New iPhone: the ‘S’ is for ‘suckers’

Going downmarket is the only way Apple will dominate the phone market

In their hearts, even the faithful know it: every iPhone since iPhone 1 has been treading water.  

A mobile phone that lets you surf the Internet, take pictures and check your email—that’s 95 per cent of the value. Everything else is gilding the lily.

Sure, GPS added some functionality and 3G provided a welcome speed bump. Though nobody uses it much, a video camera can be nice to have. But slimmer width, higher res, longer battery life, faster processor—these are the predictable, incremental improvements all consumer electronics undergo. Slap a new shell on it, change the colour, market the hell out of it, and perhaps folks will be convinced to ditch the pricey, still-functioning gadget you made them want so badly just a short time ago.

Eventually, people figure out that the differences are minor, and only the most insecure, status-obsessed early adopters will keep taking the bait. At that point, there’s only one place to go: downmarket. In Apple’s case, downmarket is most of the market.

For all of Apple’s dominance in mindshare, iPhones comprise just 5% of the cellphones in the world. While we in North America have been squealing with glee for an extra camera on our phone, Second and Third World nations have been experiencing true technological transformation through cheap, rugged phones like this, the world’s most popular handset. For millions, the homely Nokia 1100 isn’t just their first cellphone—it’s their first phone.

All phones will eventually be smartphones, and Apple wants to sell most of them. To do so they don’t need to offer new features, but cheaper phones.

That’s what the iPhone 4S will prove to be: the first entry in Apple’s budget product line. That’s why it works on GSM and CDMA. Pleasing U.S. carriers is now less important than offering a universal device. It’s their priciest iPhone right now, but soon the iPhone 5 will be here, giving Apple occasion to slash the 4S’s sticker price and market it (along with the 4 and the 3G) as Apple’s first affordable options overseas. To buy it here, now, at top dollar, is a sucker’s choice.

In the long run, there’s nowhere for the iPhone to go but down.

Jesse Brown is the host of TVO.org’s Search Engine podcast. He is on Twitter @jessebrown

 




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New iPhone: the ‘S’ is for ‘suckers’

  1. Correction: iAnything is for suckers. Putting an ‘i’ as a suffix has become standard practice for the marketing-rich, technologically poor products.

    Of course the case can be made that the trend was started by Apple, but there lies the point: when a trend becomes this common it loses any meaning.

    • The “i” is a prefix, not a suffix.

      If you’re going to label a large number of people as ”suckers,” you should do your best not to look like a fool in the process.

      • On the grand scheme of things, getting the terminology wrong is not as bad as wasting one’s allowance money on a letter.

        • iSuckers or not, Apple is still in the 3 most valuable/profitable companies in the world for innovation, quality and craftsmanship of their products.

          They must be doing something right.

  2. “All phones will eventually be smartphones, and Apple wants to sell most of them.”
    The second part of that is incorrect. Apple wants to continue making large profits by selling a lot of smartphones. They do not sell most smartphones now and don’t really seem to care if they ever do. Don’t let your knee-jerk ‘Apple is evil’ position distort reality Jesse. ;)

    As for what phone you buy, get the one that works for you. I like my iPhone 4 and while the 4S has some features I’d like I don’t see any need to upgrade. My girlfriend just got a Samsung Infuse that’s also a very nice phone and while there seems to be a new phone every month in Android land I doubt she’ll be upgrading for a couple of years either. My step-dad, who is more than able to upgrade, is still using his 3GS and I doubt he’ll be upgrading soon. I suspect the the people who always have the latest gadget are fun to write about but don’t represent most buyers.

  3. okokok I’m not an Apple Fanboy but…

    Apple makes money off selling high margin products, not large quantities.

    Nokia, with it’s no margin phone, wishes it could match the iPhone or Android: Nokia is plummeting in Europe for instance.

    http://tctechcrunch2011.files.wordpress.com/2011/09/screen-shot-2011-09-13-at-12-03-34.png?w=508&h=251
    And Nokia has been shedding jobs as it tries to realign itself.

    http://latimesblogs.latimes.com/technology/2011/09/nokia-to-layoff-3500-employees.html

    And Apple ONLY has 5% world wide market share!? You realize they only recently had 0%!

    http://www.appleinsider.com/articles/11/01/31/apples_4_mobile_market_share_rakes_in_over_half_the_industrys_profit.html

    I’m sure Apple is really upset owning almost half of the market’s profits. What a poor business model this iPhone is!

    • And the fact that this douche says that 2nd and 3rd world nations have advanced technologically with a phone that comes in a corn flakes box, is being condescendent and ignorant.

      These nation’s CAN’T afford technollogical advancement and that’s why companies like Nokia have to come out with these cheap-ass phones for the economically challenged countries. It’s popular because it’s very affordable, that’s it. If they could afford something else, they’d ditch these phones in a blink.

  4. I think this article is right on the money! I predict the Iphone5 to be out in Feb. 2012.
    Coincidentally, at the same time as the Ipad3.

  5. Jesse, what crystal ball have you been using.  the iPhone 3GS lasted a year before being replaced by the iPhone4.  THe cheap phone Apple announced today is that same 3GS, available free with contract.  Two and a half years after its introduction.  Last years model is now only $99.  This is the trend I expect.  Unless you have some unnamed trusted source, stating that the iPhone 5 will arrive soon is a baseless statement.  

    • Ditto.

  6. I don’t understand why you think today’s iPhone 4S will be tomorrow’s cheap smartphone for the masses when yesterday’s iPhone 3GS already occupies that position. 

    • Hey Simon. Of course any pricey new iPhone is tomorrow’s cheap(er) iPhone, but my point is that the 4s is the first one built *primarily* for that purpose. As a hot new phone, it’s a total letdown, but I’m thinking it wasn’t built to wow us, now. It’s meant for another market, later.

      • Hmm. Other than it being the first iPhone to handle dual-mode GSM/CDMA, which I get makes it attractive to a much broader audience, if Apple truly wanted to go after the mass, why not simply release an iPhone 3GS World Edition? The addition of the dual-mode radios would cost a pittance and I can’t believe the firmware would require much in the way of tweaking to bring the new package together. Just not totally on-board with your thesis that Apple has specifically built the 4S to march into the “cheap smartphone for the world” role, even when the next iPhone hits. I’m actually not convinced that Apple wants that slice of the market at all. They have a proven track record of not being interested in the mass market – Remember S. Jobs saying they don’t know how to make a $500 laptop (in response to the netbook craze). What he meant was that they don’t know how to do so and maintain the high profit margins they’re used to commanding. I think that is just as true in the phone market.

  7. “Though nobody uses it much..”  Are you kidding??  Millions upon millions of videos/photos on the internt are shot WITH smartphone cameras.

  8. OMG no way Apple is going to release another phone next year!!! OMG that’s such big news, like holy crap I’m so excited for that new phone which is coming out next year.

    I can’t believe that Apple would ever want to release another phone since everyone knows that OMG Iphones are the greatest thing ever, like OMG!!!!!

    EEEEEEEEEEEEEEEeeeeeeeeeeeeeeeeeeeeeeeeeeeee new iphone in 2012!!! Wow I’m so excited…

    Thank you for making my day and making my life!!!!

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