Friday, January 11, 2013

The cheaper iPhone

The rumors of a cheaper iPhone, in one form or another, are not new. Rumors show what people want. We want iPhone. A cheaper iPhone would mean that more people would buy it and we might change it more often. We know. Analysts know. And Apple knows it. The price of the iPhone in 2007 was totally prohibitive, so Apple and Steve Jobs adjusted the price a little. In 2008, Apple changed course and developed a subsidy model for the iPhone 3G, the entry price was $ 199. In 2009, when they introduced the iPhone 3GS, held a version of the iPhone 3G entry $ 99. In 2010, when Apple launched the iPhone 4, the iPhone 3GS was left at $ 99. And in 2011, to launch the iPhone 4S, iPhone 4 went to cost $ 99, from the iPhone 3GS to be free entry to the contract. In 2012, the iPhone 4 has become the iPhone of $ 0.

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It is hard to imagine a second line of thought of Apple. One where they have the idea of ​​launching a second line of iPhone. One that do not get the old models, but new ones are designed to be less expensive from the start. But if that were the case, if Apple had this input device in mind since 2010, it is clear that they have not chosen to go that route, or to introduce more than one new iPhone model year. At least for now.

Never Say Never

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One thing we've learned over the years is that we should never say never in the case of Apple. Apple would never change to Intel ... Apple never put video on an iPod ... Apple would never use the name iPhone 5 ... Apple will never release a nuna Apple iPad Mini ... change the aspect ratio of the iPhone ... Apple never released two iPad in a year ... But Steve Jobs said ... But ... But Tim Cook said Phil Schiller said ...

Hyperbolically Never is a long time, and no one outside of a fictional universe can see the end. But if Apple is likely to do something, why and in what market conditions, it is interesting to take this into account.

Less expensive vs. cheap

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The easiest way to reduce costs is to do something cheap. Cheap components, cheap assembly, packaging good price, cheap software and services, and selling cheap low margin. Nothing exemplifies this better than the netbooks of the last decade. Sold at a really low price, but have not liked by anyone, not to customers who have been trying to use them, or to manufacturers that they have seen their profitability and destroy the market. Moreover, a few days ago it was announced definitive disappearance. Only the people for whom price is the only important benefited from netbooks.

The hard way to reduce costs is to do something transformed. Instead of a netbook, Apple launched the MacBook Air, providing a consistent price, instead of less value to a lower price, and the iPad, which left the keyboard and trackpad but production remained elevated, sold by the half the price of the Mac With iPod Shuffle and Mac mini, Apple removed the screen but kept his incredibly high standards of manufacture. Both products are very good and are more economical than the rest of the product line of the company. The second generation of Apple TV was less expensive than the first because it was smaller, used mobile components instead of components COMPUTERS and was built to transmit instead of storing large amounts of content. The current line of MacBook Air brought high quality components MacBook Pro at a lower price. Even with the iPod Mini / Nano and iPad Mini, Apple introduced slightly cheaper versions by reducing the size rather than build quality.

Apple may not know how to make cheap products (or rather be willing to), but in the last decade have shown that they can introduce lower cost products as and when they want.

Less expensive vs. subsidized

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While Apple has launched low-cost versions of the iPod, iPad, Apple TV and Mac, have never launched a low-cost version of the iPhone. Lowered the price of the original iPhone, and organized with companies to subsidize the vast majority of costs for the contract price does not vary much. The original iPhone was priced at $ 499 for the 4GB model and $ 599 for the 8GB model. Today, a new iPhone 5, out of contract, it costs $ 649 for the 16GB model, $ 749 for the 32GB model and $ 849 for the 64GB model. Even the iPhone 4S, which contract will cost $ 100 for the 16GB model, currently selling for $ 549 free.

Apple's current strategy of maintaining the previous generation iPhone with lower prices, subsidizing most of the cost of the same contract, creates a perception of power have an iPhone cheaply if you keep a contract. The problem is that this perception goes away if you want to buy the free end, especially considering that there are much cheaper Android handsets.

Apple kept the iPhone 3G in the market since it was introduced in June 2009 until September 2012. The first year cost $ 299 with contract and $ 650 without a contract, the second year it cost $ 199 and $ 550 respectively, and in his third and last year was $ 0 and $ 450 respectively. Just before he reached the end of his life, and just before the announcement of the iPhone 5, there were rumors that the iPhone 3GS would stay around another year (but could not take advantage of all the features of iOS 6). Since there was no way to further lower the contract price is speculated that lower the price of free terminal, maybe $ 350, and compete with Android and BlackBerry in emerging markets.

Apple, however, has two main ideas that makes this strategy is unlikely: The first is that Apple believes in offering high quality products and, second, Apple believes that the high margins on hardware sales. Apple does not sell an iPhone 3G seduced in 2013, with outdated hardware and unable to get the benefits it considers correct, so I decided to stop selling it.

Never say never again

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Therefore, if we assume that a less expensive iPhone would be neither old nor be sold below the margins, that would leave only a product sold in the margins allowed by Apple. If Apple does not follow the strategy BlackBerry or Android, which is not in the DNA of all modes, then they cease to follow the strategy of Apple.

The removal of the screen in a cheaper iPhone is logically impossible. We would have a phone itself, but lose all the applications and all the App Store platform.

The reduction of something else, like Apple reduced the size of the iPod Nano, or the resolution of the iPad Mini, seems more likely. Maybe an iPhone with 4-inch screen but not Retina, perhaps with plastic body instead of aluminum, perhaps with older processor without LTE, less RAM or storage capacity, while maintaining the same quality of construction. Could be.

Or maybe you could do something totally new and different, as happened with the MacBook Air and Netbooks.

The conclusion is that we can never say that Apple can not, should not or never will do something. Times change. Businesses change. Plans change.

If Apple decides he does not care much about emerging markets at this time, then, if history is any indication, we can enjoy the iPhone 4 to $ 0 in the next refresh cycle. If, however, Apple decides to put his foot on the accelerator and go to a cheaper iPhone, then history shows that they are smart enough to do it.

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