Apple, Samsung and ‘cheap’ iPhones

Many media types and pundits have “called for Apple to make a lower cost iPhone in order to capture more ‘hardware’ sales. But what many of us knew is just selling a lower cost phone doesn’t necessarily mean more money. And, in fact, it could have consequences on the higher margin products,” Ben Bajarin writes for Tech.pinions. “Luckily, Benedict Evans shared a post recently that broke down exactly what I and many others have been saying around the implications of a lower cost iPhone.”

“The thesis was always that a lower cost iPhone would certainly help raise sales of iPhones but would not raise revenues. Selling a lower cost and lower margin product means you need to sell substantially more product to equal similar revenues to selling less of a higher margin good. But as Benedict points out, this does not necessarily mean Apple should not release a lower cost phone — only that it would not necessarily be for the hardware revenue but for the potential value to the ecosystem, in terms of revenue capture beyond hardware, like apps, subscription services, etc.,” Bajarin writes. “Benedict rightly points out Apple has more options than ever and I would add few companies are in [as] full control of their destiny than Apple.

“Whatever strategy Apple decides, given their approach, they have a limit on their total potential customer base. We simply have no idea what the size of that number is. Employing this strategy means Apple will need to foster opportunities for their customer base to spend more in their ecosystem thus incrusting their average revenue per customer beyond the hardware. The point remains — Apple is in control of their destiny,” Bajarin writes. “Samsung, on the other hand, is a giant question mark.”

Much more in the full article – recommended – here.

Related article:
Today, Apple could proudly make a ‘cheap’ iPhone – August 7, 2014

34 Comments

  1. Apple should not (and will not) produce “cheap iPhones,” beyond selling previous models for up to three years at lower (but certainly not “cheap”) prices. It would be dumb to create an “iPhone” (a full iOS device) that costs less than $200 (unsubsidized full price); that would seriously cannibalize sales of Apple’s ultra-profitable “expensive” iPhones that have incredible profit margins. Apple is not dumb.

    But Apple can take a different approach and produce comparatively low-cost Apple phones that are NOT iPhones. It may be called “iPhone something,” but it is clearly differentiated by design and marketing. For example, back when Apple first released the iPod shuffle, it was clearly NOT a “real” iPod, although it had “iPod” in its name. It had no screen, no click wheel, and no tiny hard drive for storage; you played just one playlist of songs in order or “shuffled.” Customers saw the distinction (and lower price); customers who previously did not buy an iPod bought one. My first iPod was a shuffle.

    Apple can create a desirable phone that is “smart,” but is NOT an iOS device. All of its features (including “apps” for common smartphone functions) are be built-in and not extendable using third-party apps. Like iPods (that are not iPod touch), it does not get annual major software upgrades; what you get when you buy it is the device you have for its useful life. As the “real” iPhones become larger and ever more powerful, it would reverse the trend and be significantly smaller, feather-light and a sliver in thickness, and ultra-simple to use.

    1. There’s a huge difference between what you’re suggesting and the iPod shuffle.

      The shuffle still participated in Apple’s ecosystem. You could buy songs for that just as much as you could the full sized iPod. While your phone could still take part in music, the revenue from most everything else in the ecosystem would be missing.

      The shuffle was definitely a gateway drug. People without any MP3 player before, bought it and then upgraded to the nano or other iPod.

      But I don’t see your phone being a gateway drug. I see it as being more like a Microsoft ‘Kin. Make it cheap and give the kids texting, Facebook and Twitter… That didn’t work.

      1. Microsoft Kin “didn’t work,” because Microsoft is stupid. They were releasing it almost at the same time as Windows Phone, so they marketed it as the “young person’s” smartphone to avoid stealing away potential Windows Phone customers; it was almost meant to fail (on purpose). They certainly succeeded in that regard. 🙂 The Kin was the final wasteful result of the Microsoft’s Danger acquisition, which previously produced the T-Mobile Sidekick, a successful product (before Microsoft’s touch of doom).

        iPod shuffle was meant to reach customers who previously did not buy a “big expensive” iPod, without stealing away customers who wanted a “real” iPod. And it, especially after the colorful clip-on 2nd gen model, became very popular. And those customer became loyal Apple customers for later products, including iPhones. But Apple did not release the shuffle until a “few generations” into the iPod dynasty, after selling the more expensive (and profitable) iPods to the “easy” customers. And that’s the current state of iPhone… It’s time (or will be at some point) to go after the hundreds of millions of mobile phone customers (many times more than the existing iPhone customer base) who will not buy an iPhone. I think my comparison is perfectly valid, and makes even MORE sense today…

        The “ecosystem” benefit to Apple is secondary, and WAY overemphasized in terms of profit. Apple makes most of its profit from selling hardware products. The services, such as the iTunes Store and App Store, are more value-added services for Apple’s hardware customers (to instill loyalty and sell more future hardware). I’m sure they generate profit, but they are NOT Apple’s profit centers. Apple is not Amazon, selling the device and “hoping” for later profit from media purchases by the customer.

        1. “Microsoft Kin “didn’t work,” because Microsoft is stupid.”

          Well yes, but they’re stupid because they thought people would be interested in a low cost phone that was limited in what it could do. People didn’t want that, and you’re suggesting the same thing, just provided by Apple… which they wouldn’t do.

          “iPod shuffle was…”

          You pretty much repeated what I said, although I didn’t say that it became very popular, nor would I. However again, the shuffle succeeded because it rode on to the back of the iPod’s established ecosystem. The purpose and capability (for the most part) of any iPod at the time was to play music, and the shuffle did that just as well as the full sized iPod, albeit with a limited interface. It’s not like as if you couldn’t buy or play some music if you had a shuffle. It’s not like as if your playlists didn’t work. It was an inexpensive way to bring people into owning an MP3 player, when at the time, most people didn’t.

          “The “ecosystem” benefit to Apple is secondary, and WAY overemphasized in terms of profit. Apple makes most of its profit from selling hardware products.”

          That’s true from a percentage, but the profit from the ecosystem is very much a significant business. More importantly, the ecosystem is one of the major reasons why there is so much profit for Apple in selling hardware. Selling devices that are restricted from the ecosystem hits them both in terms of direct profit, and in support of the ecosystem.

          And you’re suggesting doing this for no real reason. A phone capable of running Facebook is capable of running Safari and most of the apps in the App store (along with other media).

          If a phone capable of running Facebook and the other apps you mentioned could run about 90% of the apps in the app store, what’s the point of restricting them?

          1. But the Kin’s predecessor (the Sidekick) WAS reasonably successful. And it was a lower-cost mobile phone that could do a limited number of specific “smart” tasks. Nothing wrong with that concept… Microsoft just blew it, and intentionally made Kin fail, to better promote Windows Phone.

            iPod shuffle did NOT require this all-important “ecosystem.” Most users at that time had existing music libraries consisting mostly of songs ripped from CDs (and downloaded during the “Napster era”). It succeeded because it was more affordable (compared to previously existing “real” iPods), and it became a “cute” fashion accessory. Apple embraced its limitations, and designed a user experience (around those limitations) that customers loved. It’s limitations are what allowed it to be tiny and much less costly.

            The shuffle did NOT succeed because of the iTunes Store or any “ecosystem”; many owners where first-time Apple customers, and did not even have iTunes previously installed in their Windows PCs, yet they still bought the shuffle. But once they bought the shuffle (and installed iTunes), THAT is when the “ecosystem” became important for that customer. And that is what Apple needs to do (at some point) to draw in the hundreds of millions of mobile phone users (many times more than the existing iPhone customer base), who would otherwise NOT consider getting a phone from Apple. THEN, they are part of the “ecosystem” GOING FORWARD.

            This low-cost iPhone may not run third-party iOS apps, but its just as much a part of the “ecosystem” as any media-player iPod, and Apple still produces and sells iPods. Apple TV does not run third-party apps either (it is ANOTHER existing type of Apple DEVICE that does only specific things BY DESIGN), but it does participate in the ecosystem in its own way. Apple could have devised some elaborate way to make it run iOS apps, but chose to intentionally limit its functionally BY DESIGN, because Apple wanted it to be a simple low-cost media-consumption device that costs $99.

            1. “But the Kin’s predecessor (the Sidekick) WAS reasonably successful.”
              The Motorola StarTac was even more successful. That’s no more relevant. We’re not talking about phones that were released when very few people had smartphones, and none like we have today. We’re talking about the ‘Kin, and your idea for a phone that is pretty similar to the failed ‘Kin.

              “Microsoft just blew it, and intentionally made Kin fail, to better promote Windows Phone.”

              Wow, not this.. not… It failed because MARKETING!!! It failed, because it sucked. It was a bad idea. The hardware was quality, they promoted the hell out of it, and nobody bought it because in an age of smartphones, this was a very crippled phone that focused on what 80% of what most people want to do with a phone while ignoring that the 20% that people do is incredibly important and varied.

              “…The shuffle did NOT succeed because of the iTunes Store or any “ecosystem”

              It most certainly did. The iPod shuffle wasn’t that successful to begin with, but when it was released it was priced higher than the competition that had displays and full controls along with higher capacities. iTunes was a HUGE selling point with the shuffle as was the iTunes Store.

              “And that is what Apple needs to do (at some point) to draw in the hundreds of millions of mobile phone users (many times more than the existing iPhone customer base), who would otherwise NOT consider getting a phone from Apple. THEN, they are part of the “ecosystem” GOING FORWARD.”

              This makes no sense. Either people can afford an iPhone or they can’t. If you’re building an Apple phone for people who can’t afford an iPhone, they’re not going to be getting an iPhone anyway. They won’t be part of the ecosystem, and there’s no margin in selling to them.

              The shuffle made sense because so few people had mp3 players back then. Almost everyone has a phone today. The shuffle was at a price point that was a POS purchase wherein your phone is still going to be over $200 (you still haven’t said how it gets below $200).

              “This low-cost iPhone may not run third-party iOS apps, but its just as much a part of the “ecosystem” as any media-player iPod, and Apple still produces and sells iPods.”

              Barely, and most of the iPods Apple sells are the iPod touch. Plus this is different. The iPods Apple sells still achieve a roughly 30% margin, and they’re not competing with the iPhone. The same goes for the Apple TV. The difference with the Apple TV, is that while it doesn’t yet have 3rd party apps, it is a media consumption device that sells a lot of content in the form of movies and tv shows from the ecosystem. Your phone would not.

            2. What a load of minutia, that is no longer relevant to the topic of discussion. To summarize…

              Instead of the question, should Apple create a “cheap iPhone,” my (big picture) SPECULATION is that Apple should INSTEAD create a low-cost phone (no “i”) that is NOT an iPhone, by design.

              Make it a device in the same “class” as the current iPod nano, not a hand-held computer. A very mobile PHONE that happens to do some other very useful (but specific) things. By comparison, an iPhone is a general purpose computer that happens to make phone calls.

              Include “apps” (buttons on its touchscreen) for various functions that are possible on this class of device. A button for using the phone functions (obviously). A button for playing music (and other media types). Calendar and contacts. Camera. Health/fitness (including Nike+). Calculator. Etc. And an assortment of buttons related to accessing Internet data (over cellular). That last set of buttons COULD include email, texting, iTunes Store, and popular non-Apple services. Any specific examples were incidental (as in “just examples”). (I rarely use FaceBook, so I couldn’t care less if it’s included as a built-in “app.” Frankly, a built-in fart sound app would more useful to me.)

              Design it as a simple DEVICE (not a computer) to have a specific set of known functions (not expandable or upgradeable), like an iPod nano (versus an iPod touch). Provide a high-quality user experience for those specific functions. Make it for less than half the retail price of any current “real” iPhone, putting it in the “less than $200” range (and lower over time).

              Attract the VAST pool of customers who currently do not consider buying an iPhone, while minimizing loss of sales to existing (highly profitable) “expensive” iPhones through careful design choices and marketing. Get them into the “Apple ecosystem” now, so that they will become loyal customers of future Apple products.

              If you don’t agree, that’s fine… I thank you for the opportunity to explain my personal opinions in greater detail.

            3. “What a load of minutia, that is no longer relevant to the topic of discussion. To summarize…”

              That’s because you’re not answering the questions, and you’re backpeddling on your statements. You’re speaking in abstracts without acknowledging specific realities.

              Look, if you had said, that you would like to see Apple release a phone that was essentially an iPod nano but with cell phone capability and sold for under $200, that would’ve been a different conversation.

              But instead you said that you wanted something that ran a default set of apps (and ran them well) that included Facebook, Twitter, and others. Now, maybe not so much Facebook, but popular internet apps.

              You speak in the abstract of the idea that a dedicated device doesn’t need the resources of a general purpose device, and that’s very much true, but then you name apps that require general purpose computing, and arbitrarily omit Safari, which is far less resource intensive than Facebook. You argue that it’s not arbitrary, but then don’t see that it is when Safari’s requirements are a subset of Facebook’s requirements.

              So forget any dedicated example apps like Facebook, or Twitter, let’s get rid of those and only go with what we see today on the iPod nano. Let’s also pretend that the needed phone components fit inside an existing iPod nano.

              How does that phone sell for less than $200, while maintaining Apple’s usual margin???

              You can’t answer that, and that’s why it’s not so much that I disagree with you, as it is that I’m pointing out that you’re just blowing smoke.

              Further, if you’re are going to include some of those example dedicated apps like the resource intensive Facebook, the best way to achieve both a great user experience and low price is by doing exactly what Apple has been doing, which is why we currently have the 4 (in some countries), the 4s, and the 5c.

              If you disagree, realize, you’re disagreeing with Apple too.

      2. i think you are missing Ken1w’s point.
        The trick is to serve the billions who want an iPhone but can’t afford one. Give them all the excellent standard iPhone apps built in, and leave it at that. In time, when they grow accustomed to low-cost excellence, without the extensibility that the ecosystem affords the iPhone user, large numbers of them will upgrade to the real thing.
        I think Ken has made an excellent point here.
        The comparison to the Kin is spurious and disingenuous. A cheap shot with zero merit as an argument.

        1. “Give them all the excellent standard iPhone apps built in, and leave it at that.”

          That wasn’t his point at all. He specifically said it would include Facebook, Twitter, and not include Safari. You’re making the same mistake he made. If it includes the standard iPhone apps built in, you’re not reducing the cost to produce the iPhone, you’re not removing components, you’re just arbitrarily restricting the device from the app ecosystem.

          “The comparison to the Kin is spurious and disingenuous. A cheap shot with zero merit as an argument.”

          Not at all, what he was describing was pretty much the Kin. A high quality produced phone without an app ecosystem, but with a set of default apps specifically those mentioned by ken1w (including Facebook and Twitter).

          Ken1w never said how his idea for an Apple phone would be any different from the Kin, and neither are you.

          It failed, not due to poor marketing, as Microsoft spent a ton of money on marketing it. And it had tons of free press. A ton of them were given away. It didn’t fail because of poor quality or being buggy in any way. Nobody bought it because those very same people who could afford monthly data plans could afford real smartphones. The very same people who used Facebook and Twitter wanted to use their phones for games and other apps.

          Apple could produce a phone today that has the same description of the Kin, an inexpensive phone with default apps such as Facebook and Twitter, and that’s exactly what ken1w described.

          You’ll notice that Apple isn’t doing this.

          I’m all for a low-cost entry phone that draw people into Apple as the Shuffle did, but neither you nor ken1w are describing how that happens. He drew parallels to the iPod nano, but that’s already a $149 retail device, add the components for a phone and nothing else, and you’re clearly over $200 retail for a phone that would compete with unlocked iPhone 4/4s devices that are about the same price. And of course it doesn’t make sense at all in areas where phones are purchased with subsidies.

    2. What I want is an iPhone Nano. Take the iPod Nano and make it into an iPhone with whatever features can be implemented. Price it at $300 with the same margins as conventional.

      I don’t like the size of 4.5″ and up phones.

  2. So Ken1W, what is the name of the giant company you manage? And why would you want to let Apple in on your brilliant secrets? I want to invest in your company right now.

    1. It’s no “secret” at Apple. The current iPod nano appear to be a testbed for that “low-cost Apple phone that is not an iPhone.” It sort of looks like a tiny iPhone, and it has built-in Bluetooth (for connecting headsets), running a touch-based interface that looks like simplified iOS (but is not iOS). It’s hardware is optimized precisely for what it does, and nothing more, meaning it is MUCH less expensive to produce. Extend the casing to accommodate the additional phone parts and larger battery, enhance the processing power a bit, upgrade the software with more built-in apps, and there you have it…

      Apple could sell the current iPod nano for $99 (which is the price on Apple “Special Deals” page); that already includes the most expensive parts (touchscreen, processor, flash storage, etc.). The low-cost Apple phone (as I’ve described) would come in well under $200, with healthy profit margins. It won’t not interest customers who want a “real” iPhone (so no cannibalization), but it will be VERY interesting for customers who would otherwise NOT buy an iPhone.

      The only real question is, if and when Apple does it… 🙂

      1. ken1w, I responded to you in the other article about this. An iPod nano, retail price (not refurb or special deal) is $149. If all they did was add the mobile chip, antenna, speaker and microphone, you’re still looking at it selling at over $200.

        But you said you wanted more than that. You want a Facebook, email, and Twitter. Well, there’s the issue of the screen size and being able to accommodate a virtual keyboard. If you increase the size of the display, that’s more $$$.

        Also, as mentioned in the previous article comment, once you set the requirement of allowing Facebook, you’re just artificially stripping off Safari and the ability to run other apps.

        I just don’t see where the math is that Apple gets the usual 30% margin, with a desirable phone that sells for less than $200 without discount/subsidy.

        I also don’t see how that phone would be competitive compared to a new iPhone that’s either an old model or uses older components.

        1. Apple sells the nano for $149 retail, because Apple chooses to sell for that price. Apple could certainly sell it for $99, with acceptable profit margin, if Apple produced it in higher volume, which is currently not possible because “it’s just an iPod,” and iPods are currently not as “hot” as they once were.

          The current iPod nano screen, when held in landscape mode, is just was wide as the current iPhone screen, when held in portrait mode. It could, therefore “accommodate a virtual keyboard” without increasing the display size. In the past, people were texting using a standard numeric keypad. You don’t think Apple can use a 2.5-inch touchscreen to allow efficient text-based input? Child’s play…

          > you’re just artificially stripping off Safari and the ability to run other apps.

          No, because even in iOS, social media companies have specific apps for their service. They don’t rely on Safari, although they could, because (for mobile devices) apps allow better customized features that are optimized for their service (a better experience for users). Apple certainly has the clout to make deals with the most popular social media companies to create “mini-apps” that are “built-in.” Those built-in apps are optimized for the processing capabilities of the device and smaller screen size, to access the service in a specific way that still provides excellent user experience.

          Limiting the device to only apps that are built-in is precisely what makes the proposed TRUE low-cost Apple phone possible. It is “intentional,” not “artificial.” If the designer knows precisely what the device will run during its useful life, the hardware specs can be optimized precisely for that purpose while still providing excellent user experience. On the other hand, if the device is required to run an unrestricted apps (and a full web browser), the designer does not know the precise performance requirements; the hardware specs would need to be “overkill” to ensure even adequate user experience, and cost MUCH more. And THAT would be a “real” iPhone that costs about $400 (even for an older design), because its really a hand-held general purpose computer (not a “device” designed to only do specific things well).

          1. “Apple sells the nano for $149 retail, because Apple chooses to sell for that price. “

            Right, and they chose that price because cost + roughly 30% margin = $149. This is their formula. It’s been working very well for them.

            “Apple could certainly sell it for $99, with acceptable profit margin, if Apple produced it in higher volume, which is currently not possible because “it’s just an iPod,” and iPods are currently not as “hot” as they once were.”

            Not at a 30% margin. Unit costs don’t scale like you think they do. The nano is already benefiting from either selling in high enough volumes to get scaled discounts or benefiting from shared component discounts on things like flash storage.

            “The current iPod nano screen, when held in landscape mode…”

            … results in a ridiculously small height. It’s doable, but it’s going to be a pretty terrible experience.

            “No, because even in iOS, social media companies have specific apps for their service”

            You seemed to have responded to a totally different point here. You said that you wanted Facebook, among other apps as defaults. That’s fine, I’m going with Facebook because it’s the most demanding of the apps. It’s also far more demanding than Safari. Facebook uses WebKit, it’s pretty much Safari with a slightly tweaked interface that lives as one component in the overall app that is Facebook.

            You’re acting like as if you could reduce the number of components, or the cost of the components by reducing the number of apps. It doesn’t work that way. You need to have the components be capable of the demands of the most demanding app, which by your specification would be Facebook. While there are high-end games that are more graphically intensive than what Facebook demands, you’re not really saving much by excluding them, and certainly not by excluding Safari.

            It’s not like as if there’s an A series chip that would be built that runs Facebook but wouldn’t be capable of running Safari (or many other apps). It’s not like as if the Facebook app doesn’t require a general purpose CPU. It very much does.

            That’s why, if anything, it would make more sense to go with a cheaper, older A series than trying to design, and develop one that was Facebook capable along with the default apps you mentioned.

            “If the designer knows precisely what the device will run during its useful life, the hardware specs can be optimized precisely for that purpose while still providing excellent user experience.”

            That would be true IF you were talking about things that didn’t require what Facebook (and the other apps require). H.264 decoding… check that, it’s needed; the level of RAM, it’s needed; WebKit, it’s needed; GPS, it’s needed; MapKit, it’s needed… the list goes on and on.

            You keep talking about this in the abstract. What processor are you talking about that would run Facebook, but not run Safari? What specific components could you strip out or reduce?

            1. The iPod nano cost discussion is mostly irrelevant to my overall point. You’re “deflecting.” I don’t really care if Apple can sell the current iPod nano for $99. The point is creating a (highly desirable) TRUE low-cost Apple phone.

              You don’t “get it” because you are thinking about it as “iPhone lite.” Instead, it is a different type of mobile phone that is a “device,” not a “computer.” It only does specific things (like an iPod nano), but does those things well. It’s not “open-ended” like an iPhone (or iPad or Mac). If it can’t handle a particular aspect of FaceBook, or any service, that aspect is not included in the “mini-app.” Design of the hardware and its software goes hand-in-hand, because Apple is doing the work “in-house” in partnership with the external service provider, who agrees to support the device and its software.

              With early iPhones, performance was more limited, so native apps were designed to provide good user experience within those limitations. Some (many) things you could do on the full web site, you could not do in the app, BY DESIGN. By limiting the device’s functionality to what Apple builds into it, Apple can precisely design its user experience around a device with MUCH lower production cost. Again, it is a DEVICE (a phone with additional features), and NOT a computer.

            2. “The iPod nano cost discussion is mostly irrelevant to my overall point. You’re “deflecting.””

              But you’re the one who brought it up, first in comparison as to what the phone would be like and then talked about it in pricing. You specifically said:

              “Media-playing (and other) functionality of the current iPod nano, including a small touchscreen interface.”

              So now are you going to back-peddle and say that the phone you’re talking about isn’t even capable of the same functionality of the nano?

              “I don’t really care if Apple can sell the current iPod nano for $99. The point is creating a (highly desirable) TRUE low-cost Apple phone.”

              Right, but we’ve got the nano as a baseline comparison. Apple isn’t going to take what goes into the nano, and then add to it, and then price it the same. What they’d be adding to the nano would easily bump it up over $200 even if all they did was add the mobile chip set, microphone, speaker and antenna as a bare minimum.

              “You don’t “get it” because you are thinking about it as “iPhone lite.”

              No, I’m not. I’m going just on what you described. A phone that is comparable to the iPod nano, but with the ability to run Facebook and Twitter, but not for some stupid reason run Safari.

              You then go on to put two totally conflicting sentences in the same paragraph:

              “It only does specific things (like an iPod nano), but does those things well.”

              Versus:

              ” If it can’t handle a particular aspect of FaceBook, or any service, that aspect is not included in the “mini-app.””

              So which is it? Either it doesn’t do Facebook well, or it includes WebKit, MapKit, and everything else that puts it well above the requirements for running Safari, or 90% of the apps that are out there.

              Again though, you keep talking about this in the abstract. What processor are you talking about that would run Facebook, but not run Safari? What specific components could you strip out or reduce to get the price significantly below what a new build of an old model would cost (like the 5C or 4S today)?

    1. Technically, Foxconn makes the iPhone 4. Apple hasn’t spent any time thinking about the iPhone 4 and if Cook had, he would see the error of his choice to sell it now. The venerable iPhone 4 doesn’t run iOS7+, which means that — wait for it —

      continuing to sell old 32-bit hardware is to FRAGMENT the iOS platform!!!

      The inability for a brand-new iPhone to run the current OS, let alone the latest 64-bit apps, is a slap in the face of new Apple customers who think they will be getting a premium phone, which the iPhone 4 is no longer. It doesn’t even have a Lightning connector, which means new iPhone 4 customers will only be able to use old/used Apple accessories. Especially in a very quickly growing market, Apple needs to be smarter.

      Apple needs to complete the transition to Lightning and 64-bit ASAP worldwide and stop selling obsolete stuff. If Cook wants to compete on price, which is absolutely an important consideration in emerging markets, Apple needs to find a way to maintain the latest hardware processing and interfaces, while perhaps reducing cost by losing phone nonessentials like fingerprint ID, GPS, iBeacon, camera, etc. Such an Apple device could still be high-quality and would be super popular. Selling antiquated iPhone 4 models as a new product today is just undercutting Apple’s own ecosystem strategy.

      1. Whichever ‘Mike’ you are: You are incorrect in your assertion that “the venerable iPhone 4 doesn’t run iOS 7+”. YES IT DOES.

        http://arstechnica.com/apple/2014/03/ios-7-1-on-the-iphone-4-as-good-as-its-going-to-get/

        Apple’s strategy is consistently about small progressive steps as the customer base AND the technology allow. Ideally, this fall Apple will find it ideal to have everyone running iOS 8 on their 64-bit processors. But that’s going to take at least a couple years. Apple know it. Apple allow for it. The customer is NOT cut off and abandoned. The technology gradually upgrades and improves. Minimal ‘FRAGMENTATION’ and minimal customer disruption.

        1. Believe it or not, the iPhone 3GS is still considered a good iPhone by a lot of people that use it. My mother in law is one of them, since she, at 95, is not using it for sophisticated activities and it does just fine.

        2. Loved reading that article, thanks Derek. It supports exactly what I said.

          “We weren’t impressed by iOS 7 on the iPhone 4. The Apple A4 that powers the phone is now nearly four years old, and you can feel it from the moment you turn the phone on. It just isn’t well-suited to iOS 7’s big, sweeping animations and other graphical effects, and its jerky performance is worlds away from what you’d get on a new iPhone 5S, 5C, or even the one-year-newer 4S.”

          iOS7 features that the iPhone 4 won’t support include:
          – flyover or turn-by-turn navigation in Maps
          – panorama mode or filters in the Camera app
          – AirPlay mirroring
          – Siri
          – AirDrop
          – several iOS7 graphical effects (no loss there, actually)

          But wait, there’s a nice conclusion:

          “By the time iOS 8 rolls around later this year, you should really think about stepping up.”

          So, Derek, have you tried iOS7 on an iPhone 4? Why would any sane person anywhere in the world buy a new one today when to do so when puts them 3+ years behind even Samsung’s imitation phones?

          No matter how much you want to root for the home team, iPhone 4 hardware wasn’t designed for iOS7 and 64-bit apps, and attempting to do so gives the user a crappy experience that is not up to modern standards. For Apple or you to pretend otherwise simply undermines your credibility.

          1. “Mike” (anonymous coward): Why do you insist upon making an ASS of yourself.

            – I proved you wrong. You made an ignorant statement.
            – You decide to go on a jag about the proof I pointed out to you, going off on a different topic.

            Is the point here just to troll? Is it? Success from what I can see. Bravo troll.

            This is why people say ‘Don’t Feed The Trolls’. You’re all sadomasochists who just LOVE to hurt others and to have them hurt you back.

            So ‘Mike’, are you all happy now and tingling with self-inflicted punishment? Get help please.

  3. Why are these people so stupid? The fall of Nokia wasn’t that long ago. There wasn’t anyplace you could look in the entire world and not see a Nokia handset. In the streets, on the movie sets, all the biggest celebrities had Nokia cellphones. Nokia had market share, market share and more market share. The high-end Nokia feature phones stopped selling as the industry shifted to smartphones and the rest was history. All those $25 poverty-nation Nokia handsets weighed down the entire company and cash became kindling as Nokia tried to rebuild some sort of strategy. Of course, we all know it failed and look at that company now. Microsoft’s bitch with low single-digit market share. That’s a huge fall from its former grace.

    What is it with the jackasses of Wall Street that they can’t figure out market share doesn’t guarantee long-term success for a company? What a company needs to do is to keep its ledger books in the black by doing whatever it takes even if it has to lose market share. In the end, it’s profits that keep a company afloat, not market share. Apple already knows what it takes but there are always these people who think they know how to run the company better to make a little bit more money short-term. If Samsung wasn’t able to capture the entire smartphone market then I don’t know what company can.

    I don’t know why Wall Street wants every company to be a market share hog simply to put other companies out of business. Apple takes but is still leaving plenty on the table for companies who are savvy enough to build good products for the low-end consumers. Wall Street always trying to urge companies to go for everything and I don’t see the point of it except possibly massive greed. Apple is already high up there, but yet that’s still not enough for some people. Apple doesn’t need take everything from the smartphone industry, but if they want to make more money then go into some other business and pick those profits.

    Why are companies without major market share seen as failures if they make good products but only satisfy a niche because that’s their goal?

    1. To be fair, Nokia was taken down by a Trojan Horse. If Nokia had better management, the engineers of the company could have offered a viable ecosystem too. They were not allowed to do so.

  4. Why would they make a cheap iPhone when one already exists: iPhone 4/4S? You can get one for 99 cents, or even free if you sign up for a carrier. Do these guys live in the South or Midwest? (Before you get angry I live in the Midwest…Minneaoplis/St. Paul! Rep!)

  5. If revenue were profit the theory would be sound. It’s not though. As stated, when you make less per item you have to sell a lot more to even break even. If Apple halved the price and somehow retained the same margin they would need to double sales to stand still. Even if they could achieve that, what would be the point?

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