Is Apple too late to the low cost market?

[John Kotches]

Tech Crunch reports from an IDC source that Android Is getting 75% of worldwide smartphone shipments.

Shipments aren't sales, but they wouldn't be shipping that many if they weren't selling something near that.

Has Apple lost out on this market, even though rumours say they might be getting into this segment?

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[Scott Greczkowski]

Here in Connecticut I saw an add where you get a free Android Phone when you buy 2 large pizzas.

 

[John Kotches]

Scott,

And?

A large portion of the world's population can't afford a $300 phone. A $50 phone is a stretch but they can just manage that.

Smartphones are the path for the next billion+ to hit the internet.



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[Scott Greczkowski]

The "free" phone requires $70 a month service to work.

 

[John Kotches]

In the US.

The world market is much more than this country.

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[Scott Greczkowski]

Yes I agree. Too bad the US is so far behind the rest of the world.

 

[lparsons21]

A big question is does Apple really want to compete in the very low profit end of the scale? And that is exactly where the Android growth is coming from.

While I think Apple will come out with a lower cost iPhone this year, I don't think it is going to be at or even near the really low priced Androids. And then of course, Apple is still making the bulk of the profits in the smartphone market, as well as in the tablet market.

 

[lparsons21]

The "free" phone requires $70 a month service to work.

$70? When I went to the Verizon and AT&T stores yesterday, they both quoted around $100/month after all taxes and crap are figgered in.

 

[Scott Greczkowski]

I think Apple with a lower cost to produce iPhone could make out well in returns from App store purchases.

 

[mike123abc]

Apple needs the poorer class tier, but not the broke African hut tier. If the target customer is too poor to buy anything from the app store or itunes, it is not a market Apple wants. Apple needs a phone that "broke" Americans can afford, a tier that would be considered upper class in many countries.

If the non contract standalone price were in the $100-$150 range for prepaid use in the US I think they would be able to sell a lot of them.

 

[lparsons21]

I doubt seriously that you'll see a non-contract iPhone at the $100-$150 price range. Actual Android phones that are on par with the iPhones don't sell for that. You have to go pretty far down the list to get a non-contract Android phone for those prices.

Subsidized phones are interesting though. With iPhones from $0 to $199, they compete well in that spectrum.

 

[John Kotches]

If Apple makes the choice of not competing for the business they will find themselves in a niche market much as Mac is in the personal computer market.

I love Mac, but their desire for profit margin is, frankly, holding them back from a better slice of the computer pie.



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[John Kotches]

Lparsons:

The US is not the world market. It matters what it's going to sell for unsubsidized on a pay as you go which is what the next billion will be.


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[lparsons21]

John, I realize the US isn't the world market and heavily subsidized phones seem to be mostly US only.

But unsubsidized phones are costly, no doubt. There are some very cheap and others Android phones outside of the US, but they are very much less 'smart' and most likely would be more 'feature' phones vice 'smart' phones. So the question then becomes, does Apple want to come out with something less than what we think an iPhone is, think 'iPhone lite'? Personally I don't think so. And that means an iPhone that does all it does now, but in some lesser quality build casing.

If you look at the latest unlocked pricing, iPhones are still price competitive at the upper end. They just don't have anything at the lower end. So does Apple want to get into the much lower profit market or not? I think the analysts and such think it is the right move, but I'm not all that enamored of the 'analysts' opinions.

 

[John Kotches]

lparsons:

Your vote is niche market in the world then.

Basic smartphones these days, not feature phones, are reasonably powerful as starters. Dual core SoC are very cheap.

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[Anole]

Cheap iPhone recipe

Apple knows how to build high end phones.

If I'm not mistaken, the 4S was one hardware build for the planet.
That means each phone carried unused parts/capability. (GSM plus CDMA, for instance)

The 4, 4S, 5, and the upcoming 5s have an extremely high resolution screen.
None but the top end Android handsets come close.
So, could Apple make a cheaper iPhone with lower resolution?
Sure, the 3G and 3GS had half as many vertical and horizontal pixels.
Many games and applications still run just fine.

A modern single- or dual-core processor Apple is already making could be way under clocked, increasing battery life.

How 'bout making the cheapie, GSM only? No LTE.
That'd work for Tmobile and AT&T in the USA, several Canadian and Mexican carriers, and most of Europe.

And a plastic case, of course (just like 3G & 3GS had!).

The question is, does Apple know how to build a cheap phone?

 

[John Kotches]

Apple knows how to build high end phones.

If I'm not mistaken, the 4S was one hardware build for the planet.
That means each phone carried unused parts/capability. (GSM plus CDMA, for instance)

The 4, 4S, 5, and the upcoming 5s have an extremely high resolution screen.
None but the top end Android handsets come close.

It's barely more than qhd (960x640 vs 960x540 for qhd). The 5 simply stretches the height (1136x640). 1280x800 is pretty common for midrange Android phones. Top end Android is at the full HD range (1920x1080). There needs to be a discussion about what "extremely high resolution" is.

So, could Apple make a cheaper iPhone with lower resolution?
Sure, the 3G and 3GS had half as many vertical and horizontal pixels.
Many games and applications still run just fine.

You can sell it anyway you want, but retina is a entry/midrange resolution now. It was only a higher pixel count because of the aspect ratio at the time, rather than being innately higher resolution than qhd. Stretch a qhd and you get retinas 3:2 aspect.

A modern single- or dual-core processor Apple is already making could be way under clocked, increasing battery life.

Bad idea IMO, as that messes up the interactivity.

How 'bout making the cheapie, GSM only? No LTE.
That'd work for Tmobile and AT&T in the USA, several Canadian and Mexican carriers, and most of Europe.

And a plastic case, of course (just like 3G & 3GS had!).

The question is, does Apple know how to build a cheap phone?

If they want more market share, they need to figure it out. Their worldwide market share is dropping.

IMO, they need to lower margins on a low end product to compete.

Maybe they don't want to compete at that part of the market. See previous abut niche status.





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[mike123abc]

I have to agree, Apple's odd resolution on the iPhone is now low end. They need 1920x1080 to be high end.

The current resolution should be on a "low" end phone. Perhaps with plastic.

I could imagine:

iPhone 6p - plastic low cost with current resolution screen, perhaps 3.5" to cut cost but still 16x9, current iPhone 5 processor

iPhone 6m - 4" 1920x1080p mainstream phone - new processor, NFC

iPhone 6XL - 4.5+ inch screen high end phone - new processor, NFC, waterproof/rugged

Essentially of course it would be a lot more skews, but would cover different market segments much better than one single phone and last years models.

 

[John Kotches]

Mike:

That might be too many SKUs for Apple's strategy. It works for others quite well.

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[mike123abc]

That might be too many SKUs for Apple's strategy. It works for others quite well.

I am sure Apple would love just one sku, but that is unrealistic. Other vendors manage to keep track of many skus, Apple should put on the big boy pants and manage the supply chain.