The iPhone's Greatest Weakness

[Ohwhatda]

Don't get me wrong, I love the iPhone. But the number one thing wrong with it is the PRICE.

First of all, AT&T is requiring that you sign up for a two year contract yet the rumor is that they aren't even subsidizing the phone. How does that make any sense, if the iPhone was subsidized it would bring it down from the astronomical $500-600 to a more reasonable $300-400. Believe it or not, that $200 price difference would open up the product to a whole lot more buyers. And why would AT&T subsidize every other phone, offer great deals like a RAZR for $25, and then leave the iPhone out in the cold? It just doesn't make sense to me, either some other big announcement is going to be made regarding some kind of discount or rebate with the 2 year contract, or I'm afraid the iPhone is going to be introduced with a fizzle.

Believe me, I know there's definitely some demand out there for the iPhone because it's a revolutionary product, but correct me if I'm wrong but isn't Steve Jobs trying to sell as many phones as possible? The $500-600 price point seems to be acceptable to only the most zealous Apple fans or those in fairly high tax brackets. Ask any average consumer... while they may be very impressed with the iPhone their response will probably be along the lines of "I'm not going to spend 600 bucks for a phone."

Now some of you might say, well it's the price of a Video iPod and a PDA and a Phone rolled into one. That may be true, but Apple is marketing the product as a PHONE. It's not called the iTouchScreenVideoiPodWithPhoneCapabilities. They're targetting the cell phone market, the same market that gives away brand new camera phones when someone signs a contract. So when anyone goes to sign up with AT&T their options will be: Get a RAZR for $25, or get an iPhone for $600. While the iPhone is the greatest phone ever made, the second greatest is ONLY $575 cheaper.

This post isn't about how the iPhone isn't a great product, it's about how if Apple doesn't do something to the price, then the product just isn't going to take off. Right now it's luxury product, and while those products gain a ton of hype, unless their priced right it's like trying to sell a Lamborghini... you're only going to get a handful of buyers even though everyone really wants one.

 

[rdowns]

Most of these people complained about the price. How'd that work out?

Regarding price, in survey after survey, when buyers are asked what they consider about buying a product, price always falls at number 5 or 6 on the list.

 

[infobhan]

While many people are not used to spending this kind of money on a phone, Apple has done their research and I think you will be surprised how many of these are sold.

 

[skubish]

Most of these people complained about the price. How'd that work out?

Regarding price, in survey after survey, when buyers are asked what they consider about buying a product, price always falls at number 5 or 6 on the list.

That is such garbage.
I believe that surveys say that but price is almost always number 1.
For example, if a product launch at a price of $500 or $10,000 price is definitely a major factor. People who take these surveys are just stupid.

PS: I think the iPhone price is fine.

 

[fishkorp]

i believe the RAZR was $399 subsidized when it first came out and lots of people still bought them. Apple isn't looking for everyone to have an iPhone in their pocket. their goal is 10m phones by the end of '08 right? 1% of the worldwide market? that's easily attainable with a $500/600 device. it's not marketed toward everyone. if you look at what you're getting for the money, i think it's worth every penny. anyone that thinks otherwise obviously doesn't need all the features.

 

[slffl]

You're right. The iPhone will fail because of the price. Much like the RAZR failed because of it's price ($500 at launch).

BTW, I live in Bizarro World, so forgive me if I misuse some words.

 

[chrisgeleven]

Some people make it seem like this is the one and only version of the iPhone. No revisions ever. No price changes ever. The iPhone will be forever frozen in time the second the first one comes off the assembly line.

Relax, wait and see. I bet before long (as the technology is perfected, the manufacturing costs drop, etc.), there will be a bunch of iPhone models at various price points.

 

[Gonzlobo]

i believe the RAZR was $399 subsidized when it first came out and lots of people still bought them. Apple isn't looking for everyone to have an iPhone in their pocket. their goal is 10m phones by the end of '08 right? 1% of the worldwide market? that's easily attainable with a $500/600 device. it's not marketed toward everyone. if you look at what you're getting for the money, i think it's worth every penny. anyone that thinks otherwise obviously doesn't need all the features.

Trust me, if the stockholders could sell 1 iphone to every human on earth, they'd be elated.

As an open-source PC guy, I think the close-source closed-platform idea limits the iphone too, but they're still going to sell a lot of phones.

 

[Cleverboy]

This post isn't about how the iPhone isn't a great product, it's about how if Apple doesn't do something to the price, then the product just isn't going to take off. Right now it's luxury product, and while those products gain a ton of hype, unless their priced right it's like trying to sell a Lamborghini... you're only going to get a handful of buyers even though everyone really wants one.

It's pretty much decided that this product will take off. If pricing were a huge mistake, then nearly no one would be talking about it. Until the iPhone started elevating pricing expectations, not many in the mainstream were talking about the Nokia N95 either. Nokia is right to say that this knock-on effect is real, given all the positive interest for iPhone.

Previously, over $500 for a phone? Crazy talk. But, now that people have come to the table, its a totally different story. I think the Apple exec had it right when he remarked earlier, "You get what you pay for." Wi-Fi is a premium feature. I can gaurantee that you WILL NOT see this feature on a sub-$400 cellphone. Even Helio's much touted Ocean omits the feature, only to begin cutting its customers off from "free" YouTube access over EV-DO.

So, it seems like the "price" is more about 2 HIGHLY important things. PERCEIVED VALUE and CUSTOMER EDUCATION.

A couple of years ago, I paid $275 for the phone I have now. I feel its a piece of crap (now and not long after getting it), and I regret not feeling I had many choices when my old phone began malfunctioning. I would have GLADLY paid $500-$600 for an iPhone, knowing what I'd be getting. I remember looking at the Sidekicks and thinking that they looked like lipstick on a mouse. WHY couldn't someone just give me a SOLID phone with NO "gotchas"? I'll pay! Nearly ALL of the subsidized phones on the market ship with under 256k of memory/storage. Getting yourself to even a total of 4GB could only be a small amount of money, or it could be impossible. The devil is in the details.

There is an ongoing perception that the iPhone is "overpriced". Submitted for your agreement... the iPhone is "right priced". Not everyone can afford everything, but it WILL come down in time. Over-priced phones currently on the market include the HTC Touch (which is allegedly said NOT to be an iPhone competitor) and the LG Prada. Both of these phones are woefully outmatched compared to the iPhone, and they COST MORE for LESS.

• HTC Touch ($500+) - Mm, Steak
• LG Prada ($700+) - Walk through

Long and short, both are horribly sluggish, and seem like kludges yet they wouldn't be priced that way if pricing were a problem. Phone companies use phone pricing to jerk people around. They mask the true price when incentivising people to come over, but if they don't care about you, you're stuck paying full price. When quoting things like the Razr at $50, always watch the "with new activation" caveat. That price isn't for EVERYONE, just new customers and otherwise qualifying ones.

If nothing else, consider the old anecdote about Martha Stewart. She'd sold cookies for a good price, and didn't get much business until she raised prices, establishing a perceived VALUE for her customers. If the iPhone were priced at $50, I'm sure it would do even better, but it would likely be a disaster of epic proportions. Like anything significantly new, let them bring it out high, and gradually lower the price as production efficiencies catch up and any systematic problems are addressed on the large scale.

~ CB

 

[lilnyc]

You make a good point. Although the price is not an issue to ME, I went to a non-tech community website and asked who's getting the iPhone. No one who responded was getting one. Few if any of them noted reasons like the lack of features, simply the price.

 

[lilnyc]

i believe the RAZR was $399 subsidized when it first came out and lots of people still bought them. Apple isn't looking for everyone to have an iPhone in their pocket. their goal is 10m phones by the end of '08 right? 1% of the worldwide market? that's easily attainable with a $500/600 device. it's not marketed toward everyone. if you look at what you're getting for the money, i think it's worth every penny. anyone that thinks otherwise obviously doesn't need all the features.

The Razr came out at $700 unlocked. I paid $500 with a 2-year Cingular contract.

 

[elppa]

My thoughts are this.

You get what you pay for, and then some.

Maybe a possible future iPhone nano type device with a smaller price tag and feature set may be more suited to your needs?

 

[Cards1]

I paid $499 for the RAZR the day after it came out. I did not mind paying that price because it gave me something that no other phone gave me back then: the ability to put the phone in my pocket. I just hate having something clipped on my belt or a huge bulge (at least on the side of my pants--HA!) on my pockets. Also, I knew when I used the RAZR, people would want to see it and there is something to be said there as well.

With the iPhone, the coolest part of it for me is the iPod features built in. Music, video, and podcasts that I can listen to at any time without having to carry an iPod AND a phone. Carrying one device is the biggest plus for me. Also, not to mention the coolness factor....

 

[elg23]

Most of these people complained about the price. How'd that work out?

Regarding price, in survey after survey, when buyers are asked what they consider about buying a product, price always falls at number 5 or 6 on the list.

HAHAA... i never read that thread.. that sounds like people in these threads.. complaining it sucks and its too expensive.. and look how the ipod turned out.. hahh. thats awesome.. if people only knew the ipod would sell 100 million

 

[pherplexed]

the price is right

i've been scratching my head wondering why so many people are bitching about the price of this thing. I paid $450 for my treo 2 years ago (subsidized), and then last year paid $350 for my Q (after $100 rebate). The iPhone is not going to cost the same as a regular phone, it's a freakin smart phone.

i know apple is avoiding the term 'smart phone', but for all intents and comparisons...it's a smart phone. And smart phones cost a lot more than regular cell phones. The $599 price tag is steep, but not outrageous for a device like this.

 

[ShellyFM]

Remember, it's a video iPod, too. So, it's even worth more than the Nanos since the Nanos don't play widescreen video.

Subject the arbitrary cost of that when deciding the true value of the iPhone.

 

[magicjames92]

ROFLMAO It will probably get cheaper, the razr came out at $800

 

[TenaciousPZ]

That is such garbage.
I believe that surveys say that but price is almost always number 1.

You are wrong, completely and totally. Do you work in marketing? I do. Price truly does not matter to people. When all aspects are equal, price matters. But when the anti is up, (and "want" is through the roof) a carefully crafted price can work on people.

 

[TenaciousPZ]

I agree with most of you in this thread. The price steep, but not outrageous or unreasonable. Certainly justifiable at the very least. Not the most over priced "thing" to ever hit the market either, not even in recent years. Remember the price of Apple 20" displays....and that did one thing.

 

[Cards1]

You are wrong, completely and totally. Do you work in marketing? I do. Price truly does not matter to people. When all aspects are equal, price matters. But when the anti is, (and "want" is through the roof) a carefully crafted price can work on people.

You are right. Especially when people go from a want to a NEED. Now, I know that nobody absolutely NEEDS this phone. But in many people's eyes, they do need this. Apple is driving this phone to new marketing levels by giving bits and pieces of additional info about the phone in the days preceding this release. Brilliant move. Here is the bottom line: people have justified why they need this phone in their own mind. Once you have done that from a marketing standpoint, you are golden.

Consider this: Apple is releasing this phone with no 3G, GPS, etc. They are holding this back on purpose because in this version 1 release it is being called revolutionary. Next version will have 3G. Then GPS. It will go on and on. Don't believe me? Look at the iPod versions. They will give all of us a reason to upgrade to V2, V3, etc.

 

[rdowns]

That is such garbage.
I believe that surveys say that but price is almost always number 1.
For example, if a product launch at a price of $500 or $10,000 price is definitely a major factor. People who take these surveys are just stupid.

PS: I think the iPhone price is fine.

Really, are you a marketing person? I am and run the $20 million web division of my company so I think I know a thing or two about consumer behavior and buying attitudes. Price is the only issue when products are commodities. The iPhone is hardly a commodity item.

 

[TenaciousPZ]

HAHAA... i never read that thread.. that sounds like people in these threads.. complaining it sucks and its too expensive.. and look how the ipod turned out.. hahh. thats awesome.. if people only knew the ipod would sell 100 million

Does anyone know if that 100 million number is a world-wide number and what the U.S. percentage is?

 

[TenaciousPZ]

Consider this: Apple is releasing this phone with no 3G, GPS, etc. They are holding this back on purpose because in this version 1 release it is being called revolutionary. Next version will have 3G. Then GPS. It will go on and on. Don't believe me? Look at the iPod versions. They will give all of us a reason to upgrade to V2, V3, etc.

See I really really really don't think so.

You can't ignore some of the facts about the iPhone that make this highly unlikely..that we'll see a 3G and GPS phone anytime soon.

#1. The phone as WiFi. Depending on who you are and where you spend most of your time, WiFi can be something thats readily available, almost always. You will spend A LOT of time on WiFi with your iPhone. EDGE will fill in nicely when not on wifi, such as out on the road. Its really not that slow, its just not as fast as 3G. Plus, I personally would rather have full coverage just about everywhere (EDGE) than be part of a service that is strong in some places and weak or non-existent in others (3 G).

#2. GPS. Clearly not needed. Google Maps with integrated functions for directions, turn by turn, with Traffic. You don't need GPS. If you don't know where you are to begin with... you're an idiot.

 

[Uptown710]

To some, this is nothing new...

I find that the people who lament about the price of the iphone are of the "casual" bracket of cell phone users. Most people who start exploring the world of cell phones know that when a new device is released, that device is pretty pricey when you buy it unsubsidized. The funny thing is, i paid just as much for my w900i when it was released (I think it was about 670 after taxes and all). You think the iPhone is expensive? Just like someone posted, you should see how much the Q cost, unsubsidized. I remember when moto did the star-tac anniversary deal. That phone was about 1200. I am quite pleased that the Iphone cost as much as it does. Plus maybe this will get the ball rolling on companies releasing unsubsidized phones to the US.

 

[Cleverboy]

Consider this: Apple is releasing this phone with no 3G, GPS, etc. They are holding this back on purpose because in this version 1 release it is being called revolutionary. Next version will have 3G. Then GPS. It will go on and on. Don't believe me? Look at the iPod versions. They will give all of us a reason to upgrade to V2, V3, etc.

Unlike other people, I do NOT believe that Apple is "holding back" anything. I think there are more factors at work than people credit them for dealing with. I LOT of thought and intention has gone into this phone. To imply they're "holding back" features like 3G, GPS, and/or a large megapixel camera, etc... to me is crazy talk. More so than running this as an out-and-out "feature" war, Apple has decidedly thought "outside the box" on what this needs to do. Prediction: People will play catch-up on whether they chose wisely.

Palm was caught saying as a new entrant into the mobile phone industry, Apple lacked all the trial-and-error Palm had accrued over years. They are releasing at EXACTLY the right time. If they delayed another 4-6 months in order to get these other things in, and who knows what else, I think we'd be getting a half-baked product. As it stands, some people still say this was "rush-to-market". On the contrary, I think this is the definition of intention, and knowing what things to take on first.

~ CB