“With schematics of an alleged low-cost iPhone now in the wild, AppleInsider offers a glimpse of what that device might look like as an actual product in this pair of high-quality 3D renderings,” Neil Hughes reports for AppleInsider.
“These 3D renders are based on the schematics shown in blueprint images that leaked earlier this week,” Hughes reports. “Major iOS accessory companies are currently high in their convictions that the leaked blue prints are indicative of the much-anticpated low-cost iPhone and are currently designing and building cases to fit this form factor.”
Hughes reports, “The speaker and microphone holes on the bottom of the device are circular, and akin to the current iPod touch design. In an interesting marriage of hardware and software, the circular openings are also similar to the new signal indicators in iOS 7.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
Same as the rendered Apple NetBook in 2010 ?
Or the previous “iPhone mini” and “iPhone 5” (before the actual iPhone 5 – the one with the odd tapered thickness casing). They starting making cases for those “sure things” too.
Apple’s answer for the “netbook” was iPad. Apple’s answer for the “low-cost iPhone” is iWatch. It will run an expanded version of the touch-based OS used by the current iPod nano.
A “low-cost iPhone” that is just a cheaper iPhone does not make sense. It would cannibalize sales from the highly profitable fully subsidized “regular” iPhone models (including the older models that Apple sells as new for a lower cost).
“It would cannibalize sales from the highly profitable fully subsidized “regular” iPhone models”
Q When has Apple ever let that hinder them?
A. Never. They released the iPod Nano after the iPod, the Shuffle after the Nano, iPad alongside the MacBook, Mac Mini to compete with the Mac.
Unlike other companies, Apple often releases products when they feel they have something great, even if it cannibalizes another product line. Apple will release a budget iPhone when they can make one that is great on its own and they feel the market will “flock to” rather than just “settle for” due to a lower price.
Actually, Apple often CANCELS products when something similar but better is to be released. For example, iPod nano REPLACED the best-selling iPod up to that point, the iPod mini. And the “big iPod” had MUCH higher storage. So cannibalization was not an issue.
When a new iPhone is released, the old one continues as the lower-cost model. But in that case, Apple WANTS the new model to cannibalize sales of the old model! So again, cannibalization is not an issue, because it is the desired outcome. And if the customer chooses the cheaper older model instead, that is not a problem for Apple, because with the subsidy payment, Apple’s profit margin (per unit) is similar, no matter which iPhone model is sold.
The iPod shuffle was an entirely new product line. It had no screen, had much lower storage, and lacked other important features of iPods (like playlists and even the ability to easily pick a specific song to play). For anyone who wanted a “real” iPod, they would not choose an iPod shuffle, so no cannibalization was not an issue. Apple used the iPod shuffle to expand its market to people who would not otherwise buy an iPod due to cost.
And THAT is the role of this “low-cost iPhone,” which I speculate is the iWatch. It needs to EXPAND the customer-base for Apple’s phones, not cannibalize potential iPhone customers. It cannot be a viable choice for anyone who wants a “real” iPhone.
> Q When has Apple ever let that hinder them?
Are you kidding…? ALL THE TIME. Anyone who knows Apple knows that product differentiation is VERY important to Apple. Product differentiation is another way to say Apple cares about the effect of cannibalization, much MORE than most tech companies, who produce countless variations of the same product. For example, why is there no desktop “headless” Mac model between the Mac mini and Mac Pro? Because such a model would cannibalize iMac sales. Why hasn’t Apple updated the hard drive iPod, the iPod classic, since 2009? Because doing so would cannibalize sales of iPod touch and nano. But letting it continue “as is” satisfies customers who want the extremely high 160GB of storage (customers who would not buy an iPod that tops out at 64GB).
Brau is correct in that the cheaper iPhone will cannibalize some sales from the iPhone 5S. That’s inevitable. But Apple brought out the iPad Mini. Although many here said that Apple wouldn’t. Don’t hear much from those folks anymore. It has cannibalized some iPad sales but has also expanded the customer base. And you are correct in that the cheaper iPhone will expand the customer base. It’s not a zero sum game. The iWatch observation is probably spot on as it will most certainly be tied to at least the iPhone if not other Apple devices. So the more people in the ecosystem the better. More potential iWatch consumers. And once they are in, they spend money. Apple doesn’t brag about selling expensive products just the best. There is a difference.They had no problem bringing out the $99 iPod shuffle and will have no problem bringing out a cheaper iPhone. Margins. They will try to keep the margins as high as possible for as long as possible. Margins on hardware will come down eventually as phones become commoditized. Apple will make its money in the future on people inside the ecosystem not by selling hardware. It’s all those accounts that Apple will monetize. That’s where the money lies. Apple knows what it’s doing. Apple will be bringing out the larger iPhone as fast as they can. You can be certain of that. When it gets here, it will sell like hotcakes. Easily outselling the iPhone 5S form factor. And eventually Apple will delete the 5S size. They know what they’re doing in Cupertino.
Apple considers the effect of cannibalization VERY carefully. Each situation is different, and the decision is different… You can’t generalize about it.
In the case of iPad and iPad mini, the effect of cannibalization is mostly irrelevant. If the customer buys an iPad mini instead of the “big” iPad, they are still buying an iPad. Proceed…
(Same for continuing old iPhone models as the cheaper choices. Any choice is still an iPhone, so cannibalization exists but it’s mostly irrelevant.)
In the case of iPad and MacBook, Apple’s profit margin is somewhat higher with MacBook, especially during that first iPad year. So there is some negative impact if a customer buys an iPad instead of a MacBook. However, it’s also possible that the customer buys an iPad instead of a Windows netbook, or even buys an iPad AND a MacBook, so iPad is a net positive on profit. Proceed…
In the case of iPod shuffle and other iPods, iPod shuffle is really a different Apple product. It has no screen. Other than playing audio, it does not have MANY features people expect from an iPod. NO ONE who wants a “real” iPod buys an iPod shuffle instead. iPod shuffle’s cannibalization of other iPod sales is minimal, and it served to expand the market for Apple music players. Proceed…
In the case of a desktop Mac with the iMac’s specs but no built-in display (a high-performance Mac mini), it significantly cannibalizes iMac sales. Although such a Mac model is likely to be popular, an iMac is already popular and has higher profit margin compared to any potential “super” Mac mini. There is no upside to a desktop Mac that is a “headless” version of the iMac. Do NOT proceed…
In the case of a low-cost iPhone, that is actually a “low-cost iPhone,” it cannibalizes sales of the fully-subsidized iPhone that is highly profitable. The profit on ONE current iPhone, whether it’s the iPhone 4, 4S, 5, or “5S” is more than the entire price tag of any imagined “low-cost iPhone” (and it may be closer to double). And if that price tag is something like $199, that is “low-cost” compared to current iPhones, but it will not sound that great to a typical consumer. Any increase in total iPhone sales will not offset the effect of cannibalization on overall profit. Do NOT proceed…
In the case of a low-cost Apple phone that is clearly NOT an iPhone, it would expand the market for Apple’s phone with minimal cannibalization of sales for the fully-subsidized iPhone, because it would have significant product differentiation. Any profit will be ON TOP OF current iPhone profit. Like an iPod shuffle versus the other iPod choices. Proceed…
Actually you’re the one who is generalizing. Cannibalization of the iPad from the iPad mini is just that. Obviously the same goes for the iPhone. You don’t seem to understand how many iPhone 4 and 4S have been sold in the last year. Absolutely cannibalization. I have no idea what you’re talking about regarding the headless iMac? Or Windows netbooks? Jeez! Are you off the tracks! I use Mac Pros for a living. I have more than a passing acquaintance with everything made by Apple. I don’t just use computers for email and posting to websites. You seem to have read too many articles and can’t seem to correlate the information and assimilate it in a coherent manner. Again, I am the guy who uses Macs to make a living. I’m in business. “Real” business. Using “real” Macs. “Real” iMacs. “Real” Mac minis. “Real” MacBook pros. And I understand profit. “Real” profit. “Anyone who wants a real iPod”….. “Anyone who wants a real iPhone “….. “Anyone who knows Apple “….. Wow! Who are you trying to impress? Tim Cook isn’t reading your posts you know. It’s coming. And it’s not going to be “imagined”. And what will you say then? Or will we hear from you? It’s only three months away. Y’all come back and visit.
No, you don’t seem to understand what I wrote. Reading comprehension problem? I’m saying there IS cannibalization with iPad (and iPhone). The important point is NOT whether there is or there is not cannibalization. The important point is whether Apple’ thinks that cannibalization will negatively impact overall profit.
So with iPad versus iPad mini, the cannibalization obviously exists, but it is mostly irrelevant, because the customer is buying an iPad either way. So the iPad mini got the precious YES and became a real product.
For the iPhone, Apple does not care if the older models cannibalize sales of iPhone 5. The cannibalization obviously exists, but again, since the customer is buying an iPhone and the subsidy makes per unit profit from any model of existing iPhone similar, it is mostly irrelevant. Therefore, Apple uses this efficient tactic, where previous iPhone models become the cheaper iPhone choices.
And when cannibalization would have a negative impact on overall profit, the answer is one of those a thousand NO’s for every YES. That’s why there is no “middle” desktop Mac model between the Mac mini and Mac Pro, because it would cannibalize iMac sales (and probably Mac Pro sales). There is more profit per unit from selling an iMac, compared to a Mac mini that has the iMac’s performance specs.
AND, that’s why I believe the “low-cost iPhone” that is a stripped down low specs “regular” iPhone is not where Apple will go. Such a model cannibalizes iPhone sales in a way that negatively impacts overall profits. It may NOT be the iWatch, but the “low-cost Apple phone” needs to target consumers who would not consider the current iPhones due to high cost of ownership. It can’t simply be a cheaper version of current iPhones. It must EXPAND the market for Apple phones and ADD TO the existing profit from iPhone.
Ken : You just don’t get it. Your comments are all over the place. They make no sense at all. None. And there is a desktop model between the Mac mini and the Mac Pro. It’s called an iMac. What are you smoking tonight? Jeez! And once again, there will be a cheaper iPhone. You do understand that cheaper means it won’t have as many features as the iPhone 5S don’t you? And once again, the cheaper iPhone will not look like a watch. The iWatch, when it comes, will not look like the cheaper iPhone either.
If you read my original comment, I said no desktop model without a built-in display, between Mac mini and Mac Pro. And THAT is because such a model would cannibalize other desktop Mac sales in a way that negatively impacts overall profit for the Mac business. But for the iPad (and iPad mini) and iPhone, cannibalization is certainly there between the models, but it does not negatively impact overall profit, so it is a non-issue. Each situation is different. Cannibalization is sometimes important, sometimes irrelevant.
Obviously, a lower-cost iPhone would use lower quality materials and have lesser features. That is not the point. The point is product differentiation. If the low-cost iPhone is still an iPhone in the eyes of the consumer, a significant number of future iPhone customers will choose it instead of the fully subsidized “high-cost” iPhone. That will negatively impact overall profit from the iPhone business.
Therefore, Apple may call it an “iPhone something” just as an iPod shuffle is called an iPod. However, in its design and marketing, it must clearly be something that is highly desirable, but NOT a “real” iPhone. An iPod shuffle is highly desirable (I have two of them), but I did not buy it instead of an iPod nano or iPod touch. Why? Because Apple does a great job with product differentiation.
I can’t help it if you can’t comprehend my eminently logical reasoning… 🙂 But that’s OK. I won’t resort to flinging insults back at you.
According to Nielsen, the pre-paid smartphone mobile service percentages around the globe:
China – 51%
India – 84%
Russia – 74%
Korea – 2%
Australia – 21%
US – 15%
Brazil – 55%
UK – 17%
Italy – 66%
Turkey – 50%
Feature Phones prepaid percentages worldwide:
China – 59%
India – 92%
Russia – 74%
Korea – 2%
Australia – 55%
US – 30%
Brazil – 74%
UK – 55%
Italy – 80%
Turkey – 59%
http://www.nielsen.com/us/en/newswire/2013/how-global-consumers-pay-for-mobile.html
This makes 0 sense to me. Apple’s answer to the need for a low-cost iPhone is already in place.
Currently, you have the iPhone 5 at the top of the heap. Want something a little more affordable, and are willing to sacrifice a few features? Then buy a new iPhone 4S. Need a free Witt contract solution? Then go out and get a new iPhone 4.
It’s a simple and ingenious plan than allows Apple to maximize their ROI for the R&D that goes into new phone models. Think about it, by the time the case design introduced with the 4 in 2010 is no longer being produced, it will have had a 4-year run (ending in 2014 when the 6 is launched, and the 5 becomes the bottom end offering).
Why would Apple spend time and money researching, developing, and retooling assembly lines for a new low end offering when they already have something that fills that space perfectly.
In my opinion, this whole “new low cost iPhone” rubbish is nothing more than the seeds for stock fomenting. These same analysts, when Apple “fails” to launch this expected device will help create another “buying opportunity”. It’s such an obvious game, I can’t believe no one else sees it.
Those cheaper iPhones are subsidized by USA telcos, not those in BRIC countries.
Well, as the Big Four continue thier economic development, forays into subsidization are inevitible. I don’t see Apple taking a margin hit just to satisfy those nations burgeoning economic status. Apple has demonstrated patience in the past, I think they can do so here too.
“subsidization are inevitible”
No, not inevitable.
History repeats, and the cycles of economic growth and evolution – along with the trends they create – are relatively consistent. Subsidization allows for a type of symbiosis that benefit multiple players. As the BRIC economies evolve into modern first world economies, cooperative elements across industries are going to happen. One of the easiest of these cooperative endeavors to engage in is subsidization.
It’s about as close to inevitable as possible.
To be fair, iPhone 4/4S are quite pricey to build as they are made of steel and a lots of glass, both of which are dramatically more costly than plastic.
Though, speaking of plastic, this rumours looks to be nonsensical as even cheapest iPods are made from aluminium, which is ready-form in mass manufacturing is cheaper than glass and steel. (Price cost comparison with plastic is more complicated, but aluminium would be more expensive usually even in Apple’s super effective approach.)
Sure, glass and steel are more expensive than plastic, but Apple buys those materials in sufficient quantities that the difference is negligible when compared to the costs associated with retooling an assembly line, not to mention the time and effort that goes into design.
Still, if the idea is to create “inexpensive” phone, you are not going to use the most pricey materials that ever used in mass production, such as glass and steel.
So maybe Apple will retire iPhone 4/4S altogether, and make “inexpensive” new phone instead of it — made from aluminium — while they will keep iPhone 5 as cheaper than the new iPhone 5S phone.
This makes a lot of sense. Instead of keeping on the iPhone 5 as the 1 step down and 4S as 2 steps down offering, this could allow Apple to offer this as both the 1 & 2 step down levels, and then standardize on 4-inch screen, 802.11ac (and possibly minimum A6 processor) level a year early. This will allow apple to drop support for 4S level hardware in 2015 instead of having to wait until 2016. As is noted in the recent editorial, software design is often shackled by the hardware specs it has to support. This will allow Apple to stay more cutting edge and minimize fragmentation.
Ding! Ding! Ding! We have a winner.
Gruvdone, what if Apple already has its own spies telling it what is coming down the line from another competitor, while its own engineering is showing senior management lower cost battery, memory & IC chip components?
At that point, they would see what is possible for both Apple and their competitors and Apple would have to act or be in a position of being 2nd and not being able to claim the first to market advantage.
Apple knows hardware gets better and cheaper and that it can use its efficiencies of scale to allow it to enter the 2nd-3rd world markets where the numbers of customers are huge compared to the US & EU.
It makes sense because the iPhone 4 is NOT a low-cost iPhone. It costs you $450 to get one, with no contract. $450 is NOT a “low-cost iPhone.”
What does NOT make sense is for the “low-cost iPhone” to be a low-cost iPhone. It needs to be a “low-cost Apple phone.” Just as no one who wants an iPod touch would buy an iPod nano or shuffle instead, no one who wants a “real” iPhone should consider this new Apple phone as a viable choice. This new low-cost Apple phone needs to expand Apple’s phone market to customers who would not currently consider an iPhone due to high cost of ownership.
I think this new Apple phone is the iWatch. That would kill two rumors with one “stone.” 🙂
IPhone. Apple phone. Semantics. Who cares what it’s called? Of course it’s going to have less features than the current iPhone or the upcoming iPhone 5S. Everyone understands that! Who cares what it’s called? And I have an iPod Touch and an iPod Nano. And they are both “real” iPods. I also own Mac Pros, iMacs and Mac Minis. And they are all “real” Macs! The cheaper iPhone is not a watch. It’s a phone. It’s an iPhone!
NO… I’m actually saying this new “low-cost iPhone” will NOT be an iPhone. An “iPhone” runs iOS and apps from the App Store. THAT is an iPhone that “everyone understands.” My prediction is for an Apple phone that does NOT run iOS and does not run apps from the App Store. It will have great apps that are built-in. And I think it will be the iWatch, running an expanded version of the current touch-based OS on the iPod nano.
Also, I don’t agree about the iPod touch. An iPod touch is NOT really an iPod. It is really an iPhone without the phone parts, or a 4-inch “iPad nano.” As you said, “Who cares what it’s called?” So, just because it’s called an “iPod,” it’s NOT an “iPod.” 🙂 Thanks for making my point. SO, just because this low-cost iPhone is called “iPhone something,” that does not mean it’s REALLY an iPhone.
Yeaaaaahhh, not so much. An Apple phone that doesn’t have any App Store access makes even less sense than having a phone strapped to your wrist. Apple gets plenty of money from hardware sales on iOS devices, but it gets substantial revenue from the App Store as well. I do find that ironic though, as I have always held that Apple is a hardware company, who uses software as a tool to drive hardware sales. What we have here is a new paradigm, but the theme is consistent.
Don’t get me wrong, I like where your head is on this. But I think the fly in your ointment begins with comparing a casual device (a music player) with an essential tool.
In this age, practically everyone with sufficient access to technology has some manner of portable telecom device. In fact, for many, their cell phone is their only phone (such has been the case for me since 2004, when the best I could do was some Mototola flip phone). Additionally, the Internet is ubiquitous. There are kids about to graduate High School who have no memory of a world without it. Access to it has become an essential need. It is actually a challenge to live in a first-world society without an online footprint of some sort. As such, most or all of these people have at least one (though usually more than one) device that allows them the all-important Internet access. Increasingly (since 2007 *wink*), people’s Internet and telecom devices are becoming one and the same. So, here we are in this ‘Post PC’ transitional period, and it is safe to say that having a modern smart phone is almost standard issue. The majority of those without such a device, will have one in the next 5 years.
Now, on the other side of the coin, a music player is not essential. It is casual technology, and plays only a peripheral role (folks with the aforementioned smart phones have that functionality as an app) In fact, I’d say that the only people who still have a device ONLY for playing music are either folks who like to listen to music while working out, people who have one just for car use, or DJ’s who find a couple of iPod Classics much easier to lug around than cases of CD’s or crates of Wax.
Therefore, it is acceptable for one’s music device to not be Internet enabled, as people typically already have a portable device for that purpose.
It is less acceptable for one’s telephone to lack that access. The iPod touch is mostly owned by either kids, who’s parents have deemed their children too young for a phone, but want same children to stop playing games on thier (the parents’) phones. Or for folks who wanted an iOS device, but had an incompatable phone provider (less and less of an issue). The third, and most important category are those who play a lot of games to the point that their habit puts undue strain on the battery life of thier phone. In order to play those games, they must be able to access the App Store (or platform applicable online market) to obtain said games.
I just don’t think it’s going to work the other way. I don’t see the appeal of an iPod Nano with phone capabilies, in any form factor. A huge part of the appeal of iOS and it’s devices is directly attributable to the App Store. We are moving rapidly toward a time when everyone you encounter will have a single piece of hardware that serves as their phone and Internet device. What you are suggesting is that market is going to fragment, I hold that it’s not.
I never said it would be an iPod with a phone, although it would certainly have all the features of an iPod nano. It’s more of Apple’s take on the “feature phone” without the feeling of “cheapness” and “disposability.”
For now, let’s say it’s NOT the iWatch, because that point seems to get in the way of understanding. It would have all the common “apps” built-in, including apps that access the Internet. The main differentiator between this phone and a “real” iPhone is iOS and third-party apps. It does not run iOS. It does access the App Store to install more apps.
That limitation is VERY important for a low-cost device. By NOT running iOS, it does not have to be designed with the capacity to run a taxing OS with serious overhead, as well as future major upgrades of that OS. Instead, it is optimized to run the OS it comes with (which is optimized to do what the phone does), and nothing else. I think the iPod nano’s touch-based OS would be a good starting point. And like iPods (that are not the iOS iPod touch), it may get minor bug fix updates, but NOT major yearly upgrades that add new capabilities.
By only running the built-in apps, the hardware can be optimized to do what it does very well, but nothing more. Apple’s engineers know exactly what the phone is expected to do, and can design the hardware to precisely meet those requirements. That makes the phone much cheaper to manufacture, because it will have precisely the storage it needs, and precisely the performance specs it needs, and precisely the battery power, etc. There is no need to over-design the hardware, to support future major OS upgrades, and unknown third-party apps.
And if you think such thinking is “not Apple,” just look at the Apple TV. It is a cheap device that is intended to do what it does, and nothing more. The hardware is designed to optimally meet those KNOWN requirements, without excess capacity to do more things that are UNKNOWN at the time of the product’s purchase. And that’s why Apple can sell it profitably for $99. You can buy a Mac mini, and make it perform the equivalent functions offered by Apple TV, but it would be overkill. A Mac mini can do MUCH more.
So you can think of this new low-cost Apple phone THAT way. As the Apple TV is to a Mac mini, this new low-cost Apple phone is to an iPhone. It will do what most customers ask of a smartphone (including the people who buy an Android phones and never install any new apps), and it do it gracefully and efficiently, without any “overkill.”
And if this new low-cost Apple phone happens to be the iWatch, THAT would be awesome. 🙂
What about this ken,
A low costing “simpler smart phone” a phone somewhat running built-in – apple only apps – the core apps and nothing but those. i.e. facetime, imessenger, siri, maps, icloud, notes, camera, safari, music player… just the base apps, upgradeable ofc – but unable to install anything more then what it comes with — you suggest touch-base os like the nano.
That’s possible. It may be even more likely, in terms of “do-ability.” And that was actually my previous speculation…
But I just like the idea of the “low-cost iPhone,” that the “industry experts” are predicting to be simply (and predictably) a stripped-down “high-cost iPhone,” being the iWatch instead. That would be SO much like the repeat of iPad’s release, when the same experts were pushing for and predicting a “Mac netbook.”
Low-cost Mac laptop => iPad (which is NOT a Mac)
Low-cost iPhone => iWatch (which is NOT an iPhone)
The reasons for Apple NOT doing a “Mac netbook” are mostly parallel to the reason for Apple NOT doing a stripped-down low-specs plasticky version of the iPhone. Back then, there were rumors of an Apple tablet. Now, there are rumors of the “iWatch.”
Also, what else would the iWatch be, if it’s not a complete communications device? Just a watch with built-in iPod? NO. A watch that interacts with iPhones and iPads. Maybe, but that’s a bit pedestrian (sounds likes something Moto would do). The only path to WOW! UNBELIEVABLE! (and the next game changer new tech product category creator) is for iWatch to be a phone.
The iPad is not a laptop. It’s a tablet computer. And it’s rumor was around years before it arrived. It had absolutely nothing to do with a netbook laptop. The cheap iPhone will be just that, a phone. A cheaper iPhone. Plasticky. The iWatch will be something worn on your wrist, a watch. And much, much more. The cheaper iPhone that’s coming in September is not a watch.
It will be an iPhone. A cheaper iPhone. Not an iWatch. The iWatch will be a separate device.
I don’t agree about the watch thing. I mean, sure Apple will do something in that form factor, and it will likely integrate with the other i-Devices in some clever ways. But I see nothing even remotely practical about selling a wristwatch as a phone. It would either require one to purchase a Bluetooth earpiece (which has been out of fashion for a few years now), or have an annoying tether from your ear to your wrist.
Consider too, that the market for such a low-cost device will be comprised largely of low-income families, who tend not to be the tech-savvy geeks for whom a wrist worn computer would be appealing.
Apple has never really been interested in the bottom-end of the market. A ‘cheap’ product requires too many compromises to retain respectable margins, and there is nothing Apple about that.
My guess; A Siri optimised iPhone Nano available in pretty colours. £179 RRP
A big round Applause for Apple releasing high-end plus low-end iPhone which giving more choices for consumers to chose from and also good for Apple’s business as well.
iPod…
“much-anticpated” by analysts maybe…
But. A low cost iPhone is already here in the iPhone 4A and an even lower cost iPhone is here in the iPhone 4… So no need.