Saturday, December 6, 2008

Death of the iPhone Nano, long live the The iPhone.

When Apple was selling the first generation iPhone for $499, most
people were convinced Apple was going to introduce a cheaper and
scalled down version of the iPhone so it can expand in all price
ranges. Befere the end of this year, Apple will likely prove them very

The iPhone concept has never been only about inovation into the
device. It has been about giving the people the best device at the
best price.

Apple designed to make a smartphone that anyone can use. That also
meant that everyone should be able to afford it.
The typical smartphone devices made by Nokia for example are little
computers that are complex to operate and could be isefull to a very
small group of tech educated people. These devices are sold unlocked
for huge prices in much fewer numbers than normal phones. This is the
only way to that can be profitable.

What the pundits did not realize it that the iPhone was so
revolutionary that it can be used not only from every one but can also
work with every business model . It's atractiveness was so big.

The first year of it's life, Apple kept the price high to benefit from
it's creation, to irron out the software and to bring down the cost of
the components.
Durring this first year, Apple could not benefit from the iPhone if it
had sold it at low prices. It would have hurt itself more that it
would have gained. The iPhone software could not do so many things.
People would have been frustrated.

Now there is the App store and Apple had an added bonus from the sale
or more phones. Every new iPhone is likely to buy Apps and Apple gets
30% from those. This sum could be even more than the monthly share
they get from the wireeless carrier. Remener. Apple was getting a
persentage from the customers monthly bill. With the iPhone 3G, Apple
got a new agreement in which the carrier paid the full unsubsidized
price when the phone was sold to the customer. Essentially Apple is
now selling unlocked phones to exclusive carriers around the world.
The carriers in return deside the subsidy amount.

During the last few months however Apple has found the iPhone to be a
treasure chest trough the super sucessfull App store. What is
interesting about the iPhone apps is how much band they give for
megabite. The band is certainly in order of magnitude grated than the
movies apple cells trough iTunes.

A movie on iTunes costs $5-$10 and takes more than 700MB in space.
Apple gets just a dollar for every movie they cell. An iPhone App cost
on average $3 and takes 2-3 MB space. However Apple gets a full
dollar out of it. Now do the math which is more profitable data per
megabyte. What is more, you can install almost 150 Applications on the
iPhone and fit them in less than 1GB.

The iPhone now trough the Apps store is something else. The Value is
the App Store app and the iPod App cannot be compared. People needed
large capacities because of the size of their music colection and
movies. But now thanks to some apps, you can listen music for free and
even watch video for free, and I do not mean YouTube.

So, the 4GB capacity, Apple decided to drop is relevant again. Apple
has now the chance to build an iPhone 3G with 4GB of memory at much
lower prices than a year ago. And people will not care about the size
any more.
Because of the App store, flash storage has lost much of its relevance.

Even Apple has helped in this. It has made possible for people to
download podcasts wirelessly.

So, the rumors are now that Apple, AT&T and Wallmart will be selling
an 4GB iPhone 3G for $99 before the year is out.

IPhone 3G at $199 has allready claimed the #1 spot as the best selling
mobile phone in the US. What will the the result be if it sells for $99?
The iPhone sold 4 times as much by lowering the price by half the last
With the iPhone price being slashed by half again and sellIng
locations expanding greatly, Apple can easily cell 8 times as much
iPhone's it sold for the same period last year.

Apple sold 1,6 million iPhone's during Q1 in 2008, so in Q1 2009,
Apple can sell as many as 13 million iPhones.

Again, this is only possible because Apple has made a device that
stays relevant with years and can be sold with long term contracts.
Apple competitors will simply be be uable to offer better value
products untill they have developed an OS and a device that can
chalange the iPhon as a platform, not as a device that beets the
iPhone by specifications.

Sent from my iPhone

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