The potential problem for Apple is that it really doesn’t have a decent solution for the prepaid market. And the massive danger for Apple is that the US may also become one (TMobile is supposedly going this route next year).

A prepaid market is a better market for consumers, and a postpaid market has significant legal pitfalls. Many countries already don’t allow them.

Honestly, I think a $200 unsubsidized iPhone would be sufficient for Apple to capture a large portion of the market.

The top end belongs to Apple. Apple just needs enough compettiveness to have a total market share which stops it from falling behind Android as a platform.

You are right, IMO. Apple can do it! But I also remember Steve Jobs saying:

“I’m as proud of the products that we have not done as the ones we have done.”

So, the question is: Should Apple do it? Must Apple do it?

As always with the Apple/BMW analogies… Should BMW do a low-cost car?

Neither I’m American, nor I live in America, but I think that there is a law the forces public companies’ management to do the best in shareholders interest.

Highest revenues is surely in shareholders interest.
Market share at very low profit, I do not think so.

If you look today at figures showing hyper growth in mobile customer base, one easily discovers that they are in developing countries (Asia, South America, Africa) in which close to 99% of the customer base is prepay..Many of these countries have granted or are about to issue 3G even 4G licenses to develop Mobile Internet…

Prepay is best adapted for countries in which commerce is “done in the street”, with all dealers assembled in the same corners (the “souk” model), which take their commissions from selling top up cards.

Prepay is adapted to economies relying on cash, with relatively underdeveloped retail banking. Hence so many mobile operators following Safaricom to develop mobile money, attaching a bank account to a prepay number, providing info on money going in or out of the account, allowing for cash deposit and cash transfer…

Prepay is the best way to secure a reasonable performance in working capital. The mobile operator sells wholesale cards, gets the cash from resellers, and does not have to put in place complicated cash collection processes

When one has access to true customers consumption, you would be amazed how some customers spend on prepay… Pb is that in many western countries prepay is perceived as cheap offers .. and certainly in SV..

I am currently involved in a consulting project in one African country. I can guarantee to readers of this blog that I hear bout Chinese I Phones (imported from Dubaï) for lack of possibility to import true ones…(or thru friends))

And I heard more than once that countries with low level of literacy SIMPLY NEED simple smartphones with screens appropriate for viewing You Tube (mobile Internet for us is not about surfing or writing, it is about seeing content..)

To catch growth in developing countries and bring something that would change the game…AA could thus think about
* a phone with an even stronger focus on voice command/Siri/Access to local content..
* a phone which would be an easy to use as a purse, allowing thru a simplified I tunes (and Western Union ?) money management/transfer
* a ruggedized version.. (It’ ain’t downtown San Francisco in terms of comfort)
* with a wholesale distribution model.

and if AA does not do It.. Google may well do it

The people who say smartphones today are like the PC market are right, only it is not at all like early 1990′s PC’s — smartphones today are like 2005–2010 PC’s. The iPhone, like the Intel Mac, has taken all of the high-end and almost all the profit, chasing Android and other phones down into $99 unsub prices, just like Windows Vista/7, which were both so very proud of the way they ran better on netbooks. Next comes a new kind of low-cost iPhone that matches 2010′s new kind of low-cost Mac: iPad. That will eat Android alive like iPad has been eating Windows alive, taking over 30% of its sales in just 3 years.

We don’t know what the low-cost iPhone looks like, same as we didn’t know what to expect from iPad. But somebody is going to have to explain to me what is going on with iPod nano if it is not on its way to becoming a phone. Every year it gets one step closer. And iPod touch is a 3G chip away also. And it starts at $189.

So there is a lot of low-cost iPhone smoke already. Given the iPod shuffle, I find it hard to believe that there won’t be a full line of iPhones at some point. Given $329 iPads, I find it hard to believe that anyone truly believes Apple will leave low-cost phones to everyone else.

What is weird is that for decades, PC makers were so sure there would be no $500 and $300 computers from Apple that once iPad shipped, they are all toast. There was no plan B for those guys other than cheap Mac knockoffs. Where is the plan B for Android once the iPod nano gets a feature phone inside and still sells for $149?

If all a company has is their price point (e.g. HP in 2010, Samsung in 2013) then they are at-risk that somebody will design a better device just for that price point. I say “somebody” but history tells us it will be Apple. Everybody else innovates in cardboard while Apple innovates in all other materials. An iPhone nano might use Liquid Metal to be cheaper. It might use iPod OS to be cheaper. It might have a new kind of app to be cheaper. Apple can do all these things because they have the technology and talent to do them.

Anyone who has to reach back to the early 90′s to explain today missed that Apple was re-founded in 1997 and has refuted the early 1990′s a few times already: iPod nano, iPod shuffle, free-with-contract iPhones, $999 MacBook Air replacing $1799 MacBook Air, iPad replacing Macs at half price, iPad mini replacing Macs at 1/3rd price.

I think a big problem is many pundits just can’t imagine what the phone market looks like if — for example — iPod touch and nano had 3G phones added but maintained their price points. Even 3 years later, for many it is hard to understand that the Windows PC as we know it has already been killed by iPad. The denialism is religious in nature. The generic technology world has shrunken down to feature phones and TV’s and so as a matter of faith generic technology people have to pray that Apple will decide not to play in feature phones and TV’s. If Apple will sell $49 music players and $329 personal computers, there is no doubt they will make $149 phones. Samsung has been eating other generic technology makers to survive iPhone, but they are setting themselves up to be brutally killed by iPhone nano because the one thing Samsung has is price.

Depending on the outcome of these experiments Apple may use credit as one strand of a multifaceted approach. I do believe Apple will broaden the iPhone offering but its a complex calculus to find a price point that will swell buyer numbers enough at likely a lower margin to increase profits overall despite some cannibalisation. One should remember that while only having a small overall marketshare apple has something like 75% profit share. Therefore 80% of the non-apple market contains only 25% profits to be pursued and obviously the cheapest phones yield minimal profit. So Apples challenge is to know the price point and margins that will maximise profits for their efforts.

A $299 prepay phone with 12 months interest free credit anyone?

The iPad mini serves as a good example of apple is playing this game. They opted for a higher price than the pundits wanted at a slightly lower margin than the finance community had the stomach for. Well soon find out how the first innings went on that model.

This sure beats coming in with a smaller/different device with a necessarily smaller dock that has to start from scratch. Now the way is already prepared.

Currently Gazelle will purchase my used and even my broken iPhone because, I assume, the components have enough material or “bullion” value. Why shouldn’t Apple offer to take iOS devices in trade? Why hand off to Gazelle all the good will and good business?

More importantly, product recycling is a critical and inevitable policy change. And the first one in will get the bulk of the credit. Does Apple really want Google, Samsung, or Microsoft to grab the brass ring? I’ve put up a petition asking Apple to take the lead and a leap that it is best positioned to succeed at. http://cl.ly/0A302L3Y0c0r

a lot of people want smartphone but if they don’t spend money or use apps
than what is the point of cheap iphone.

But Apple knew how to do a new “concept” at $500.- with the iPad.
Also, we must remember that to get into the low-cost iPod they delivered the iPod shuffle. Do we remember all those pundits that said that a screen-less iPod would not success?

In the same line-of-thought it is possible that Apple gets a “new concept” or “I-do-not-know-what” to get into the pre-paid market.

Some telco executive told the news that Steve Jobs wanted to avoid the telcos.
Could it be possible?

Apple already has FaceTime and iMessages. Could it be a wi-fi phone? (OK, Cisco failed with their own iPhone!)

Could it be a virtual-SIM phone (less cost)? Telcos do not like that.

Or, maybe, Apple shifts the revenue stream to apps. Low cost phone + app purchase may be tempting (although prepaid users are skimpy at paying, they also are more impulse motivated to buy).

Just look for a “new concept.” (Do we remember the iPod+RotatyWheel presented in January 2007?)