Apple Requiring an 'Innovative, Category-Killer Experience' for Potential Low-End iPhone

Barron's reports on a brief note from RBC Capital Markets analyst Mike Abramsky, who shares some of his "takeaways" from a meeting with Apple Chief Operating Officer Tim Cook and Chief Financial Officer Peter Oppenheimer.

According to the note, Cook and Oppenheimer continue to believe in a "massive opportunity" for Apple in China, seeing the potential for significant growth there with the company's recent explosion to $9 billion in annual revenue for the market being only the beginning.

Many have viewed the introduction of a low-cost iPhone for the prepaid market to be key for Apple's future success in China and many other countries, and the Apple executives reportedly noted that any such device would have to be "an innovative, category-killer experience". Cook and Oppenheimer obviously did not specifically confirm plans to launch a low-cost iPhone, but it is clear that Apple is working hard on finding a way to break into and succeed in that market.

They include the fact that Apple has a “massive opportunity” in China, with the market there “significantly untapped” despite Apple revenue of $9 billion in the country. Despite an “explosion” of devices based on Google’s (GOOG) “Android” operating system, Apple can maintain a competitive advantage through its integration of hardware and software, and its “curation” of the “application ecosystem.”

Regarding a low-cost iPhone, Abramsky writes that “Apple’s primary criterion for launching a lower-end iPhone is an innovative, category-killer experience.”

Other topics of the discussion included word that Apple's gross margins for the quarter may be better than expected due to it currently being a "buyer's market" for components, and the company's efforts to settle with Android handset manufacturers in the numerous ongoing patent disputes.

Top Rated Comments

(View all)
Avatar
115 months ago

Does anyone here know of any harmless weed I can smoke till September ("Fall") ? This wait is killing me.


Normal weed.
Score: 15 Votes (Like | Disagree)
Avatar
115 months ago
Will the carriers come out with better data plans to go along with the cheaper iPhone, or will they stay the same? The data plan is what really makes any smartphone expensive to own.
Score: 7 Votes (Like | Disagree)
Avatar
115 months ago

Apple will never do a cheap iphone, it cheapens the brand.


when $299 or $249 is cheap?

So they do not sell iPod touch?

they even sell appletv for $99 with some $20 to $30 margin ...
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago
first off, most foreign markets are prepaids plans (you buy your service month to month, no lockin). Mostly because the culture there is to 'buy minutes' (and I assume then GB of 3G as well) I also know part of that is turning on/off services such as data, and the other is floating between a myriad of wireless companies.

So, To get into that market, you need a less expensive phone because no subsidy (and the 2 year lockin to pay off the subsidy) exists, or is tolerated by the market.

2nd, Apple stated up front that they will be aggressive with pricing and models to keep from being undersold. They learned from the Mac Experience, that you must be ready to aggressively protect the brand. The iPod Shuffle is just that device... it's the gateway to the nano, to the touch, to the phone (why... iTunes... no loss of time investment in media management). The term they used early was 'price umbrella' They want that umbrella as low to the floor as possible, to keep other brands from engaging in customer brand loyalty lockin.

Android is to some extent under the umbrella now, however, their capabilities and 'emotional investment' at that level is so low, that it's just a 'cheap phone.' If Apple closes that gap, the brand value ("I can get an iPhone for _almost_ the same price"), That drives for the long term 'halo' (app store, music store, upgrades, iCloud, iPads), which when you have a 'family' of products, is bound to happen.

I know I'd buy my 20 yo daughter a iPhone 4'lite' if it was under $200 and not locked into ATT/Verizon. In a Minute. She has a MacBook, She has a iPod nano. She's graduating from college (poor ATT coverage there, no VZN), and is about to move. a 2 year contract is silly. She has WiFi everywhere. I don't think she needs an iPad (she's a writer... needs a good keyboard). But when she gets a job (hope hope), then she can go get an iPad and not lose her 'investment'

So... a $<300 prepaid solves a lot of problems.
1) it can be the 'free' or $9.99 iPhone for ATT, Sprint, VZN, TMoble in the US
2) it becomes the 'iphone shuffle' (phone, web, 4GB of mem for apps/songs/media,a nice display, and a
3) it lowers that umbrella (you can own an iPhone... or one of those no name android phones that has no experience, and limited support)

Apple's cash allows them to make almost nothing on the shuffle... but it drives the long term (2 years, they'll buy an iPhone) plan. Thats the real beauty of Apple's cash account. They can invest in the future, and make decisions that are focused only on this quarter.
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago

Category-Killer ?

What the hell does that mean?

Something that clobbers the competition.

Think iPod touch: annihilated Microsoft's Zune product line. Right now, the iPod touch has no credible competitors.
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago
Looks like Apple's just getting started. A low cost prepaid iPhone is gonna sweep the legs out from under the competition.
Score: 4 Votes (Like | Disagree)

Top Stories

Apple Doubles the Price of RAM Upgrade on Entry-Level 13-Inch MacBook Pro

Saturday May 30, 2020 4:00 pm PDT by
Apple today doubled the price for upgrading the RAM on the entry-level 13-inch MacBook Pro, with customers in the United States now being charged $200 to move from 8GB to 16GB compared to the previous $100 upgrade price. Similar increases are seen in other countries, such as moving from €125 to €250 in Germany and from £100 to £200 in the United Kingdom. Current pricing on RAM upgrade for ...

Tim Cook Addresses George Floyd's Death and Ensuing Protests and Riots as Apple Temporarily Closes Some U.S. Stores

Sunday May 31, 2020 8:04 pm PDT by
Amid unrest in numerous U.S. cities following last week's killing of George Floyd by police in Minneapolis, Apple CEO Tim Cook has shared an internal memo with employees (via Bloomberg) addressing the pain that many are feeling and urging others to commit "to creating a better, more just world for everyone." Cook also announced that Apple is making donations to several groups challenging...

Apple's First MacBook Pro With a Retina Display Will Become 'Obsolete' in 30 Days

Monday June 1, 2020 7:50 am PDT by
If you are still hanging on to a Mid 2012 model of the 15-inch MacBook Pro with a Retina display, and require a new battery or other repairs, be sure to book an appointment with a service provider as soon as possible. In an internal memo today, obtained by MacRumors, Apple has indicated that this particular MacBook Pro model will be marked as "obsolete" worldwide on June 30, 2020, just over...

Top Stories: macOS 10.15.5, New Powerbeats Pro Colors, iPhone 12 and 13 Rumors, and More

Saturday May 30, 2020 6:00 am PDT by
This week saw an interesting mix of news and rumors on the Apple front, led by the release of macOS 10.15.5, which brings a new battery health feature to newer Mac notebooks, while we also saw the official announcement of new colors for the Powerbeats Pro earphones. On the rumor front, we heard a few tidbits about not just this year's iPhone 12 but also next year's iPhone, while we saw...

8 Mac Tips and Tricks You Might Not Know

Friday May 29, 2020 12:36 pm PDT by
There are tons of hidden features and shortcuts for Macs that Apple has built into macOS over the years, ranging from shortcuts to keyboard commands to other little hacks to make Mac usage just a bit simpler. In our latest YouTube video, we highlighted several of these tips and tricks, and some of them might just be new to you. Subscribe to the MacRumors YouTube channel for more videos. Tr...

6.1-inch 'iPhone 12' Production to Begin in July Ahead of Other 2020 Models

Monday June 1, 2020 2:36 am PDT by
Volume production of Apple's forthcoming 6.1-inch "iPhone 12" models will start in July-August ahead of the rest of the company's flagship iPhone lineup this year, according to a new report by DigiTimes. Apple is widely rumored to be launching four new ‌iPhone‌ models in the usual September or October timeframe, although supply constraints and delays in production ramp-up could cause a...

Apple Releases iOS and iPadOS 13.5.1 With Fixes for Recent 'unc0ver' Jailbreak Vulnerability

Monday June 1, 2020 9:58 am PDT by
Apple today released iOS and iPadOS 13.5.1, minor updates that come a little over a week after the release of iOS and iPadOS 13.5, major updates that brought the Exposure Notification API, FaceTime changes, mask-related unlocking updates and more. The iOS and iPadOS 13.5.1 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings >...

Apple Introducing New Internal USB-C Diagnostic Tool

Sunday May 31, 2020 7:26 pm PDT by
Apple is introducing a new internal USB-C Diagnostic Tool as a successor to its existing Serial Number Reader, which can be used to both collect a device's serial number directly from its logic board and test power on a device itself. Image via Giulio Zompetti With only a Lightning version previously available, images have surfaced of a new USB-C Diagnostic Tool (UDT) that appears to be known ...

Powerbeats Pro Debut in Four New Colors: Spring Yellow, Cloud Pink, Lava Red, and Glacier Blue

Friday May 29, 2020 10:00 am PDT by
Following a couple of leaks in recent weeks, Beats today is officially announcing four new colors for its Powerbeats Pro wireless earphones: Spring Yellow, Cloud Pink, Lava Red, and Glacier Blue. The new earphones will go on sale June 9 and sell for the same $249.95 price as the existing color options. Aside from the colors, the new Powerbeats Pro models are otherwise identical to the...

Apple Releases macOS Catalina 10.15.5 Supplemental Update With Security Fix

Monday June 1, 2020 10:56 am PDT by
Apple today released a supplemental update for macOS Catalina 10.15.5, the fifth update to the macOS Catalina operating system that was released in October 2019. The supplemental update comes a week after the release of the macOS Catalina 10.15.5 update. ‌macOS Catalina‌ 10.15.5 is a free update that can be downloaded from the Mac App Store using the Update feature in the System...