asia, then it wouldn't get back to the western market in any force, as Apple will have the fact that it's a budget phone on their side. I mean, buying a budget phone is kinda pointless when you have to pony up tonnes of $$$ to import it from Asia.
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Again, this is going to be aimed at the prepaid market.
I don't understand how expanding their potential reach with consumers is a bad move for Apple. If a lower cost phone performs as advertised, all should be well. If they over promise and under deliver on a lower cost iPhone like they did with Apple Maps, they will be in trouble.
I think it's only the folks who view their iPhone as a status symbol that say it's a bad move for Apple to sell a less expensive, slower phone for less money off-contract. To anyone who sees their phone as a status symbol, I'm sorry, I just don't get it. It's a freaking phone. A communication tool. We all pretty much have one.
If pulling your iPhone out of your pocket makes you feel superior, I think you need to stop and think about the metrics you're using to build up your own status in your head. A phone? Really?
I think it's only the folks who view their iPhone as a status symbol that say it's a bad move for Apple to sell a less expensive, slower phone for less money off-contract. To anyone who sees their phone as a status symbol, I'm sorry, I just don't get it. It's a freaking phone. A communication tool. We all pretty much have one.
If pulling your iPhone out of your pocket makes you feel superior, I think you need to stop and think about the metrics you're using to build up your own status in your head. A phone? Really?
Ixnay on that one. If the design causes supply constraints because of build complexity, then it is anything but "best designed and manufactured".
No they don't.
Other 2GB MP3 players such as Philips SoundDot or SanDisk Sansa are in the $10-20 range.
The iPod shuffle is more expensive by a factor of 3 to 5. Most of these even support video playback (http://www.valleyseek.com/coby-mp71...h-portable-media-player/store/show_item/39309)
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I'd argue that the reason the high end car manufacturers are niche markets is because they're products only start at $50k. Apple's products start at $329. While some say that they offer only expensive computers, expensive computers (phones, etc.) are a LOT more accessible than expensive cars.
If you look at any car manufacturer, there is little growth. It is a fully saturated market. The main audience looking to buy new cars are new people. Again, even a cheap car isn't as accessible as an expensive computer.
Also, Apple has not run out of room to grow in the USA. The PC market is stagnant, but the smartphone market is far from it. Apple can still grow in the PC market (they have substantially outgrown a declining market for a couple years now), it just means other companies have to shrink. In the smartphone market, if Apple is 35% of the smartphone market but 18% of the overall mobile phone market <http://dawn.com/2013/01/04/apple-google-gain-in-us-smartphone-market-survey/>, than that means only about half the mobile phone market are smartphones. If Apple only maintains their smartphone share, they can still double their sales in the US.