I'll give an explanation so we can get some discussion back into this thread piece (looooong post). The iphone isn't a business device no matter how much Apple may wish it was. Its a chic broad market commodity whose primary user are nerds like myself. Business products generally have longer lifespans and hence their price points generally hold longer since corporations upgrade technology in cycles rather then on impulse. Furthermore, the device you linked is a ATT branded device, which further adds a complication to the way its marketed.

If you want to compare the iphone to anything, then you have to compare to a Razr which actually did have quite a few major price cuts since its introduction. Something on the order of 499 -->399--->199---->99---->free with plan over its roughly 2 year product lifespan. I doubt the Iphone will ever be free with a plan(though it would be awesome if it was), but it will probably follow the same trend over the course of the year and as new models are introduced. Now, Apple can pull an AMD and completely fuck itself, but I doubt it.

The reason the iPhone is amazing to me, and the reason I bought it is because it bridges the gap between a standard phone and a smartphone. Think of it as a smartphone 'model T' that takes an entire market segment: those being PDA phones, and moves it down from the business class / technocrat realm to the reach of all consumers. Now you ask, "but you just said it wasn't a smartphone!" Not quite. I maintain that the iphone isn't a business phone which it really isn't. It has too many quirks and lacks too much utility to replace a RIM device or even windows mobile devices like you just linked.

Now a little background in pricing:

Why do phones drop in price so much? Cell phones are amazingly cheap to manufacture. Disgustingly so actually. They also happen to have a very very finite technical lifespan because companies are constantly able to cram new features and bring them to market really quickly. So quick is the technological pace that I've seen devices hit the market that were already outdated upon release. Because of this pace and the need for profitability, devices are priced to maximize ROI and this means maintaining as large of a margin as possible.

The way margins work on cellphones is tricky. The bean counters have the pricing structure for each project a given company might be working on calculated out throughout a products lifespan. Say my company is releasing a phone in March and that phone is slated to cost $X dollars. Well, I'm a fuckup engineer and my project is late so we release in December instead. Well we just missed our first "window price" so to speak of $x and now have to sell at the cheaper price of $y. Had we released in March, then by december we'd still market at price y$ but the difference is we'd have enjoyed several months of much higher margins and made more money.

What's the point here? Price points are almost always precalculated. They don't magically appear and certainly not for devices that sell well but they're always calculated before the project is even committed too. Apple being new to the market probably got a lot of things initially wrong. Maybe they missed their initial release date and hence we hit the first drop sooner then expected or maybe they figure they can't charge more for a full 3G iPhone then the current Edge model and need to free up a slot in the 599$ bracket. Who knows. I will concede that I personally would have pegged this price drop for November rather then now but overall I'm not particularly surprised. I'm actually feeling pretty vindicated in that even the mighty Steve can't (drastically) change the cellular market.

9/9/2007 1:58:55 PM

Well see, that was a good read. Although, I will say that the Razr didn't drop in price massively for 6 months and after 5 million had been sold. With that said, Apple most definitely had this price point planned well in advance, but like you said, the reason it happened as "soon" as it did was because they had originally planned on releasing the thing sooner than they did. Had they released the iPhone when they originally planned, it wouldn't have seemed so jarring.

Like I said, I really love the product, but knowing Apple's history, I'm sure the next refresh will be the one to fix all of complaints people have had and hopefully add 3G (and fingers crossed, GPS). I'll be first line to buy that phone for $600, if I don't break down and get the HTC TyTn II first.

http://www.htc.com/product/03-product_tytn_II.htm



I think it's gonna end up being branded as the AT&T Tilt, for $499.99 with contract.

[Edited on September 9, 2007 at 3:27 PM. Reason : :]

9/9/2007 3:17:49 PM

Quote :

"figure they can't charge more for a full 3G iPhone then the current Edge model and need to free up a slot in the 599$ bracket"

I think that pretty much sums it up.. I'd gladly pay $600 (even though I paid $500 for the 4gb one already) for one with all those features... that will be the ultimate phone. Well, if they'd make the battery last longer then it'd be even better but you get the idea

9/9/2007 3:32:54 PM

I would say the battery life is very good on the phone... I mean if you only used it as a phone (or even with light browsing), it'd last ages, the thing is most people surf/video/mp3 on this phone quite a bit more than they would/do on any other device. It easily lasts days if you're light on the video/internet stuff.
Ahmet

9/9/2007 4:24:28 PM

^i thought you bought an iphone then returned it?

9/9/2007 4:49:49 PM

I tried it when we got back from Europe, a couple of things annoyed me (crappy email client, no 3g). Went back to a "regular" phone... Then realized how bad other phones were in comparison, got one for my gf. On that day, they dropped the price, and it was worth $400 to me, so I picked one up for myself too. I will probably buy one when they release a 3g phone as well.
Ahmet

9/9/2007 5:58:58 PM

The battery sucks on mine whether I use it for anything beyond phone calls or not. I'm just used to a cheapo phone that the battery would last 4 days on.. It's not bad considering the huge screen though, it has to take a lot to power that thing

9/9/2007 6:01:03 PM

my battery lasts days if i just use phone/text and will last about 2 whole days with moderate internet/video usage.

It lasted leaving from RDU to Egypt with 2 stops (1 in Boston and one in Paris). All in all the trip was exactly 23 hours long. I used the iPhone to watch movies and listen to mp3's. I did not switch it off the whole way (including the take offs and landings) and by the time I reached my house in Cairo i had about 25% battery left. As for movies, I had watched 300 all the way through, the 300 spartans all the way through and 2 episodes of heroes. The rest of the time it was strictly mp3's.


I should add that the brightness was turned down to about 20%. Wifi and bluetooth were both switched off. And in flight it was on airplane mode obviously.

[Edited on September 9, 2007 at 6:22 PM. Reason : fda]

9/9/2007 6:21:55 PM

damn, not bad.. I'll run mine till it's dead starting tomorrow and see how long it goes but I really dont think it'll make over 24 hours

9/9/2007 6:33:32 PM

The honeymoon is over, but I still love this device.

1) Call quality is definitely worse than my past phones (mostly Sony Ericssons). Seems like I drop more calls in more places than before (comes up "Call Failed" on the iPhone). Whats your guys experiences with this...same for you or do you or does it perform same/better than previous phones when it comes to call quality?

2) Safari "crashes" often...I'll be loading a page, then all the sudden the page will close and i'll get booted to the main menu. any idea on what causes this? i am running the latest software version.

9/9/2007 7:00:41 PM

Safari does that for me when loading pages with either a lot of pics or a few really large pics..and more so when using wi-fi than EDGE. As far as dropped calls, mine does some weird shit.. sometimes it'll have full signal and give me the call failed message and sometimes i've gotten calls to go thru when it says no service.. Overall it's about the same as my last phones though as far as where it gets coverage and def isn't any worse. The biggest negative for me is i can't force it to roam on to a particular network. At my parents house a very low cingular/at&t signal but a very strong suncom one. So, usually it stays on at&t which makes it not possible for me to make calls..The unlocked phones have the option of picking a network, I wish I knew they (apple) wouldn't screw me for having it unlocked..but who knows, one day they might

9/9/2007 7:09:41 PM

Say I buy an iPhone this week, activate it with AT&T, beginning my 2 year contract.

Technically, I'm not able to buy a new version of the iPhone within the next 2 years, correct?

At least I know that is how it works with Verizon because of the included 2 year discount.

9/9/2007 7:10:49 PM

Surely there's going to be a way around that...

9/9/2007 8:04:57 PM

i'm guessing, since you aren't getting a discount on the phone with signing a 2 year contract. its just something you have to do to buy the phone at full price and activate, you'll probably be able to upgrade just fine....extending your contract for a further two years or so. There is no way in hell apple didn't figure this out because they know that all the early birds are the ones that will buy each new version with significant changes.

Call quality:

I lose signal in all the same places as my other phones (sony ericsson) around the apex area. Dead spot driving down holly springs right before penny road. and a dead spot at the exact intersection of ten-ten and smith road. I've always had this problem with ATT. However, when i was at a store in cameron village, i was sitting in the back near the changing rooms surfing on edge waiting on someone and one of the store clerks was surprised that i had signal back there. He said nobody can get signal back there because the building is so old or something. So over all its pretty much the same.

[Edited on September 9, 2007 at 8:10 PM. Reason : fda]

9/9/2007 8:08:17 PM

^ Haha, that's true.

All the hardcore iPhone people are gonna be contracted with AT&T for the next decade

9/9/2007 8:14:59 PM

that htc phone looks like absolute horse shit and its a crime on humanity to even compare it to an iphone

if you pay more than 200$ for that piece of shit you're crazy

a fold out keyboard are you kidding me?

9/9/2007 10:35:43 PM

You're right, it isn't comparable to the iPhone. It has 3.5G, GPS, better hardware, and superior mobile application support. Compared to it, the iPhone is a toy. A pretty toy, but a toy nonetheless.

9/9/2007 10:48:12 PM

Try using them both for a week and get back to me, k?

9/9/2007 10:59:15 PM

Quote :

"You're right, it isn't comparable to the iPhone. It has 3.5G, GPS, better hardware, and superior mobile application support. Compared to it, the iPhone is a toy. A pretty toy, but a toy nonetheless. LOOKS LIKE A PIECE CHAN-WAN CRAP. "

9/9/2007 11:46:02 PM

Can someone recommend a program for PC's that would help me organize my contacts? I'm trying to merge my gmail contacts with the phone numbers in my iphone. I tried doing this in outlook, but there's got to be a better way.

9/10/2007 2:01:34 AM

fail

9/10/2007 9:32:56 AM

Quote :

"I tried doing this in outlook, but there's got to be a better way."

Quote :

"i hear theres this program called outlook. check it out."

[fail]

9/10/2007 9:59:03 AM

Quote :

"Can someone recommend a program for PC's that would help me organize my contacts? I'm trying to merge my gmail contacts with the phone numbers in my iphone. I tried doing this in outlook, but there's got to be a better way"

why would you put all your contacts into gmail? You should always use programs like Outlook since your data is portable in Outlook...not so much in gmail.

http://mail.google.com/support/bin/answer.py?hl=en&answer=24911
http://www.askdavetaylor.com/how_do_i_export_my_gmail_contacts.html
http://tinyurl.com/3amjea

But I would export your contacts out of gmail, import them into Outlook, then sync Outlook with your iPhone.

http://email.about.com/od/outlooktips/qt/et031706.htm
http://www.csus.edu/saclink/email/importaddresses.stm
http://tinyurl.com/2pmwsy

Although if you don't have Outlook, you can import them into the Windows Address Book, then sync with that. Start- All Programs-Accessories-Address Book

9/10/2007 10:07:53 AM

I meant that i'm trying to merge peoples emails with their phone numbers. I've got everything imported into outlook but it's all seperated.

9/10/2007 2:38:59 PM

^ oh you're not going to be able to do that. only way to do that is manually...time to start typing.

[Edited on September 10, 2007 at 2:54 PM. Reason : agsdf]

9/10/2007 2:41:45 PM

1 million iPhones sold:

http://news.com.com/8301-10784_3-9774593-7.html?part=rss&subj=news&tag=2547-1_3-0-5

9/10/2007 5:15:42 PM

In Reply to SandSanta's post up top

Quote :

"If you want to compare the iphone to anything, then you have to compare to a Razr which actually did have quite a few major price cuts since its introduction. Something on the order of 499 -->399--->199---->99---->free with plan over its roughly 2 year product lifespan. I doubt the Iphone will ever be free with a plan(though it would be awesome if it was), but it will probably follow the same trend over the course of the year and as new models are introduced."

I understand the general point you are making and you are absolutely correct in your numbers, but you are not correct in your reasoning and justifications.


For those who think a 33% drop in 2 months is crazy, check out the RAZR V3 price history (which, incidentally, is almost exactly the same for every other cell phone price curve.

Quote :

"They also happen to have a very very finite technical lifespan because companies are constantly able to cram new features and bring them to market really quickly."

Its not about being able to cram in new features for Apple, this is where the flow breaks from the Cellular industry. Apple packs in the right features to sell it's generation. It's entire business model is based on planned obsolescence, whereas most cellular manufacturers build on iterative innovation. Basically Apple makes a base platform and then refines it as long as possible. Traditional manufacturers make a does-everything platform and then repackage it as long as possible.

This makes for a HUGE difference in market timing, sales windows and price-points. I completely agree with you that the iPhone will see the same basic slope of price, but it's not going to be in the same time-lines or the pre-determined models of traditional phones. Apple needs to make sure they hit VOLUME, not REVENUE numbers for V1 of the iPhone. They need to quickly grab dominant market position in order to justify their higher mean price against competitive products.

Quote :

"Why do phones drop in price so much? Cell phones are amazingly cheap to manufacture. Disgustingly so actually. "

This has also been a fundamental shift with Apple, versus the traditional industry. We won't know until Apple releases their numbers at the end of the year, but I suspect that, like all of their other hardware products, Apple's margins will be well below that of their competitors, relying on volume over unit price. A quick look at the component structure of the phone versus even high-end smart phones shows a significantly higher cost part list, and one that has far less room for volume price reduction than past products.

The other HUGE problem Apple has is it's own internal SKU competition. In order for the iPhone to drop below the magical $199 price-point, it's going to have to phase out the iPod touch and likely the iPod classic as well. It will be interesting to see how this is handled in the next year or two, because it's not a situation that's really has a historical precedent.

[Edited on September 10, 2007 at 5:54 PM. Reason : .]

9/10/2007 5:52:34 PM

Its like Microsoft's debut with the Xbox. New to the market, HUGE success.

Apples already got the huge success from the iPhone so future iPhone's can only get better and more popular (hopefully). I just hope they don't water it down to make more affordable ones.

9/10/2007 6:00:38 PM

^no doubt they'll be successful

RAZR - 50 million units
Nokia 1100 - 200 million units
Ipod - 110 million units

http://en.wikipedia.org/wiki/Motorola_RAZR

forgot they started at $500/$800 when the RAZR first came out

[Edited on September 10, 2007 at 6:15 PM. Reason : .]

9/10/2007 6:07:01 PM

^^The xbox was not a huge success. They barely broke even on the entire life-cycle.

The iPhone is hardly a runaway success either. Neither financially or from a market perspective. Unless Apple can garner the magical double-digit market-share, it's not going to keep them afloat as the iPod declines in prominence. It's got fairly lackluster sales trending, and a very murky future in terms of price points, market segments and life-span.

9/10/2007 6:24:47 PM

True, but look at the Xbox following and loyal fans they have now...not to mention all the development companies making A+ games for the past Xbox and the Xbox360. I would hardly call it anything but a success, especially it being the first time Microsoft gets into the Console market. Which with Sony and Nintendo would seem really tough to get into. Realistically, Microsoft probably didn't see the actual console turning over a huge profit. The money isn't really in that anyway.

Apple doesn't have it any easier...all they had on their side was a strong iPod following.

Another problem with apple is AT&T. Not that i'm complaining that its a GSM only phone. But too many people have problems with AT&T that no matter how good the iPhone is, they aren't going to risk switching to a under-par provider. But i'd be willing to bet that internationally, the iPhone will have a enormous success. From a personal point of view. Every single random person that saw my iPhone on the beach in Egypt was asking relatives to buy it from Dubai, unfortunately for them its not available there yet. What really surprised me were the older generations. I'm talking my parents and grand parents age that saw the phone. I even let them use the phone and to my surprise they had no trouble getting around it. (and no these aren't relatives or even people i know).

As far as price, non of them objected because they already pay that much and more for phones. In Egypt you buy your line not a contract....its very similar to land-lines so you don't ever pay for incoming calls.

The down side, it was annoying by the end of my stay, the news that someone on the beach had an iPhone so of course everyone had to get a look at it....quite annoying.


[Edited on September 11, 2007 at 11:16 PM. Reason : q]

9/10/2007 6:31:59 PM

Quote :

"True, but look at the Xbox following and loyal fans they have now...not to mention all the development companies making A+ games for the past Xbox and the Xbox360."

unfortunately this has absolutely no correlation to economic success. and if you can't make money, you can't make products. Microsoft could ONLY pull off the Xbox because they have HUGE pockets financially. They look at the xbox platform as an extremely long-term investment to build their platform dominance.

i can point you to thousands of products that have rabid loyalty and support, who's companies failed quickly because they couldn't make the product profitable.

9/10/2007 6:52:08 PM

Quote :

"Another problem with apple is AT&T. Not that i'm complaining that its a GSM only phone. But too many people have problems with AT&T that no matter how good the iPhone is, they aren't going to risk switching to a under-par provider."

exactly why i'd rather have an ipod touch and keep my RAZR w/ Verizon

9/10/2007 7:04:19 PM

Quote :

"unfortunately this has absolutely no correlation to economic success. and if you can't make money, you can't make products. Microsoft could ONLY pull off the Xbox because they have HUGE pockets financially. They look at the xbox platform as an extremely long-term investment to build their platform dominance. i can point you to thousands of products that have rabid loyalty and support, who's companies failed quickly because they couldn't make the product profitable."

Well thats the point i was trying to make...but left the 'deep pockets' part out by accident. What i was saying is the console is a huge success because they'll be making the money off of software not necessarily off of the console itself. Of course with the 360, $1 billion is a pretty huge set back....but like you said, Microsoft has deep pockets. And between the true next gen systems (ps3 and xbox360) i'd say the xbox turned the tables in Microsoft's favor for future developments.

9/10/2007 7:40:48 PM

^um, i dont think you understand. microsoft broke even with the xbox as a whole. including all the licensing. their ROI on the 360 is like 5 years minimum. it's the same principals that have Ford selling cars at a loss.

9/11/2007 2:36:30 AM

one thing i've noticed about safari on the iphone is it only downloads webpages while the page is open. so if you try to load a large webpage, and you know its gonna take a while (since edge sucks), you can't play with the iPod functionality or look at another page since it only loads while the page is open I assume theres nothing you can do about this right?

9/11/2007 11:14:02 AM

nah, same here.. haven't found a way around it

9/11/2007 11:26:45 AM

I just noticed on mine that when it's sitting on the dock I get a full 5 bars where I usually get 1-2 at most at my current location. I take it off the dock and it goes back to 1.. put it on the dock, back up to 5. Even with just the dock and no cable at all attached to it this happens... Guess I found a way to get a good signal here at least Any idea why beyond the obvious answer of an external antenna of some sort in the dock?

9/11/2007 9:25:57 PM

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9/11/2007 9:31:52 PM

i wish i could see the rest of this page

thanks for fucking up your ninja edit Golovko

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