Comment by guiambros | Hacker News Reader

Comment by guiambros | Hacker News Reader

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But Nexus 4 is not an iPhone. No trolling.

The "flagship" iPhone (5) costs between $650-850 + tax. The "non-flagship" is a couple of hundred bucks less, which is reasonable. Apple charges more, simply because they can.

I'm not making a judgement call here. I personally wouldn't pay that much, but I'm not the target. In fact, I don't think any individual person is the target of non-flagship devices for Apple; their strategy has always been to sell locked devices to carriers in bulk, so they can offer "for free" to customers upgrading from a dumb phone -- in exchange of a 2 yr agreement, ETFs, and an outrageously expensive data plan.

That's essentially my reading of Tim Cook's answer in the link above. If they can charge what they charge, why change?

Of course this strategy won't work forever. Eventually they will have to migrate to a portfolio strategy, OR enter the race to the bottom with Samsung, HTC, et al (unlikely).

The only question is when.

"But Nexus 4 is not an iPhone. No trolling."

Complete straw man. This sub-thread is about the price of non-flagship iphones vs alternatives in Russia. I provided two such prices for comparison.

"The "non-flagship" is a couple of hundred bucks less, which is reasonable."

You seem to be under the misconception that I am complaining that the iphone 4 is overpriced. Let me disabuse you of that notion: zonk

"Apple charges more, simply because they can."

Apple charges profit maximizing prices but due to secondary market realities it cannot charge radically different prices in different countries.

One way of looking at the smartphone market is that there are <$100 smartphones, $100-$200 smartphones, $200-$300 smartphones, $300-$400 smartphones, $400-$500 smartphones, $500-$600 smartphones and >$600 smartphones (some overlap yes).

We might observe Android has entries in all of these categories but that Apple has chosen, for profit maximization, focus, brand, whatever reasons not to participate in 4 of those 7 categories as of today. We could use fewer or more categories but the same basic truth will remain: Apple does not compete at the low end of the market.

Another observation is that for many countries, of which Russia may be one, the majority of smartphone consumers don't buy from the top 3 categories that Apple participates in. Regardless of how you structure the categories, some markets cater toward the low or lower-middle end that Apple doesn't participate in.

>> "But Nexus 4 is not an iPhone. No trolling."

> "Complete straw man."

Not at all. As I said, Apple does have a non-flagship device. Still, this doesn't mean they are participating in the race to the bottom. The same profit maximizing strategy still in full force, flagship or not. Good luck trying to make the same strategy work for Samsung. Or Nokia. Or SE.

(side note: do not confuse profit maximizing strategy with having models at all price bands. That's what the CE and personal computer industry did for the past 20 years. How's that working for Sony, Dell, HP, Nokia...?)

Yes, $400-800 is a steep price to pay upfront, in any country. That's why it works in heavy subsidized markets (like the US).

On the flip side, this doesn't work well in markets that 1) don't have a large middle/upper class population with high disposable income (to afford the outrageously expensive data plans), AND 2) don't have a strong culture of carrier subsidy.

That's exactly Apple's problem in Russia. Or India. And - just to stay with BRIC markets - the situation is slightly better in Brazil only because the heavy culture of subsidy and the recent growth of middle class, but import tax is what is/was killing them. (solution? Just open a fraking factory there [1]).

> ...the majority of smartphone consumers don't buy from the top 3 categories that Apple participates in.

And who said that volume is the goal? If your ultimate objective is profit - and why wouldn't it be? That's always your ultimate obligation with shareholders - volume alone is pointless [2].

Unless, of course, your very long-term profit maximizing strategy is to dominate market at the bottom, and then jack up prices so you can finally make some profit to compensate years of eating sand. There are very few industries (like retail, with Walmart and Amazon) where this can be done. Mobile manufacturing is likely not one of them (case in point: Huawei and ZTE eating Samsung's bottom).

The only threat for Apple is a global movement towards ending carrier subsidy, so consumers would have to finally pay full price for their devices.

But that seems unlikely. Consumers still don't know how to do math.

[1] http://online.wsj.com/article/SB1000087239639044416580457800...

[2] http://www.asymco.com/2012/05/03/the-phone-market-in-2012-a-...

I think you're arguing a point no one made. This entire subthread is just about why the iPhone does not do well in the Russian market. And so far, everyone agrees it's because the full cost of the iPhone is more expensive than the alternatives.

>>But Nexus 4 is not an iPhone.

You might appreciate this: https://www.youtube.com/watch?v=FL7yD-0pqZg

NSFW ( or as NSFW as foul mouthed teddy bears can be )

This never gets old :)

He's not trolling. He's just saying that the non-flagship iPhone is still expensive compared to new Android phones. Which explains Apple's poor performance in a market which forces consumers to pay the actual price.

Apple's poor performance ? You do realise that Apple siphons the majority of the profit from the market and on every metric (except market share) is doing extremely well.

If you want to see examples of poor performance then take a look at the Android ecosystem. It consists of effectively one player: Samsung and a bunch of other companies whom are either exiting or perilously close to bankruptcy.

>poor performance in a market which forces consumers to pay the actual price

The Russian market, not the market in general.

It seems the price point is your only criteria for a 'flagship' phone. N4 beats iPhone x handily, with half the price.

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