Sunday, March 7, 2010

A little bit of unwanted Advice:Part 1

Apple is doing great. The just seam to defy the laws of physics if the physicians were the tech pundits analyzing their every move and especially those making design suggestions on their next generation products.

With this post I might just as well fall into that category. I would not pretend to be predicting the future though just rather make some logical observations.

Apple has proven that traditional smarthphones are obsolete and the whole Market is up for grabs by whoever embraces the iPhone approach and does a good job creating a great user experience. Android has done it to some extend and WP7S are poised to do so as well at the end of this year. Apple is not in danger of being out-inovated but of not delivering its 2007 innovation to people fast enough for it capture dominant market share, the way it did with the App Store.

Apple needs to replicate the success of the App Store into the iPhone. Don't get me wrong, I know the better the App Store, the better the iPhone sales. It's just that Apple managed to create and new type of digital store in such a way as to appeal to majority people in the one area that matters most besides quality: COST!

While the original iPhone had quality to spare, its cost constrained its sales.

Why is it that Apple can sale 1000 times more apps than devices on which they run? Clearly the iPhone is not 1000 times more expensive than its App's....or maybe it is. A lot of people have raized the valid point about the total cost of an iPhone over the two year contract being somewhere in the thousands.

Do you really need to tie people with a 2 years data plan contracts to guarantee that they will spend money on data traffic and bring profits to the carrier? Haven't people by now learned to conveniece of the allways on internet that they are going to purchase trafic themselves anyway?

Maybe, but maybe that's one side benefit to the success of the App Store. It trained people to buy is small parts but all the time. There was never a mountly fee to use the App Store, but boy did people not download stuff all the time?

What it is that I am trying to say here? Where is my point you ask? Well, my point is illustrated by the success of the approach some great App Developers have taken is selling their products ..... for FREE.

Great games and software now come virtually full featured from day one free of charge. But there is nothing like a full featured software from day one. There is always something you want to add or customize your experience or add additional functionality. These small updates cost what now cost the cheapest apps on the App store - 0.99 cents. Affordable to any and no brainer to buy if you have the slightest need to add this functionality to your app.

Apple has the best platform for generating money not just for itself but for its developers by bringing great content to the mass audience at unbelievably low prices. It's a WIN-WIN for every one. The more iPhones Apple deploys the more people can get access to its App store. The more people have access, the more incentive to developers to create better apps and lower prices. The more Apps are sold the greater the profits for Apple too.

The iPhone as a physical device is no longer anything special. It does not have any top of the line component any more. Not even the largest and highest res screen. But it doesn't matter, and it with the platform and its experience already established it probably better stick to its current specs. This should play to enormous financial benefit for apple as it can get ever lower prices on components and lower the manufacturing cost of the product.

Last September, Jobs talked about a the $199 Magic price point. Well it is magic but has a lot more power if its not tied to a 2 year contract. I think Apple are heading in the right direction and the Market underestimates the impact an existing product like the iPhone 3GS could still have if Apple manages to sell it at a new magics price without a contract. The iPad has proven that cellular devices can indeed be sold without a contract for a reasonable price.

So my first advice to Apple that they know themselves: find a way to negotiate with AT&T an 8GB iPhone 3GS for $299 without a contract.

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