A little perspective on iPhone competition, and what it means for Palm

[mikah912]

Let's be really clear. There is only one model as far as America goes, and the iPhone is sold under it just as every smartphone is: Subsidize and hit a competitive price point. In America, that price point is $199. To be fair, the iPhone is what set that bar. Now, it and almost every other handset has to hit it. Price agnostic carriers like Sprint will sell an Epic 4G here or Touch Pro 2 there for more than $199, but they are exceptions that prove the rule.

The only reason that third parties are allowed to discount further is because the prices are for new customers only, as carriers want to negate churn and boost subscriber numbers for every quarter's results. Just like iPhone, most devices are only discounted by the carrier when a replacement has arrived and it's time to EOL. It took Verizon until the arrival of the Droid X to reduce the price of the Droid by $50. No Galaxy S handset has yet been reduced in price by the carrier, nor has the Evo 4G. The Droid Incredible has not been reduced in price. The Nexus One was never reduced in price. Essentially every superphone launched since the Droid has stayed at the original price, and the Droid was only reduced to make pricing room for two successors.

There's just one model, and iPhone helped establish it after years of $299 and $349 smartphones. Thanks, Apple. Now, everybody gets to compete against you on a level playing field, and it's starting to show.

[SoFly]

Originally Posted by C-Note

One selective business chart deserves another:

AppleInsider | Apple's share of U.S. PC market slips to 7.4% as sales decline

So if I can sell "x" number of units at a 50% profit, but COULD sell "4x" units at a 25% profit, how as a corporation am I making tons of money for my shareholders by leaving that money on the table? The percentage of profit may be lower but the amount of profit will be higher.

Once again, how are the Mini Mac's selling as compared to comparably priced PC's?

Certainly in the phone market, the coming year will tell the tale. Let's see if Apple continues with business as usual. We shall see. If Apple doesn't change how they are doing business in the smartphone arena I'll eat crow. But don't count on it.

LOL! WOW! You pull up a chart that shows sales for a whole quarter. That's really insightful. I showed a chart that was for the whole year of 2009.

Dude, Apple is a premium manufacturer. If Apple starts playing in the cheap PC market by lowering their prices, customers will start to expect that and then Apple will become Dell and HP selling cheap commodity PCs and constantly undercutting each other and making little money for all those cheap PCs they sell. Once you associate yourself with cheap, it's very hard to raise your prices when you want to sell a more expensive product. Just ask Volkswagen and the expensive Phaeton that they are thinking about releasing in the US again, after it didn't sell well here the first time. Why? Because people don't associate $70,000 cars and Volkswagen.

Find me a PC that looks anything like a Mac mini then we can discuss sales. But, most likely you won't find a PC that looks as sleek and modern as the Mac mini. See, that's what Apple is good at, design. They do it better than any other PC manufacturer. That's where they have an edge over the PC manufacturers and they can charge more money for the Mac mini vs a generic PC.

Apple has an image as being above the generic PCs. It's just like you don't see an Intel sticker stuck on a Mac.

So if I can sell "x" number of units at a 50% profit, but COULD sell "4x" units at a 25% profit, how as a corporation am I making tons of money for my shareholders by leaving that money on the table? The percentage of profit may be lower but the amount of profit will be higher.

All I have to say to that is the Pre started at $199 on Sprint and the price has been lowered numerous times to where it is now free. As the price of the Pre was lowered, did sales increase? I never saw where they did. With your theory then the Pre's should be flying off the shelf since they are now free on HP's web site. But, the iPhone still outsells it multiple times over at a price of $199. So, that blows your theory right out of the water.

[SoFly]

Originally Posted by mikah912

There's just one model, and iPhone helped establish it after years of $299 and $349 smartphones. Thanks, Apple. Now, everybody gets to compete against you on a level playing field, and it's starting to show.

It's not a level playing field until the iPhone is at least on Verizon. After it's on Verizon, then it will be a level playing field where Android is competing against the iPhone on the Verizon network.

[C-Note]

Originally Posted by SoFly

LOL! WOW! You pull up a chart that shows sales for a whole quarter. That's really insightful. I showed a chart that was for the whole year of 2009.

Dude, Apple is a premium manufacturer. If Apple starts playing in the cheap PC market by lowering their prices, customers will start to expect that and then Apple will become Dell and HP selling cheap commodity PCs and constantly undercutting each other and making little money for all those cheap PCs they sell. Once you associate yourself with cheap, it's very hard to raise your prices when you want to sell a more expensive product. Just ask Volkswagen and the expensive Phaeton that they are thinking about releasing in the US again, after it didn't sell well here the first time. Why? Because people don't associate $70,000 cars and Volkswagen.

Find me a PC that looks anything like a Mac mini then we can discuss sales. But, most likely you won't find a PC that looks as sleek and modern as the Mac mini. See, that's what Apple is good at, design. They do it better than any other PC manufacturer. That's where they have an edge over the PC manufacturers and they can charge more money for the Mac mini vs a generic PC.

Apple has an image as being above the generic PCs. It's just like you don't see an Intel sticker stuck on a Mac.


All I have to say to that is the Pre started at $199 on Sprint and the price has been lowered numerous times to where it is now free. As the price of the Pre was lowered, did sales increase? I never saw where they did. With your theory then the Pre's should be flying off the shelf since they are now free on HP's web site. But, the iPhone still outsells it multiple times over at a price of $199. So, that blows your theory right out of the water.

Stay in the game. We are talking about PC's and sales of comparable units. You keep jumping between Apple dominates and "oh Apple doesn't care about THAT market".

(Oh, and by the way read the ENTIRE story, not just the chart. It wasn't JUST low priced PC that helped it's competitors. Notice the worldwide sales information too... but I guess the undiscriminating computer users in Europe Asia and South America, or Africa don't really count )

Quote:
HP’s strong portfolio of low priced consumer mobile PCs helped drive its growth in the U.S. home market while its improved channel programs helped it to increase its share in the professional market, Gartner said

If you want jump back to phones, to have a meaningful analysis, you have to look at the phone market before late 2009. By next year you may looking wistfully on early 2009. Apple didn't have any real competition then. Lets see what Q1 of 2011 looks like. Want to make a bet on that?

"Do you feel lucky, well do ya..."

My whole point is not that Apple is a terrible company, but that there are a lot of factors which the Apple faithful do not factor in when accounting for their success. Those factors are changing, and they will expose many of the Apple myths.

Yeah, I know, Steve Jobs has never even pick up an Android or a Pre or even a Blackberry. (Reminiscent of one of Rubinstein's dumbest statements). But if is drinking his own Kool-Aid, he won't be happy with where he may find himself in a few years. I suspect the public projected attitude does not reflect what he considers in private planning.

Maybe you don't remember, but when I started in this business, Apple dominated in education and business markets. But the dismissive attitude toward the competition left them trailing badly in those areas.

Funny, it was a music player and .99 music (not so high end) that gave Apple it's second life.

Finally, nobody said you can sell anything and people will buy it. (Unless you can sell a first generation Apple phone for the same price as a current generation model)

But I am just puzzled (and still am) by the bi-polar references to how they (Apple) is a quality over volume premium manufacturer when it suits your argument (meaning - they are not doing as well as others in that space), but a juggernaut only when the sales figures support it.

So unless their quality drops, or the unwashed massed are duped... (those fools!) Apple should keep the same stellar sales volume in the future as in the past with no adjustment to their marketing model, right?

[yaggermr]

You guys are still letting sofly flame this post and responding let this dog die.

[hparsons]

Originally Posted by dandbj13

That reasoning is faulty. I just pointed out the difference between amortizing the cost of something over time, and discounting it. Your argument only makes sense if Verizon charged a higher contract price for the free phone, which is what happens elsewhere in the world. Instead, Verizon charges the same contract price for the free phone and the paid phone. They are only charging for the contract. The phone is free. Apple does not allow this.

When did Apple "allow" Verizon to have the phone. Apple has been in trouble in the past with attempts to price control, it's a very thin piece of ice.

However, you make an excellent point. The fact that the iPhone currently is not discounted has nothing to do with being a "premium" phone and having "no competition", it's because it's so strictly controlled by the manufacturer.

Originally Posted by dandbj13

The question still stands. Which would be best for the upcoming Palm offering? Despite your protests to the contrary, not all sales models are the same. I have suggested that Palm do what is being done with the Fascinate: sell it free or bogof. Since one sales model is the same as another for most of you, why not eliminate all up-front costs and make it a contract play.

Another part of the question is who will Palm choose to compete against? Does it make sense to go directly after Apple with a premium pricing model. Or should they go after Android with the freemium model? Perhaps they could even go after the RIM/WM segment by offering a corporate discount to large companies.

This is a classic straw man. You are proposing scenarios based on facts that don't exist. Manufacturers of devices don't do BOGO at Verizon. Verizon does it. That won't be Palm's call, it will be Verizon's (notice, if you will, that Sprint still sells the Pre at $150).

[hparsons]

Originally Posted by dandbj13

Where? The O2 example is NOT a discount. You are just trying to confuse the issue by using the word. What O2 is doing is more like credit. You buy something with a credit card, you don't pay an up-front fee. What you bought is not discounted; it's amortized. You pay every penny, and more.

Android phones, Fascinate, RIM, Palm, and every other phone I can think of gets discounted very soon after release. The cost is not amortized as the contract price does not go up. You are either confused or being dishonest. Or, I am mistaken. In which case, where is your evidence that the iPhone is being discounted by carriers.?

Actually, you are twisting things to suit you, then making asinine accusations aginst those that simply disagree with your reasoning.

[hparsons]

Originally Posted by dandbj13

...
Every time I get things back on topic, Palm's competitive strategy, you continue to shout it down. Why? What are you so afraid of?

Stay on topic if you please.

The problem is that your topic is bogus. You haven't talked about manufacturer's pricing policies, you've talked about carriers. Palm is not a carrier. They won't have the type of program you are talking about.

[hparsons]

Originally Posted by oddlou

I just wanted to note that dandbj13's arguments are so ridiculous that he got Mikah912 and Hparsons to agree. That's impressive. Carry on.

Notonly Mikah, but Kupe!!

[hparsons]

Originally Posted by SoFly

...
Palm? Yeah, all that talk from a few years ago and now it's just another division of HP and the Pre is a joke in the smart phone market. Now, being given away by HP for free. Since you wanted to bring up what was said or happened in the past.

But, to focus on Safari when no one (including me) has ever said it was going to be taking over any browser markets is just plain silly.

Speaking of just plain silly, HP is not giving away the Pre for free. Cite your source (and be careful what you cite, things aren't always how they appear to those that don't look closely).

[ryleyinstl]

Originally Posted by hparsons

Actually, you are twisting things to suit you, then making asinine accusations aginst those that simply disagree with your reasoning.

...this thread appears to have collapsed in on itself.

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