Pricing-seriously

[PDR447]

(let me preface everything by saying use a mac and I like this phone, I'm not simply "hating" on apple)

ok so I've been thinking about pricing and I seriously think that apple priced themselves to high. lets look at the two most likely groups of buyers:

1. Smartphone owners who want an ipod

2. Ipod owners who want a smartphone

Both of these groups have already invested a decent chunk of change into "half" of what an iPhone is.

Group 1 will look at the iPhone like: "It's nice, but I just spent $X00 on my phone so why should I buy another. I think I'll just get an ipod."

Group 2 will be much the same just reversed: "It's nice, but I just spent $X00 on my ipod so why should I buy another. I think I'll just get a smartphone."

What (i believe) they should have done is priced it at the price of an ipod or smartphone(instead of combining like you see in the keynote). basically they could market it as an ipod with phone capabilities/phone with ipod capabilities. 80gb ipod/treo750= $350-$400. This is where it(at least the 4gb one) should have been priced. This is still a rip off if you're looking at it as an ipod since you get an 80gb ipod for $350 vs. a 4gb iphone for $400. Anyways, at this price point you would see the two groups behave like this:

Group 1: "It's nice and I just spent $X00 on my phone, but it's the same price as an ipod so why not."

Group 2: "It's nice and I just spent $X00 on my ipod, but it's the same price as a smartphone so why not."

Of course the $400 price would be the subsidized/contract price. Either way this would greatly help apple gain a foothold in the market. And they could always release a 3g version of it later at the premium price they are currently asking.

Oh and I have to mention the third group which will be the hardest to get to buy this phone: People like myself who already have invested in a smartphone and ipod(in my case 2 ipods). These people need to "trash" TWO devices/investments making the high price of the iPhone a VERY hard pill to swallow!

Your thoughts?

***my "analysis" excludes the people that are "gadget freaks". These people(you could probably include me here, yes I will probably buy the iPhone) would buy the iPhone at pretty much any price. My analysis is more a representation of the "average" consumer.

 

[mrjoec]

Both of these groups have already invested a decent chunk of change into "half" of what an iPhone is.

I disagree. iPod is not HALF of what iPhone is. It's a third or one quarter of what iPhone is.

You're also not taking into account how valuable having both a smartphone and an iPod in one device is. iPhone is better than the sum of its parts, so to speak.

Add to that the user interface of iPhone, which, even without the iPod capability, is worth more than a Treo 680.

I think the average smart phone and iPod user will think, "Hey. I can ebay my smart phone and my iPod to get within $100 of iPhone, so why not?"

Let's face it, though. There just aren't a lot of current smart phone users out there. Apple's main audience will be people who thought about a smart phone once or twice but gave up on the idea when they realized how hard to use and geeky smart phones are. They'll think about how cool their iPods are, and they'll assume that getting an iPhone will multiply their cool yet again.

From a business perspective, the hi-res touch screen alone makes your pricing unrealistic. Apple would have to sell them at a loss, as Microsoft is doing with the Zune. And we all know how well that strategy is working out so far.

 

[Pearl_Diva]

Honestly, IMO I think $500-$600 is too high also. At least to attract enough mass customers. People who like high-end phones and have money will get it. People looking for value(majority of Americans) may hold off. $500 with a 2 yr. contract is not the norm in the US. People are used to paying less with a contract.

 

[fly888]

Jobs said they want 1% of the global mobile market which makes me think that they know what they're doing. Generally speaking Americans are cheap with their phones. I read an article somewhere about it having to do with youth spending power but I'm no expert on the subject. The big market for this device will be in Europe & Asia (unicode anyone?).

Most of my peer group usually spends US$400 - US$700 on their handsets every 18 months or so. I've spent up to US$1k on my handset & would do so for the iPhone, once it's got some software and is proven to be stable.

But if they want 1% of the US market I completely agree with PDR447 that they've made a mistake.

 

[Advance The Man]

Does Cingular offer unlimited data like Sprint does?

The 700P started at $649, $499 with a 2 year contract. I just got mine for $250 thru retentions and a 2yr contract renewal.

I don't see the iPhone prices staying at $599 with a two year contract -- especially when people see Cingular's data prices which are $360 higher per year than Sprint.

Competition is good, variety is good. The iPhone will move the smartphone (mobile computing device) market forward. No device is EVERYBODY's dream machine. Each offering will have it's plusses and minusses. Everyone will pick their best fit.

Cheers, Perry.

 

[whatever7]

If Apple can make Palm or Samsung release a similar product (with a crappier UI) that's 200 cheaper - all the better.

 

[Pearl_Diva]

I'd like to see a WM device like this. And we all know MSFT is a big copycat. Don't count on Palm doing much though. They like their form factor too much. Getting wifi is like pulling teeth from them also.

 

[maninrochester]

If the iPhone kills the TREO it will be at Palm's own hand. I love my Treo, I hate the resets, the time it takes to switch between apps, the bluetooth issues, the display is too small and I can't multi-task. If Palm pays some attention to its base it can be very competitive with Apple.

 

[PSB22]

Based on the 8GB memory alone, and the fact it has no SD slot (and even if it did you can bet the iPod functionality only works with the built-in memory), I don't think this is a "sum-greater-than-parts" device.

An 8GB nanon can be had for $220 on-line. A Treo 680 can be had for next to nothing. Together this combo offers all the functionality of the iphone AND the option for expandability. I think the killer for Apple will be the 3rd party software. If its limited to a bunch of small app's released by appple only, then it will tank.