The best thing Tim Cook didn't announce

http://www.bandwidthblog.com/2011/10/05/low-end-iphone/

by richoakley • 15 years ago

82 67 15 years ago

maigret2• 15 years ago

"The equivalent of Aston Martin releasing a competitor to the smartcar." Sorry, but I need to LMAO here. Please meet the Aston Martin Cygnet: http://www.cygnet-astonmartin.com/

veyron• 15 years ago

That was to satiate a european fuel efficiency requirement. At the beginning (not sure if it's true now) you have to own another Aston Martin to purchase this.

They basically ripped the Toyota iQ platform

eftpotrm2• 15 years ago

Not just the platform. Each Cygnet starts as a complete iQ and is then reworked into a Cygnet.

ZeroGravitas2• 15 years ago

Or the more directly ironic fact that Smart cars are made by Daimler-Benz?

hammock• 15 years ago

They are not branded so, though.

maigret2• 15 years ago

Yes, I totally agree on that also.

Tyrannosaurs6• 15 years ago

I'm not sure how relevant it is that Apple's move in the lower cost market was letting the iPhone 3GS drift down rather than introducing a specific model.

My view on why they've done it this way is that they've retained a clear visual deliniation between the higher end iPhone 4s and the low end 3GS. No-one who has a 4 or a 4S is going to be annoyed that they guy with the cheap iPhone looks like he's got the same thing as they have.

That comes with the downside of making the cheaper model a slightly tougher sell - it's visibly "old" - but that's Apple protecting their key market, the high end stuff.

But it will be interesting to see how the cheap [1] 3GS performs commercially against more modern Android phones in the same price bracket. Will Apple's brand have people going "wow, I can get an iPhone" or will people be saying "I don't want a two / three year old phone regardless of who makes it".

Obviously the attitude will vary from person to person but it will be an interesting test of Apple's name value to see if it can give a boost to older hardware.[2]

[1] I say cheap not free as it's free on a relatively pricey contract.

[2] I'm not running the 3GS down - I have one in my pocket right now, it's my primary phone, just it is older hardware and I think over the next 12 months will begin to show it's age more and more.

gks• 15 years ago

I had installed iOS 5 on my 3GS just to do some testing. It ran perfectly fine. Better than iOS 4 actually.

It may be old looking, but aside from processing power, graphics performance and "retina" display, it is a perfectly fine phone for the low end market.

ssp2• 15 years ago

No-one who has a 4 or a 4S is going to be annoyed that they guy with the cheap iPhone looks like he's got the same thing as they have.

Maybe, but it's a gamble. It's not enough that the 4/4S guy himself knows that he has the good stuff. Everybody else needs to know it too.

Tyrannosaurs6• 15 years ago

That's my point - this way with the 3GS as the entry level model it's clearly a cheaper phone, leaving the iPhone 4 users happy that they've still got the cache that goes with their more expensive version.

cbs• 15 years ago

No-one who has a 4 or a 4S is going to be annoyed that they guy with the cheap iPhone looks like he's got the same thing as they have.

Why would someone else be annoyed by another persons choice in phone? I guess I could understand if you thought the other person made a bad purchase, but how is it possible to be annoyed that someone else has something you agree is good?

Are iPhones really that big of status accessories for their owners? This explains so much.

jarek• 15 years ago

Not all owners, to be sure. But a sizeable amount.

jsavimbi2• 15 years ago

I think it's a great move by Apple to make the 3gs seem free because it says the following:

1. 3gs owners: it's time to upgrade to the 4/4s (that's me)

2. It'll burn down existing stocks a lot faster. What was more valuable, an HP TouchPad in production or an HP TouchPad when the production was stopped?

3. Parents who have an iPhone will be able to get their kids one on the cheap, thus reclaiming ownership of the ir own phone. This also indoctrinates the child into the world of the iPhone, a strategy Apple has pursued with all of its products since the very beginning.

4. Lastly: get the phone into the hands of a holdout, at least on a trial basis, and hope for an upgrade after a couple of months, if not the same day in-store.

Market share is very important to Apple as it bears on their bottom line and while not compromising on quality (low-end iphone) they can still get a portion of that share by unloading old 3gs stock and maybe even removing 1 & 2 stock still out there in the wild that does nothing to promote present-day Apple products. Walk into any of their stores with an ugly piece of hardware and they'll try hard enough to get you to hand it over.

angryasian• 15 years ago

signing a two year contract on a 3gs is hardly a trial basis.

jsavimbi2• 15 years ago

Sure, but Apple is betting that once they have an iOS phone in their hands, and judging just by repeat customer shopping patterns, they have a pretty good chance of upgrading that customer to a 4s, if not at least a 4. All they have to do is get that phone in their hands.

dawie2• 15 years ago

I think they still need to release an iPhone Nano for the masses. The iPod was big, but the moment Apple brought out the iPod Mini, the iPod went mainstream, because it became affordable.

Apple needs to do the same for the iPhone...

funkah3• 15 years ago

The iPhone is already mainstream. And the 3GS is now free, it doesn't get more affordable than that.

dagw• 15 years ago

Do all phone plans cost the same in the US? A free phone plus $10 a month is a lot more affordable than a free phone plus $60 a month.

dawie2• 15 years ago

Free with a contract. The 3rd World can't afford contracts. 95% of people in India and Africa are on "Pay as you go"

5% market share is not mainstream in mind. I guess I was referring to huge market share...

nextparadigms• 15 years ago

It's not really mainstream if you charge $60-$70 per month. There are Android phones that are free with $10-$15 contracts.

ams6110• 15 years ago

"Free," with a 2 year lock-in for voice service plus a mandatory data plan.

brudgers• 15 years ago

>"Apple is all about the brand. About image. About quality."

That's what makes Siri such a concern.

When was the last time Apple released a beta product? Have they been hiring too many Googlers?

Or, given that "Siri" alledgedly sounds like slang for buttocks according to today's interwebs, bought an outside technology and didn't immediately rebrand it to sound Apple like?

ryannielsen• 15 years ago

In the presentation, they said Siri's "beta" because it's only available in a subset of iPhone's markets, not because they consider it low-quality.

HoltonDeniis• 15 years ago

Schiller said it was beta because more language and services support was coming. I'm surprised that Siri doesn't already provide turn-by-turn activation nor can be used for launching apps or changing settings.

Argorak• 15 years ago

No so long ago. FaceTime was 'beta' for quite a while.

bambax4• 15 years ago

What (some) people want is not a low-priced iPhone on contract, or even free on contract; they want a cheap (i)Phone available sans contract.

I want a cheap iPhone available without contract, because:

- I don't want a contract

- I tend to break things (me or my kids) and want the freedom of being able to buy a new device without asking anyone if they would be so kind as to subsidize it, or having bought "insurance", or having to pay north of $600 for the privilege!

So, if 3GS is the device for the lower-end of the market, fine: just sell it at an acceptable price with no contract.

jhancock• 15 years ago

Well said. The author also seems to not understand that in developing markets such as China and India, no contract && very low monthly bills are the norm. No way to subsidize in that space.

Tyrannosaurs6• 15 years ago

I suspect what is happening is one of two things:

1) Apple are pushing down into the mid-market before moving further down into the low end.

2) Alternatively at the moment Apple aren't happy that they can create an iPhone that they want to put their name to and make money on at the price point you talk about.

Based on the way we see them behave with the Mac where Apple simply don't complete at the very low end, I suspect it's the later. This is a company who make money selling hardware - all the music and apps pull in a comparatively small amount and apparently really only run at break even.

If they can't sell a phone at that price and make money then they'll happily leave that market to others.

bambax4• 15 years ago

I think you're right, but I also think that this strategy is dangerous: as PG used to say (maybe quoting somebody else?), don't let anyone fly under you.

If you want to pursue the strategy of the very high end, you have to be innovating all the time, in a very big way, which is not what yesterday's event was about.

Or you can count on a core of very loyal customers who will buy your products no matter what, at any price; those people exist but there aren't enough of them to fuel Apple's growth forever.

hugh32• 15 years ago

Prepaid doesn't have to mean cheap. From my point of view, I don't care if it's cheap. I just want it contract-free. I'll happily pay the full unsubsidized cost of the iPhone, provided it's unlocked and I can waltz up to any mobile provider in the world, say "I can haz prepaid SIM?" and start using it.

Given that an iPod touch starts at $199, can it really cost that much more to stick phone parts in the back of it?

jcampbell13• 15 years ago

Well put. The US carrier subsidy is 350-400. That means a 3GS is still $350-400, so it is still not competitive with $150 unsubsidized android phones. With the 20% tax in china, why would I pay $500 for a 3GS when I can buy a 4S for around $750, or a low end android for $200.

ComputerGuru3• 15 years ago

The carrier subsidy is not 350-400.

The iPhone is 200 with contract, 450-500 without. They're certainly not paying the retail 500, I'm sure it costs them 430-470, making the subsidy more in the range of 250-300.

ZeroGravitas2• 15 years ago

They do sell it without a contract, for $375, so roughly the same price as a Nexus S.

cletus• 15 years ago

I'm not sure if you'd call it cheap but in most countries you can buy the iPhone without contract at full price. In the US you can do this too:

http://store.apple.com/us/product/MC555LL/A?mco=MTY3ODQ5OTY

There was an iPhone 4 link too. Can't find it now. Maybe it's down until October 7.

Does that qualify as cheap? If not, I'm not sure what you want other than more for less. But the fact is, you can buy iPhones contract free.

The real problem the US has is that cell phone service is, by OECD standards, stupidly expensive and incredibly bad. In Australia I paid $300 for the iPhone 4 32GB and then $50/month for 2-3GB/month and all the calls and texts that I can possibly use ("cap" plans are very popular in Australia where you get a certain amount of credit that you can use for various things at set rates).

What's more this is on Telstra, which puts the coverage of any US carrier to shame.

So $50 x 24 + $300 - $100 (discount I got) = $1400. The phone cost A$1000 contract free so really I was paying $400 for 2 years of service.

With AT&T you pay $300 for the phone and a minimum of about $65/month (or $85/month if you want not to pay 25 cents for each text), which is almost double the price.

pkulak• 15 years ago

Wow, I didn't know you could buy an unlocked 3GS now right from apple. $375 is really not bad at all, either. T-Mobile's new phones are going to be $250 _on contract_. $125 more for an older iPhone on a dirt-cheap ($30/month) plan? Not too shabby.

henrikschroder• 15 years ago

I can't find a direct link to the unlocked 4, but it's still there, you have to go through the chooser and select an unlocked one there. It's still $549, same price as when I bought one this summer.

podperson• 15 years ago

I agree, but Apple may be coming as close to this as it can. Apple is offering a new extended AppleCare policy for $99 which covers two accidental damage incidents for $49 each. I'm guessing the 4S will be available for $649 without plan (given the iPhone 4 is now $549 without plan).

dhawalhs• 15 years ago

Emerging countries don't have contracts. So making it free on a 2 year plan isn't the same as targeting emerging markets. Its the cost of the unlocked phone that would matter. I would also argue paying 70-80$ a month for a phone plan isn't exactly "low end" .

For comparison, I got a Galaxy S(captivate) phone for free when I renewed my contract a year ago.

T_S_• 15 years ago

Is it just me? I like the form factor of the 3GS much better than the 4/4S. I was hoping they would go back to that with the 5.

morsch• 15 years ago

Well, that's a fairly obnoxious article.

And even those spitting with fury at the disappointment will glance with envy at the guy who in a meeting quietly asks Siri to order him coffee for the lunchtime break.

Really? I think it's far more likely people will glance with annoyance at the guy talking to his phone PA app during a meeting. There are a lot of good use cases for smart voice input, none of them take place in a meeting.

mindstab• 15 years ago

Starbucks takes phone orders from robots now? ;)

yariang• 15 years ago

" The equivalent of Aston Martin releasing a competitor to the smartcar."

Hmmm.... http://en.wikipedia.org/wiki/Aston_Martin_Cygnet Bad example. I know the underlying motivation for Aston wasn't to compete with Smartcar, but that's what they released nonetheless.

aaronbrethorst• 15 years ago

Not to mention that they were owned by Ford until 2007, and Ford still retains a stake in the company today.

spot2• 15 years ago

focusing on just the high-end is a losing strategy in phones just like it was with computers. volume wins. ecosystem wins.

mbrubeck• 15 years ago

Apple's shareholders would probably disagree with you. For that matter, so would HP's and Nokia's.

spot2• 15 years ago

with computers apple is the low end. i was referring to the attack of the killer micros: http://en.wikipedia.org/wiki/Killer_micro

abp• 15 years ago

And, quite frankly, the iPhone 4 is probably years ahead in features, quality and design than the equivalently-priced Android, Nokia, or RIM device.

I don't understand how one can write this.

wmeredith• 15 years ago

Yeah, he misspelled UX and accidentally wrote "features, quality and design".

The best thing Tim Cook didn't announce

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