Apple Needs a True Low-End iPhone to Help Revive Growth | Hacker News Reader

Apple Needs a True Low-End iPhone to Help Revive Growth

bloomberg.com

15 pointsmfiguiere25 comments

This piece of "advice" is how you destroy brand prestige while generating minimal revenue due to decreased margins due to having to manage an entirely new SKU.

For people in developing markets, a smartphone is their primary computing device - the same way a HN reader will pay a premium from a dev MacBook or Dell equivalent, most consumers abroad will do the same for a smartphone. The issue is Apple products can face massive (25-100% on top of base price) tariffs depending on the market.

Apple's iPhone is competing with Samsung Galaxy and OnePlus Ace. Apple has a stronger brand reputation, but it's not worth an additional 25-100% tax hit - you may as well buy a round trip ticket to the US to buy it here (and this is in fact what a lot of foreign customers do).

Apple's current move to offshore outside China will help revive growth, as Apple products face import tariffs in markets like India, Vietnam, Indonesia, South Korea, Brazil, etc due to a lack of local production - this is why Samsung has been building local production in all those countries since the early 2010s in order to minimize tariffs

Base model iPhone 15 sales have already taken off in India now that it is being manufactured in India (and thus is exempt from import tariffs), and the same thing happened in the mid-2010s when Samsung began assembling and manufacturing the premium Galaxy SKUs in India and Vietnam, as well as OnePlus+Huawei in India in the mid-2010s before the Galwan crisis lead to an India-China trade war (most Apple and Samsung assemblers and component vendors in India initially started off as assemblers for Chinese cellphone brands, as India was their primary greenfield market). Similar moves are happening in ASEAN and Latam as well.

> It’s no secret that the pace of iPhone upgrades has slowed in recent years.

Gurman lists various reasons, but I feel like the biggest one by far is that the pace of smartphone development was incredibly exciting from 2007 to like 2017 (the iPhone X). Maybe a little later, but at some point you've got a fantastic camera and a very fast device with a great screen, so why would a normal person upgrade?

I think the cheap iPhone is one valid path, but you could also take the completely opposite direction, go all-in with on-device AI, with tons of RAM, a massively upgraded Neural Engine, etc. Find another big leap forward to offer.

I hope they’re spending significant effort on creating an ai assisted phone. But if they don’t fix speech to text, it’ll be mostly wasted effort

Yeah, I'm still using an 11 Pro. The phone works great, fills all my needs, and I've seen no compelling upgrade reason. $15/mo for service from Mint helps too, I'm no longer seeing a $70/mo bill and thinking that I should be "getting more for my money".

Now that I think about it, it feels exactly like it felt when I paid off my first car. The phone even cost nearly as much as that beater cost me in my youth.

iPhone X for me. Bought in mid-2018, got a new battery in late 2022. I'll probably keep it for another year or two.

The reasons I'll eventually upgrade are:

1. I would like a better camera. iPhone X was before iPhone cameras had good low light performance.

2. The older I get the more I could use a larger screen.

3. It cannot run the latest iOS. There's not much I directly need the latest iOS for. I think there are some passkey things that don't work on mine, but it does have some passkey support, which is mostly good enough currently.

4. I cannot upgrade my Series 4 Apple watch to the latest WatchOS. The latest WatchOS requires iOS 17+. And new watches ship with the latest WatchOS so a phone upgrade will be necessary if I ever want a new watch.

I expect that the next time I get an iPhone its camera will be good enough that "better camera" will never again be a reason for me to update. I think they have reached the point where the cameras are better than any camera I will personally ever need.

I suppose losing iOS updates would compel me to upgrade. If history is a guideline I've got ~2 more years. Not too bad, that brings the daily cost of ownership down to $0.42.

How about they make a new mini. Give me something worth upgrading to.

A new Mini with under-display TouchID

I think they would have to create a separate brand name to make this successful, a la Toyota and Lexus. I can't think of a single product brand that serves both the low end and high end of their customer base successfully. Can you imagine Louis Vuitton using their brand to sell $50 bags? Or McDonalds using theirs to open a fine dining restaurant? Brand and a sense of exclusivity matters a lot as long as your business targets high end products.

Toyota lexus apart, japanese companies love to do that. This is exactly Seiko's motto that are selling almost lookalike watches for 200 (SARX055/057) or 3000USD (Grand Seiko entry level models, that used to be sold under the Seiko brand alone)

Apple doesn't need to grow, what is wrong with people thinking things should grow indefinitely?

I agree with you but thats only acceptable for non-public and non-PE owned firms. Apple is beholden to shareholders like every other public company. Those shareholders will sell en masse and invest elsewhere if they don't see a clear strategy for company growth and therefore, a return on their investment.

Some companies have stable size and nonzero dividends. And that's ok.

And that's ok.

Another way out for Apple is to limit iOS upgrades to newer phones, forcing device upgrades on customers.

I really hope they don’t go down this path.

Or they can just jump in the cloud services. That’s the only thing that’s keeping Amazon out there, and most of Microsoft and Google.

But then again, their cloud would have some weird limitations

I don't really see how Apple differentiates themselves as a cloud provider to make it worth the massive amount of work.

Arm, power, their ai 'neural engine'. What are google, amazon, or microsoft's differentiators?

Apparently it's about 30+100+70=200B arr worth to them, which is worth a few trillion mcap

Apple could probably make it a lot simpler to use. AWS is very complex for the nontechnical. They could also do something like windows 365 and let you rent a Mac in the cloud.

yeah, disagree. IMO for better or worse, Apple's MO has always been establishing a "premium" image aka the Apple tax and letting things trickle down. Specifically targeting low end phones is a race to the bottom and cheapens the brand. It's like when all the luxury brands started making diffusion lines. Maybe great in the short-term but they are all the losers now.

If that's the concern just launch the budget phone line under a different name. Instead of iPhone it is ecoPhone or something.

I don't see a reason why apple would dip into lower range phones since they would cannibalize the iPhone.

But then they would be entering a hugely competitive market with no brand awareness. And we can't assume they easily make a value phone.

Apple ecoPhone sold on the Apple website would have no brand awareness?

Sorry I misunderstood.

I just wish they made a smaller iPhone. Even the last mini is too big.

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