Tuesday, September 23, 2008

The Futile iPhone Nano wait

Ever since the original iPhone came out, rounors have been floating
around that Apple will one day make a entry level iPhone in the same
way it did with it's iPod line. It did make some sence especially if
you have considered the opiginal price of the iPhone - $599.

However there are some factors which point that Apple may never unveil
such a device but will instead stick with only one model.

Why do people expect for Apple to diversify its iPhone line? What was
the driving force behind the iPhone Mini and the iPhone Nano?
The price of the product is the primary guide for establishing whether
a product is low end <$100, mid range <$200, high end <$400 or Pro
level <$800

The iPhone began as a Pro level device but Apple is now distributing
it at virtually any entry level. From $0 to $800

Most people will immediately point out that this is due to the high
priced data service plans that more than make up for the initial
What these people fail to notice is that services without contract
are even more expensive. The iPhone is a device with a very long life
and signing up for a plan for two years is not so bad when you see how
trough software updates, your phone will be a lot more capable devoce
with time.

Back to the question of the iPhone Nano.
The iPhone as it is at the moment is a result of years if research and
development into the perfect form factor. Scaling it down in size will
immediately impact it's capabilities. The first casualty of making the
screen smaller will be the on screen keyboard. This is an essential
element for most productivity applications.

Steve Jobs defined the iPhone as 3 separate devices combines into 1.
Revolutionary mobile phone, widescreen iPod with touch controls and
breaktrough Internet comunications device. While scaling down the
size may not impact the iPod and the Phone aspect of the device, it
will surely hurt the usability of the Internet.

But making an entry level iPhone does not nessesary mean smaller
device. The magic behind the iPhone has always been the software.
Apple can therefore lower the aquasition cost of the final product by
lowering manufacturing costs and exploring different distribution
models as it is doing now. Last year poeple made it clear that they
would buy an iPhone Nano if it is priced in the iPod Nano range. Apple
delivered a better product than the iPhone at the price level of the
iPod Nano. If only all carriers from around the world adapt the same
prices as AT&T.

Apple is going very strongly about consolidating it's devices, not
diversifying them. The second generation iPhone and IPod Touch have a
lot more in common both in hardware and on the software side.
Apple is puting a tremendous effort in making it's products better and
more affordable at the same time. This will result in sales and
widespread adoption few have expected. Who would not want a premium
product at midrange prices.

There will never be an iPhone Nano. There will be however and full
features iPhone at the price of the iPhone Nano.

It is very likely that the price of the iPhone platform around the
world will continue to drop while it software capabilities continue to

Starting from next year. Apple will be incorporating custom made chips
into it's devices. Made by PA Semi these chips will provide unique
capabilities at low cost and no warning to it's competitors

Apple may even decide to lower its hardware sale margins due to the
huge profits it gets from the App store, this making the iPhone/iPod
Touch even more affordable.

Other companies have build their bussines aroud selling different
types of devices. Ones sold, however there is little more profit to be
expected from them.

Each iPhone not only provides higher initial margins but bring
aditional money to Apple from sales of software trough the App store
and music trough the iTunes store.

There are so many more ways for Apple to increase sales using just one
design. Opening some APIs to developers will allow cutom camera
cimponentsnand phisical keyboards among other things to be attached to
the device via superthin shell cases.

Not only do Apple benefits for having to finetune only two hardware
design and one software pla

All in all a widespread affordable common design allows for much more
capabilities and sales in the long run than a plenora of devices with
different form factors

Sent from my iPhone

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