Here’s a shocker. Apple needs a low cost iPhone. Here’s another shocker. Apparently, the low cost iPhone is already here and we’re just not paying enough attention to figure it out.
Most of the tech media pundits have been clamoring for Apple to product a lower cost iPhone or cede the bottom of the food and profit chain to Samsung and other Android smartphones. In fact, hardly a day doesn’t go by without a headline about Apple’s upcoming entry-level iPhone.
Does the math really support an iPhone with a lower price tag?
So it would seem if Verizon’s latest smartphone sales numbers are an indication of what’s actually happening in the real world where customers buy products. Verizon sold 4-million iPhones in the most recent quarter, an increase of 25-percent. That’s all well and good, but get this.
The iPhone 5 made up only half of the 4-million units sold, and just over half of all Verizon smartphone sales. That means the other half of the iPhones sold last quarter were iPhone 4, and iPhone 4S– the iPhone models with lower prices. Lower. But not much lower.
An iPhone 5 on Verizon is priced $100 more than an iPhone 4S with a two year contract. The 8GB iPhone 4 model, which is over two years old already, is priced $99 less than an iPhone 4S. As in zero cost.
Spread out over a two year agreement, the iPhone 5 costs just over $8 a month more than the iPhone 4, which, in turn is barely $4 less than the iPhone 4S.
That’s crazy. Apple is selling as many iPhone 4 and iPhone 4S models as iPhone 5 models (on Verizon’s network), though the most recent iPhone is faster, lighter, better in every respect. $8 a month difference between the old model at the low end, and the most recent model at the high end.
That’s barely a trip to Starbucks.
If anything, Verizon’s numbers point out that people either don’t perceive much difference between iPhone models, or even a few dollars a month is a big deal in a bad economy. Judging from those numbers I’m inclined to believe that Apple might game some additional sales with a second tier iPhone.
That seems to work in the U.S. where price is an object. Or, put another way, many smartphone customers would rather have an old iPhone than a new BlackBerry, HTC, Droid, Google, or Samsung smartphone.