Belt-tightening in economically-battered Europe bolsters case for low cost iPhone

“Unnerved by the continued fragility of their economy, Europeans are cutting back spending on mobile devices. And that could pose problems for companies peddling pricey, marquee handsets,” John Paczkowski reports for AllThingsD. “”

“This according to France Telecom CEO Stephane Richard, who told Bloomberg that his customers are increasingly searching out cheaper wireless plans and less expensive handsets,” Paczkowski reports. “With consumers demanding lower prices, Richard says, smartphone manufacturers like Apple may have to consider offering new devices targeted at the price-sensitive end of the market… ‘There are fewer early adopters, and probably with the next release of the iPhone this will be evident,’ Richard said. ‘Except for a few hundred thousand people who will buy the latest iPhone — except for that category of people — the majority of the market will be difficult.'”

“Interesting theory. But a few hundred thousand people? The iPhone 3GS sold more than one million units during its first weekend at market. The iPhone 4 sold more than 1.7 million. And the iPhone 4S sold more than double that. And the iPhone 5 sold more than five million,” Paczkowski reports. “That trend doesn’t exactly support Richard’s prediction. That said, his comments add an interesting twist to the chorus of calls for a low-end iPhone that we’ve been hearing. Richard is arguing, as many have, that Apple needs a budget handset for emerging markets like China and India, but he’s arguing that it needs one for established markets as well.”

Read more in the full article here.

MacDailyNews Take: Meet Europe, the newest member of the Third World, at least according to France Telecom CEO Stephane Richard.

[Thanks to MacDailyNews Reader “Michael H.” for the heads up.]


    1. It’s an iPod Touch with Skype.


      If you can’t afford $80 a month for a free iPhone 4, then you might consider a plain old cell phone with a basic voice plan.
      We all got along without the Internet in our pocket for 30 years of cell phone use. (40 actually, but those first phones didn’t fit in pockets)

      It just amuses me to hear teenagers whining about not having an iPhone. Sorry, but when I was 15, $80 a month was a dream to have, not to mention, what reason does a kid need Instant access to the Internet?

      For that matter, what do most of the 20 somethings need it for?
      The first time someone can’t pay rent, gas bill, car payment, etc, but they have a smart phone in their hand, I won’t feel sorry for them one bit.

      1. Europe is on its arse!

        Not sure how you guys do your plans over there but aside from the iPhone its rare we pay anything for a phone if we are signing up for a lengthy contract.

        Not that many years back we were on 12 month plans with free phones. Then it went to 18 months and then 24 months, except now if your a new customer your expected to pay out for a handset on top of a 24 month plan.

        If your a customer with one of the big 4 (o2, vodafone, three or the EE combo of Tmobile/Orange) then at upgrade they’ll normally fight to keep you. I got my iPhone 5 free on a two year plan with the same contract with unlimited data.

        It would have been £120 if i signed up as a new customer.

        The market is saturated and the operators still fight to keep there share.

        Problem for apple is that the networks will push whatever they make the most from.

        On another contact for example i could have had the same tariff as my iPhone with unlimited data with a decent amount of calls and texts which normally costs me £35 EXCEPT if i choose another other handset like the Galaxy S3 or similar it would have cost me £10 per month.

        Thats a massive saving.

        Now a days most smartphones will pretty much do the same as an iPhone – even if it doesn’t do it anywhere near as well, and there in lies apple’s problem.

        At some point selling iPhones at a high price and getting less sales doing so will be less profitable for apple then selling more cheaper iPhones that cost less to consumers.

        Thats what it needs to work out

        It’s all well and good saying people can have a 4S or 3Gs or previous model but thats a difficult sell come upgrade time when people are offered the *brand new* Samsung, Sony, HTC etc or the previous *old* model iPhone.

        Thats before you factor in the networks will almost always charge less for any other phone then an iPhone.

        Apple has always been pretty clever with marketing – even if they did just put a new external design on the old 4S/previous model and call it something else they’d probably do better.
        Your meant to buy the most current tech you can -especially if your signing upto a two year deal because tech dates quickly and thats why buying an old model vs the new one of another brand will pull some people away from an iPhone.

        Besides i think another model is pretty much a given. The 5 surely went up in size to make way for the mini/nano. That’s the way i see apple going, like it has the the past with iPod and more recently iPad. I reckon iPhone 4/4S screen size with reduction in the space above and below the screen – possible removal of home button and TaDah – iPhone mini same specs as ip4 or 4s – free on contract and BOOM infinate sales in cash strapped insolvent Europe!!!!

        1. Wrapping the previous model phone in a new package will not reduce its price to consumers as they would lose economies of scale. The long a product is in the market the more profitable the product line will become. Part of this is parts but the other cost is manufacturing tooling. This is often a significant capital investment that is repaid of the life of the product. The fact that Apple has done so well in extending the selling period of a single model is amazing and a key reason for the mountains of cash they have around the world.

      2. @think

        In your day you probably were using two cups and a bit of string.

        What do 20 somethings need it for? I’m pretty sure that group is a large target group for AALP – these are the guys who don’t know about buying LP/Cassette/CDs, they are the group that has grown up in a digital world connected with social media, email.

        Applying for a job?
        Checking your bank balance?
        Buying a new track?
        Taking a picture?
        Finding a friend?
        Booking a ticket?
        Paying for a coffee?

        That list is limitless – thanks to the iPhone – and those 20 somethings and younger haven’t known anything else. How backwards would it be to do all that stuff the same way as 30 years ago.

        In this case change really is progress.

        The iPhone is here and the world is a better place for it!

  1. Goddamnit, stop talking about a need for a low cost iPhone, it’s already here, it’s the older models! If they’re broke they can get a free iPhone 4, or a $100 iPhone 4S. Apple could just as easily (probably even easier) gotten rid of those models completely like they do with MacBooks. You don’t see a half price, last years model MacBook Pro, do you? Quick complaining, it’s bullshit

    1. Stop talking about a ‘free’ iPhone. They all cost money and Apple doesn’t make them for free as a charity. The iPhone 4 is the least expensive option and costs around $450 in Europe. If people want a cheaper version, they can buy used iPhones.

      1. In the uk its around;

        $488 for a 4
        $687 for a 4S
        $809 for a 5

        Apple normally charge us more then the US

        Depending on which tariff you choose all of the above can be had for free.

        Also on a fairly standard 2 year £35 tariff = $53
        the cost of a iPhone 5 for a new customer ranges from $75-$120

        If your renewing then you can probably get it for less then $75 but they wont discount your tariff like they normally will on any other phone.

          1. dumbass

            You know full well i meant zero up front cost as a consumer not that apple are knocking them out free of charge. No one’s suggesting that so get back in your box

    2. When will people here ever start to understand that there is a world outside of the U.S. where customers are sophisticated enough to work out that expensive monthly plans with ‘free’ phones are not a smart deal ?

      In many parts of the world ( and I am not talking about developing nations either ), it is perfectly normal to buy a phone outright and then pay a low monthly fee solely for the phone service. In such a market, the retail price of the handset is the price that matters and Apple simply does not offer a lower cost handset, other than an iPhone 4 variant which is still a lot more expensive than brand new models from rival manufacturers.

      Whenever there is a story about the reasons for a cheaper iPhone to be sold outside of the US, you can guarantee that somebody will mention that iPhone 4S phones are free on contract, but such people are displaying how little they know about the rest of the world.

      If you’re happy to pay over the odds to buy a phone on contract, then that’s up to you, but some people have the intelligence to understand how much you actually end up paying when you do that.

      Here in the UK, I buy my iPhone outright and pay well under $15 per month for 250 mins talk, unlimited texts and 1GB of data per month. Buying much more talk and unlimited data only costs a little more than that. Look at what you are paying on contract and see how it compares.

      Whenever I want a new phone, I buy a new one and sell my old one. The service plan stays the same low price whatever phone I use and I can stop paying for the service any time I choose to.

      It may well be that Apple chooses not to offer an iPhone optimised to be sold in this way, but they are limiting their potential in massive markets if they choose not to. It all depends on whether Apple feels that it can be done profitably and I think that it could be done very profitably.

      1. One or the other is not always cheaper Alan;

        My tariff is £18 per month if its on a rolling monthly you can cancel anytime, plus iPhone 5 would cost £529.

        On the same tariff the contract its £35 per month and the iPhone is free.

        Buying the phone outright and paying over 24 months costs: £961

        On contract the total cost is £840 over 24 months.

        Being on the contract therefore saves £121.

        As always its about whats works out best. I’d rather not find the £529 upfront – especially when it works out cheaper in the long run.

        As always it depends on your circumstances and any individual deal. One or the other is not always the best.

        A cheaper iPhone would be good to avoid the long tie in or to reduce the monthly payment.

        Bring on the nano – mini is such a daft name.

        1. blaargh-

          Your comment was mild compared to many others I’ve read here on a regular basis, IMHO.

          The holier than thou politically correct speech police can go pound sand.

          Ignore them, do your thing and let first amendment freedom ring!

            1. Can only guess when the U.S. Constitution was taught in your school, you skipped class for the alley chasing tail, cussing and smoking cigarettes.

              You missed the whole point, pity.

      1. Actually there is a need, a need to be able to allow people their freedom of speech. What you are suggesting is censorship.

        I think saying the word FUCK OFF is a lot more valuable than any tyrant trying to impose censorship.

        You don’t seem to get that do you?

          1. Thanks, I may not agree with the message or the way it is delivered but darn it, it is a person’s freedom of speech to express themselves as they want to. People have died to support that right. Anyway, enough said, I highly doubt that the message will get through, that’s why there will always be a need to speak up against this sort of suggestive censorship.

            1. Good to read your thoughtful consideration looks at all sides and in the end fights for first amendment rights, RW.

              Last word for Mel Gibson in Braveheart, “Freedom!”

    1. If you don’t know what you’re writting about don’twrite it.
      The link is not to the original Bloomberg article which states France’s telecoms cheapest plan now provides unlimited calls and texting and 3 gigabytes of data for about 20 euros ($26) a month — about half the price of T- Mobile USA Inc.’s $50 plan, which is touted as a U.S. bargain.

      In 20 plus years of having a mobile phone I don’t think I’ve ever had a monthly rate that low. I understand phones are not subsidized in Europe but wow, just wow.

  2. The French or the Europeans that produces big name luxury goods
    from cars to handbags themselves don’t buy those items, they’re
    a bunch of cheapskates that only produce and not consumes their
    own luxury goods. Most of those are just bought by a handful rich.
    Look at luxury cars on streets, it’s mostly the low end BMWs or Mercedes or Audis.

    1. For “low-end” substitute “smaller”. Europeans don’t go for big cars. Most of our cities still have the streets that were first laid out in the era of cart and horse. American size vehicles just become a hassle to own.

  3. A lower cost iPhone is must. The arrogance by some that Apple does not need a less expensive iPhone is the same as the one that almost sunk the Mac. There is a bell curve where Apple controls the market and developers and then competition catches up with a lower priced product and takes market share AND developers at the same time. Apple needs to learn from the past. MS should have learned from the past.

    And let’s not forget, the blue biondi imac is what saved Apple when it was in it’s death throes. A low cost machine for the masses to get Apple back in the game. ..and assurances from MS to continue writting Office for Mac. Arrogance led it astray, but the humble imac saved the day.

    1. A country specific lower-cost iPhone is one possibility. That way it won’t interfere with domestic sales of older iPhones. But I think a less expensive iPhone is a good idea. People want to buy a new phone not a phone that is a year or two years old. Even if it is cheaper. So I believe the lower-priced iPhone will probably be sold universally. Eliminating the need to keep manufacturing older models.

    2. But I don’t understand how a “low cost” iPhone would be differentiated from the “flagship” iphone any more than the 4 is different and cheaper than the 5?

      Are you suggesting Apple wrap the 4s innards in a cheap plastic case, when they release the 5s (or whatever)? Surely that will cost them more than simply reducing the price of the gorilla glass 4s?

      The iMac wasn’t cheap – it cost a $1000 when PCs were a few hundred. It was cheaper than more expensive macs yes, but it’s “value” came in an all in one package, when other macs needed monitors.

      I can’t see the equivalent of that package with iPhones.

      I think Apple might do well instead to see if they can reduce the cost of manufacturing the next flagship iPhone. And pass that saving on to the customer.

      When telcos demand cheap kit it’s so they can take more profit, plain and simple.

      1. In 1998 PC’s would still cost about a thousand bucks. The iMac was Apple’s response to the low-end they had neglected. It was a great product with cutting edge components at great design at an affordable price.

  4. This whole story line and equating European economic political stupidity with the need for Apple to try to solve that multi-later stupidity with a low-cost iPhone is idiotic.

    Elect people that have a fundamental understanding of how economies of scale work in the 21st century, and leave Apple to do what they do best… Design and build great products or everyone.

    1. France Telecom is just asking for discount on their iPhones contract.
      nothing more. Why are they so specific about iPhones. Other smartphones cost about the same or a few difference $30, $50.
      Want cheaper iPhones? you got the IPhone 4 or 4s.

  5. Why doesn’t apple release 3 new iPhones?

    3.5″ Cheap Low End (iPhone Air)
    4.0″ Middle Range (iPhone)
    5.0″ High End (iPhone Pro)

    Covers all three market segments!

  6. Anyone would think the US is going through a boom, seems some haven’t read the papers lately. I have just spent rather a lot on a new iMac but to be honest I have gone through my bells and whistles phone stage, been there done that. Just not willing to pay what I would need to, to get an iPhone even a 4S so will likely (spit) have to get an Android phone as my present feature phone is on its last legs and such phones are now stuck in the stone age of development with a lack of even basic functions by comparison. So held out for best part of a year now but as there is no cheapish iPhone available a non Samsung Android is the likely choice sadly unless such a cheaper Apple phone is indeed released. Don’t want Apple to go any more down market than they did with the iPod but that option has been rejected at least till now. Makes great sense to me and any rational person I would have thought and sadly well overdue, which has allowed Android to take such massive market share much of which Apple could have creamed off in the middle (still profitable) segment certainly. Lets hope they are now seeing sense they dont need to grab share for the sake of it but they do need to keep a healthy share to keep everyone on board and the pressure on the opposition.

  7. And it is true as some have noted that psychologically people do not want to buy older phones as the cheaper alternative especially when they perceive the opposition is selling a new phone at the same price even if it is no more advanced in reality. Its why BMW simply update its 3, 5 series etc rather than it denoting older versions of the same car. Apple needs at least two ranges of iPhone even if the lower cost one as new is taking advantage of older innards from the previous higher model. Not Marketing rocket science.

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