Tuesday, September 10, 2013

Tech Time ::: Apple Keynote Day!

Photo: iMore of the Apple Keynote Invite

It's the big day, Apple Keynote day to announce the new iPhones! As I mentioned last week, there's quite a lot of rumored info out there, implying 4 colors of the iPhone5S, and several plastic-cased variants called the 5C.

The biggest question besides "what are they actually releasing, and when, and where" now remains, how will they price the new units, and what are their plans with the older models?

It really all depends what their goal here is, and what is more important to them. To maintain or grow market share as a whole would be the obvious choice, right?  But they have other markets that they need a lot more of a boost in than in the US.  China, for example, where the 5C could really make them a player and give them more of a foothold over the insane proliferation of Android based models, many of which are super cheap off contract--the only way it works over there.  And from the sounds of it, that boost is imminent::: ChinaMobile is going to be carrying the 5C, a huge boon for Apple. 

The U.S. is a different type of market than the rest of the world. Our carriers subsidize the phone, to make them less expensive up-front on your contract and build that price into the service cost, breaking out the difference over the course of your contract. Most other countries do not do that, many are on the pre-paid spectrum, and you're on the hook for the whole nut up front, though with the current influx of new pricing structures intended to get your upgrade in your hands sooner, that might change here as well. I personally don't find the trade off in those programs worth the investment for a faster upgrade. But maybe ask me in another year...

Photo: SonnyDickson

For the 5S, I can actually see them keeping the non-subsidized pricing as it currently stands, and making the subsidized price perhaps higher for those on contract, less of a discount. Current non-subsidized pricing is $649, $749 and $849 with the on contract pricing structure has the pricing set up as $199, $299 and $399, varying by the amount of space the flash memory can hold. I can actually see that increasing to $299, $399 and $499, and crazily addicted nerd people like myself will still shell out the money for the newest and best, because it's the fastest and most beautiful model out there, and seemingly will stay relevant the longest if you're not an annual serial upgrader.

Making the 5C a reasonable price out of a contract, a pricepoint making it worth the upfront in other countries without being ridiculously cheap, is going to be the magic formula. What will be the allure of this device, though? The cute colors? The fact that it's new? What will be the selling point, in the US for example, to lure someone away from their perfectly functional 4 and 4s models into this particular model? You can't just say "well, it's an iPhone, of course people will buy it." Some, maybe, but they have so many variants now that that's kind of a useless pitch. I will be curious to see how they handle that in marketing.  

Videos: Apple's YouTube

So far Apple marketing seems to be handling their generally upscale image and product line and its pricing well, a couple examples above, and really, they don't need to justify the pricing, because in most views, they're really superior products that do last quite a while, and are less disposable than their primary competitors. But this particular unit is less high-end than they typically produce, and purposely so. So how do you sell the "cheap" without calling it cheap?

If I had to speculate on an out of contract price, as the device isn't even "really real" yet, I would guesstimate around $249-$299 mark, leaning toward the $249 point to keep in line more with their current pricing structure, and which isn't unreasonable in the US for an upfront cost (hell, most people pay that on contract!), but outside of the US, namely places like China, that would probably be a significant problem and making it stiffer competition for Apple in those areas, because they're expecting AND used to a lower entry pricepoint. So, by my guesstimation, after subsidizing, that would make it $99 on contract, maybe free?  

Strategy Consultant Benedict Evans breaks down his ideas on pricing here. iMore has their own ideas here.  But to me, the people of China simply want an Apple iPhone bad enough in many cases that they will shell it out, at least that's my theory, and we know that most Americans want the iPhone enough that most upgrade immediately upon the launch of a new model, in fact, there are lines forming outside the NYC store already(???!!)... 

But then, what about the current 5? Or the 4S which is still one of the best selling out there.  Will those stick around? And where would they fit into the structure? Surely the current 5 would not become "free" on contract.  Perhaps that is the middle of the road at $199 on contract? But what about unsubsidized for those not buying on contract?  Maybe the 5 is priced at say $349 or $449 because of it's high end build.

Right now, my guesstimation is this:::
iPhone4S:::  Free on Contract, non-subsidized price $149. (one level of memory, maybe 8G)
iPhone5C:::  $99 on contract, non-subsidized price of $249 (one level of memory, maybe 16G)
iPhone5:::   $199 on contract, non-subsidized price of $349 (one level of memory, maybe 32G)
iPhone5S:::  $299, $399 and $499 on contract, non-subsidized price of $649, $749 and $849. (32G, 64G and 128G)

Another option:::
iPhone4S:::  Free on Contract, non-subsidized price $149. (one level of memory, maybe 8G)
iPhone5C:::  $99 on contract, non-subsidized price of $249 (one level of memory, maybe 16G)
iPhone5:::   $199, $299 and $399 on contract, non-subsidized price of $349, $449, $549 (available in 16G, 32G, 64G)
iPhone5S:::  $299, $399 and $499 on contract, non-subsidized price of $649, $749 and $849. (32G, 64G and 128G)

I realize this is me speculating and being a total nerd about all of this, but it's something I am genuinely curious about, considering this 5C model was intended for emerging markets, and it seems awfully likely that the US falls under that in Apple's mindset, because they haven't gotten enough of the smartphone market stronghold that they need, and it's being chipped away slowly by Android variants.

In the same breath, there's a lot of argument about whether they're "still innovating" and whether or not the higher pricepoint is deserved with that supposed "lack of innovation."  I really don't believe that they're not innovative. They make something that works well, and provide you a ton of locations where their techs can help you if it's not working it's best. I'd personally rather have a stable environment that doesn't have a million bells or whistles that might only work half of the time, vs one that is known to work well and might be less exciting.  Having all these supposedly "innovative" features just means more things can break. And broken does not equal innovation. People, for some reason, are equating innovation with this perception of value, and having something that is consistent and consistently functional is value. This is a phone, afterall. It just needs to make and receive calls, and the rest is gravy.

Now we just have to see what today brings! I will be intently watching along with the liveblogs online. Will anyone else be watching along?

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What do you think?