Why Apple needs a really expensive iPhone

“Apple doesn’t need a cheaper iPhone. They need a more expensive one — much more expensive. Here’s why,” Mike Elgan writes for Cult of Mac. “Android gets big market share with small profits…These phones for the masses are not profitable Samsung Galaxy S3s, but instead no-name, no-margin Chinese-made pieces of junk, for the most part. They use Android in part because it’s free… Although there are hundreds of companies making Android phones, Apple makes far more money in mobile phone profits than all of them combined.”

“To slug it out in the muck with cheap Chinese phones for small margins would not only tarnish Apple’s image, it simply wouldn’t be worth the tech support, supply chain and manufacturing trouble,” Elgan writes.Instead of a cheap, low-margin phone Apple should come out with an expensive, high-margin phone. A satellite phone.”

Elgan writes, “Apple should develop it’s own high-speed, high-capacity global satellite network, which it could do for less than $5 billion, I would imagine. Note that running its own satellite system would be expensive. But it would make Apple a wireless carrier, and a global one — for decades… I would guess off the top of my head that Apple could sell a satellite iPhone for, say, $1,500 unlocked, or $600 to $800 with a contract.”

Much more in the full article here.

MacDailyNews Take: iSatphone®.

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

69 Comments

      1. Satellite radio uses an externally mounted antenna or is located in a place that provides line of sight such as under the rear package tray (between rear seats and rear window) or under the dashboard.

      2. Elgan sounds sane and engaging on Leo Laporte’s TWIT network panel shows, but I’ve read a few of his articles lately that are simply from cuckoo-land, and none that make much sense..

    1. You really should do a bit of research before you have your tantrums and throw around words like “idiotic” and “crap”. The technology is ALREADY IN PLACE. It can, no doubt, be rapidly improved.

        1. Dchu220 is correct. It is so much fun to be a tech writer on the Internet, where along with the mere ability to have a forum and be able to bang on a keyboard leads others to assume the writer actually knows even a modicum of what he or she is talking about.

          Elgan (the writer quoted here by MDN) strikes me as an utter moron. There is already an Iridium constellation of satellites. The original builder went bankrupt. People want small phones. Satellite phones are big. They have to be big because even though the satellites receiving the transmissions have gigantic high-gain antennas, it takes a huge amount of transmitting power to get a signal to them. Even Apple will have to abide by the laws of physics. Being an Apple fan-boy also make the laws of physics change.

          So satellite phones for communicating to the Iridium constellation are huge, they have huge batteries, have poor talk time, have poor bandwidth (to get maximum bang for the channel-buck), have long end-loaded antennas on the handsets to avoid beaming powerful radio signals through the brain (enough to induce measurable heating effects), and are costly.

          The whole point of going “cellular” which means that someone can be using a particular channel and that very same channel can be in use only two miles away on another cell tower, is not possible with satellites. So you must have boat-loads of frequencies available to handle tens of thousands of simultaneous calls. There is simply no possible way to accomplish that because there is not an infinite amount of bandwidth available to license; it’s nearly all already in use.

          So every damn thing that present-day consumers value (small, long battery life, fast to receive and transmit modern-day digital files) is unavailable with satellite phones.

          Elgan is either a hit-whore, or—more likely—is blithely unaware of the technological issues governing radio communications but that doesn’t deter him from banging on his keyboard.

    2. What are you talking about, “I Love Apple?” Sat phones have Ben around for over three decades. They are expensive to set up and require greater transmitter power than cell phones because of the greater distance.

      Satellite phones using geostationary satellites…ACeS, Inmarsat, Terrestar, etc.

      Satellite phones using low Earth orbit (LEO) satellites…Iridium, Globalstar.

      Note that I am not arguing that Apple should build a sat phone network. But it is certainly possible, especially for cars which can supply the necessary power better than a handheld device.

      1. Sounds good but what does this mean: “Apple could sell a satellite iPhone for, say, $1,500 unlocked”. Where would you use my unlocked Apple Sat Phone? And why would I want to pay extra for an unlocked sat phone that only works on Apple?

        This article seems stupid to me.

    3. No, you’re an idiot. I have an OnStar sat phone built into my GM truck that comes in useful when driving through the western states in backwoods where AT&T lacks towers.

    4. Agreed. People forget that geosync satellites are far… Really far. To put satellites in geo synchronous orbit means big time latency issues. It is not as easy as it sounds.

  1. I would go for one of these but it would have to work below ground also and in tunnels. Apple could buy the old Motorola Iridium network for a few billion and supplement it with a few hundred low altitude (12 miles) solar powered balloon transceivers for another few hundred million dollars. solar collecting microwave beaming satellites could be use as aerial energy refueling stations for the low altitude balloons. Apple could expand this into it’s own broadband communication network

  2. Good article.
    Elgan gets Apple.

    Whenever I read an article, opinion piece, or other such squirt of ignorance about Apple needing to sell a cheaper phone, I presume that the writer steals (downloads) all their music, rarely (if ever) pays for software, shops exclusively at Walmart and The Dollar Tree, and actually believes the phone they got “free” with their 3 year contract, is free.

    There’s no profit to be made by chasing the cheap-asses to the bottom of the bin.
    Thankfully, Apple knows this.
    So does Elgan.

    1. Elgan gets Apple? LOL! Author of such inspiring pieces as “How the Mac Will Die” and “Why Apple Is ‘Losing’ the Samsung Lawsuit So Far”? Mike Elgan “gets” Apple about as much as Google “gets” customer service.

    2. Elgan gets Apple, but although he has identified the issue, I’m not sure that he has identified quite the right the solution.

      The issue is that Apple needs to break free from mobile phone service providers and indeed ISPs too. They are limiting the customer experience and in many cases are working against Apple’s interests by diverting customers from iPhones to alternative phones that they are promoting. The key is to use an alternative technology that can be deployed globally.

      I’ve always felt that an Apple satellite network might be the way forward, but they still need to resolve issues where there is no visibility of the satellite. For fixed indoor use, that could mean a window mounted box that would pick up the satellite and re-broadcast it as WiFi. The same thing could be done in cars. After all, GPS works in cars, so I don’t see why satellite phone shouldn’t.

      Apple could offer two solutions. One being an integrated stand-alone satellite phone that will work anywhere on the planet, while the other would be a sat-WiFi converter that would allow any existing iPhone or Mac to connect to it’s network and have the entire user experience up to Apple’s standards. You would have one in your car and another one at home.

      Apple has the financial muscle, the user base, the manufacturing ability, the global network of showrooms and a massive on-line operation, so it already has most of the critical elements.

      If Apple could free itself from the telecoms companies, the benefits would go far beyond the user experience. Apple TV could be delivered without relying on ISPs trying to retain their old ways of doing business. New technology could be introduced whenever Apple felt it was ready ( things like visual voice mail are still only supported by a few service suppliers ) and Apple can also ensure that the pricing structure remains fair and reasonable. They would be able to offer one service that would work equally well wherever you happen to be and also do away with roaming charges for those who travel.

  3. Would be awesome, but it’s an heavily regulated field full of very influential players. $5 billion wouldn’t be enough for the necessary lobbying in the US alone.

    Just ask LightSquared.

  4. “I would guess off the top of my head that Apple could sell a satellite iPhone for, say, $1,500 unlocked, or $600 to $800 with a contract.”

    It will be Apple’s Satellite Network. What good is an unlocked satphone when there is only one choice on the whole planet? If Apple made a satphone it would be contract only.

    If you want to use a satphone underground, in a building or in a car you need to be plugged into an external antenna with satellite access.

    Satphones are useful at sea, in the barren Arctic or Antarctic, in the desert or jungle and any other hostile place (AK47 country) on or off the planet.

    Who the hell would buy one when you can rent one for that once in a lifetime safari?

    1. althegeo — Don’t get out of the city much, I’d guess. Breakdown on interstates. Walking, snowboarding, mountain biking in remoter areas. Just driving for any appreciable distance. Many camping areas don’t have wi-fi. Many that say they do are very poor. There are huge areas of North America that don’t have cell access at all. If a satellite phone only cost me $500 more than my iPhone costs anyway, I’d buy it in a second.

        1. Another city-slicker? 🙂
          Never read the news reports of people losing their way or having an accident, or breaking down by the side of the road. Far from a rare occurrence.
          Last winter (if my memory is working right), there was a couple who got caught off-road. The husband tried to walk out for help and has never been found. The wife stayed with the vehicle and survived for weeks before being found completely by accident. Near where I live, a guy ran off the road and down a thirty foot bank a year or two ago. He was trapped in his car. Survived sitting there WAY longer than he should have without water. Again was found purely by luck. Can you say satellite phone?

          1. Are you referring to what happened to (ironically) CNET tech reviewer James Kim in 2006 when he and his family were lost in the southern Oregon mountains after taking a wrong turn “shortcut” down a lumber road? His wife and two daughters were found alive in the car and he died of hypothermia while searching for help. Unfortunately tech didn’t save this guy. Having a satellite phone would have changed everything.

        2. Typical townie, thinks there’s a cell tower available for every inch of the planet! There are many places in the UK, where you can see houses in the distance, but where few people go, and there’s no phone service at all, or if there is, it’s on a different network. Having said that, emergency 999/911 calls go to any network, but you have to have a signal. People walking coastal long-distance paths can easily be out if reach of a signal for several miles; slip down a cliff, and you could be there for days. Places like Dartmoor are lethal in foggy weather, because of their remoteness, and the bogs and mires that cover them.
          That’s in a small, heavily populated island like Britain, North America is vast by comparison, and people have died within a quarter mile of a clearly marked trail in the past.

      1. Every highway in Canada has almost complete cell coverage. You have interstate roads with no coverage? I find that very hard to believe.

        There are many parts of North America with no cell coverage. I have been in most of them. I have taken a satphone to many of those places. Only a satphone is encrypted. Secure calls are paramount in my profession.

        On the other hand, well over 90% of the North American populous has no need for a satphone. You would be shocked how much a satphone costs to use one. We are talking $2 to $3 a minute. Data is through the roof too. Right now there is virtually no market for satphones in most of North America. Apple couldn’t change that.

  5. If Apple were to send a few satellites sporting the Apple logo into orbit, it would be shock and awe for all competitors, and a fitting platform from which to launch a nuclear war.

    1. This is right on the mark. If Apple dominates the skies, they will have a potential speed advantage over traditional cable connection, using the right technology. LTE is already showing that it’s faster than regular internet WiFi connections in many cases. If Apple can create their own high-speed network, allow it to work in tandem with the existing cell phone network, they will have a technical advantage over rival products. This is ultimately what they will use as the network to iTV. They won’t need Time Warner. Apple force the hand of the telecoms.

  6. I travel a bit so a fone that can get me where ever I am on the planet with one number is good, especially if there are no glitches in coverage ie no mountain or high rise “shadows”

  7. We all need to keep market share in mind. It does not make profits. But but but. Market share coupled with usage drives apps. Apps in turn drive sales which drive profits. If developers do not develop the platform dies including all the high priced stuff. Read up on history of the Mac. Read up on the iPod

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