Some Nanothoughts for an iPhone 5 World: Why Apple Needs to Split its Product Range in Smartphones

I had a nice chat on Twitter with my friends Brian Katz @bmkatz and Sitaram "Maaliskuu Born" Shastri @seetu about some Apple and Google things. I thought it might make sense to expand those thoughts a bit into a blog..  Lets do some Nano-thoughts for an iPhone 5 World. Apple already makes almost all the money - and I mean profits - in the mobile handset industry, why would they need to bother changing anything? Isn't their strategy so uber-perfect, it is beyond even the slightest remark?

NANO-THOUGHTS ON A MEGA-RACE

Well. No. The battle for the smartphone market share and yes, profit share is not about who is the biggest smartphone maker of this year or next, or even 2015. That is the prelude to the big war, the battle for the pocket. Who gets to be the biggest HANDSET maker of 2020. Smartphones today are only about one quarter of the total handset industry. While yes, the big PC makers are now all panicking about 'mobile' because smartphones now sell more than all types of personal computers: desktops, laptops, netbooks and tablet PCs (including iPad and clones) combined. Toss in servers, toss in mainframes (yes, even those are still manufactured) and smartphones alone outsell all other types of devices classified commonly as 'computers'.

You'd think thats big. Yes, its huge for the computer industry. But in the big picture of the world, thats still peanuts. Thats only similar scale to say television sets or DVD/Blueray players etc. The biggest tech game is the mobile handsets. Non-smartphone 'dumbphone' mobile handsets outsell smartphones still today by 3 to 1. THAT is a big industry. THAT is where all the marbles are.

Just over the past decade, mobile has become the biggest industry on the planet by number of usersm(5.3 Billion active paid accounts as of now, out of a planet approaching 7.0 Billion total population). No technology has ever come anywhere near as close to this as mobile. More people use a mobile phone than watch TV (mobile phone users outnumber the total number of television sets on the planet by 3 to 1). More people use a mobile phone than a fixed landline phone (by 4 to 1). More people use mobile than have a personal computer of any kind by 4 to 1, and more people have a mobile phone than a car, by 5 to 1. Etc etc etc. Mobile phones now reach villages and towns that have no electricity; mobile phones are used by people who have no access to running water; more people speak on a mobile phone than use a toothbrush. There is no comparison! The world's bestselling wristwatch, Timex, sold a cumulative 1 billion timepieces for our wrists. The mobile handset industry sells another billion new phones - every one with a clock - every 8 months. Illiterate people chat happily on mobile phones in the deeps of Africa, Latin America and parts of Asia. Mobile phones go where the pen and paper cannot go.

And to put it in context, Nokia is the world's most used camera brand, the world's most used music player brand, the worlds' most used clock brand, the world's most used alarm brand, the world's most used calendar brand, the world's most used brand to access internet content (including WAP obviously on low-cost phones), the world's most used brand for messaging, the worlds' most used brand for gaming (Nokia Snake has had more than 1 Billion users) etc. Coca Cola told us earlier this year that 1 Billion servings of Coke are served every day. Many of those servings go to the same user, so the total daily user base of Coca Cola is a fraction of one billion. But 1.3 Billion people use a mobile with Nokia branding - and they use it for phone calls daily, for messages, daily, for telling time, daily etc. The world's second-most used brand is Coca Cola, with much under 1 Billion daily users, many who only use the brand once per day; the world's most used brand - by a huge margin - is Nokia at 1.3 Billlion users almost all of whom use it dozens of times per day or more. The world's most recognized song is not White Christmas or Happy Birthday or Elvis's Love Me Tender. It is Francisco Tarrega's guitar classic 'Gran Vals'. We do not know know the song by its original name, we know it as the 'Nokia Tune' the defauilt ringing tone of Nokia phones, which is the only song recognzied by most of the population in all countries of the world.

Ok. Thats the big picture. Apple (or Google etc) is not in mobile to win the smartphones race. This is only the prelued. They are in smartphones to win the overall mobile phone handset race. To be in the pockets of as many consumers as possible, on the most widely spread, most widely used technology on the planet. Because the internet is headed into the moblie phone. The TV content is headed into our pockets. News, entertainment, music, gaming, movies are headed into the cellphone. Advertising is rushing towards the 7th Mass Medium. MONEY, for heaven's sake - Visa was the first major Financial Industry brand to say just this May, that the future of payments is the mobile phone. Yes, cash will die, and it will be killed by the mobile wallet. THAT is the race for all the marbles. That is why Apple stopped calling itself Apple Computer, and now calls itself a mobile company (as does Google again).

APPLE PERFECTION

I have studied the Apple entry into mobile from literally six years before it happened (when I was Global Head of Consulting for Nokia HQ, we knew already back in 2001, that one day Apple would come to mobile, as a handset maker - and we also said at Nokia HQ at the time that it would be the day, when Nokia's world would change forever, because back then, Nokia stood for best customer satisfaction, best user experience, best ease-of-use, best loyalty of any handset brand - but we knew back in 2001 that Apple was the global tech master of that - we could see it in the Mac and the iPod - and we knew it was only a matter of time before Apple would make its own branded phones, and take all those accolades away from Nokia. If it was up to Nokia vs Apple, it was clear - to many of us, not all of us at Nokia HQ haha - that Apple would inevitably take the highest ground in loyatly, customer satisfaction and that would be driven by user-interface and ease-of use.). That is why I was able to do such comprehensive and detailed analysis of the brand new iPhone weeks BEFORE it launched, including predicting almost exactly the global regional splits of how the iPhone would sell on its three main continents of early sales - North America, Europe and Asia. Go back and read my stuff, it was pretty incredibly accurate, looking at Apple how it preformed since.

I celebrated the iPhone's launch, called it a landmark moment in the industry, that we would measure time in handsets as 'Before the iPhone' and 'After the iPhone' - as we now clearly do, we see phones from the 2006-2007 time period to be hopelessly outdeated but most modern phones to have that 'iPhone-esque' look and feel. And yes, my blog is the root of the term 'jesusphone' - even though I personally never used that term, it was mistakenly attributed to me and my blog. If you hear or read anyone talking of the iPhone as a jesusphone, you know where that came from haha..

I correctly predicted that the iPhone would hit the 10 million sales - this before one iPhone had been sold - (many reputable experts felt it was way too optimistic for Apple), but would have to make severe price cuts to get to that point and that it would not be dramatically over that (many Apple fanatics felt Apple would do even double that in one year). I not just explained what Apple would do, I explained why it would reach that level in one year, and how the sales woudl be split, in what markets.

I said back in 2008 that it was not the time to split the product range into various models (yet) but that the time would come (soon). I was the first analyst to call it that Apple's dramatic growth in smartphone market share had stalled. I wrote a very controversial blog here saying Apple had peaked. Apple had 17.4% market share in Q3 of 2009. In the first 24 months, or 8 quarters of Apple iPhone sales, Apple had grown about 2.1 points of market share per quarter on an annualized growth rate, per quarter. But in the next 24 monts up to now, Apple has only managed to add 1.2 total points of market share - over a 2 year period! Its market share is 18.6% now as of Q2 in 2011, the highest level Apple has ever achieved. What happened?

I was first ridiculed for my forecast of Apple having peaked. Then several analyst houses reported as fact, that Apple iPhone market share growth had in fact peaked as of Q3 in 2009 and was in gradual decline in early 2010. I was then clear to point out, I did not mean 'quarterly' peak, I meant 'annual' peak, and that it was still too early to tell if I was right. As it turns out, I missed my call by one market share point, Apple did not peak in 2009, it did manage to grow a measily one market share point in all of 2010, but yes, I was wrong. I was the first analyst anywhere to write that Apple's phenomenal growth rate in smartphone market share had ended. I was a bit too bold in my claim, calling it a peak. It ended up being flat. But I was off by one percentage point. If you want to crucify me for being that much off on a bold prediction, feel free to stop reading this blog. Which other analysts do you know who immediately Tweet and blog on the same day, whenever one of their forecasts is found to be wrong? And as far as forecasters go, in our industry, if you miss your target by one percent, that is considered accurate haha..

Anyway. I called it then in early 2010, that now was the time to release an iPhone Nano. That because Apple's market share growth had stalled, it meant that Apple had now reached the saturation level for global market demand of the 600 dollar price superphones (remember, the iPhone 4 today, has a real unsubsidised price we all pay of 600 dollars. If for example in the USA you buy the iPhone from AT&T or Verzion for say 199 dollars, then you are committing to a 2 year contract where the rest of the 401 dollar price is forced upon you - with interest added - on a two year payment plan, hidden in AT&T's or Verizon's monthly basic fee part of your contract. The real cost of your iPhone 4 is 600 dollars plus any local taxes etc which means in many countries its far more expensive than that even)

A NANO-STORY OF AN AUDI-BRAND

So lets talk about one of my fave car brands, Audi. Audi (Auto Union, Horsch, NSU etc) goes back to 1910. It was an innovative clever and often racing-pedigree car brand from Germany They gave us the idea of the left-side steering wheel for example (on roads where we drive on the right-hand side) which was a great boost to car safety when overtaking.. After the second world war, the Audi factories landed on the East German side, were confiscated by the communist government who manufactured pre-WW2 design cars under the Ifa brand - some VERY old readers of this blog might remember that brand haha..

The Audi brand was reorganized and new factories were set up in Bavaria in Southern (parts of what was then West) Germany in Ingolstadt. And Audi was owned partly by Volkwagen and partly by Daimler-Benz (ie Mercedes Benz) and in the mid 1960s, Volkswagen bouught out Daimler-Benz to take 99% ownership of Audi. The reason was not Audi's cool new cheap light-weight very efficent car model it was making at the time. It was because the Volkswagen Beetle was so much in high global demand, that Volkswagen simply needed more factory capacity so they bought the Audi factories to make more Beetles.

But Audi did have some nifty nice little plans and one nice little mid-sized car we would recognize as the predecessor to the Audi 80 (in the USA, the Audi Fox). This was no luxury brand in any way, not comparable to say a Jaguar or BMW by any means, but a nice little family car selling in very modest numbers throiughout the 1970s without much real obvious market niche focus. They added a second, larger model (we would know as the early Audi 100/Audi 5000). The Audi purchase by Volkswagen also brought to Volkswagen ownership some motorcycle making and some high performance engineering for racing. And with that, Audi entered the 1980 world rallye series with a radical racing car, using four wheel drive called the Audi Quattro and a turbocharged engine.

The Audi Quattro utterly dominated the world rallying scene (one of its illustrious world champions would be Finnish rallye driver Hannu Mikkola) and as evidence of domination of any type of race, when they have to change the rules because of you, you know you've achieved the ultimate. That is what ended up killing the Audi/Volkswagen brand interest in rallye racing because the Quattro was too dominant and the rules were then changed to allow others to catch up. And yes, of course, Audi sold a 'street car' version of the Quattro for consumers as a sports car from Audi. using a less powerful turbocharged engine and the permanent Quatto four-wheel drive.

So from the early 1980s, Audi had a great racing reputation, and one of the only full-time four-wheel drive systems suitable for road cars (as opposed to military vehicles and serious off-road jeeps and landrovers). They were also mastering the early often difficult reliability of turbocharged engines. So Audi decided to use the Quattro image and build a supercar, not as a sports car, but to challenge the top Mercedes Benz, BMW and Jaguar models of the time.

They used their big model car (the 100 body) and gave it a futuristic streamlined new body shape - the prototype of what all modern cars look like, kind of 'jellybean' shape, with flush windows etc to minimize air resistance. Now compared to all contemporary cars, the Audi 100/5000 was iconic in shape, instantly recognizable. Then they used lightweight construction - alumnimun for much of the car, to reduce weight. They used a 5 cylinder engine where most contemporaries had 6 or 8 cylinder engines - but Audi added the turbocharger. Now, with the car significantly lighter than rivals, the smaller engine with turbocharger could deliver equivalent performance to a large luxury sedan. That meant savings in fuel costs - remember we are near the big oil crisis in timing so fuel economy was very important. And to top it off, the topmost model had one feature no other large sedan had - Audi's world champion technology of permanent four wheel drive, the Quattro drive. Instantly in any country with difficult, slippery driving conditions like say Finland, Sweden, Norway, Canada etc - the Quattro was the ultimate safety feature for any car. The top Audi also added all the luxury and safety items of the day such as anti-lock brakes etc. In Europe to distinguish this car from the basic sedan Audi 100, the new supercar was branded the Audi 200. In America both were part of the Audi 5000 model range.

Overnight, from being a mid-range mid-price ho-hum who-cares car brand, Audi had a supercar, a real Jaguar-beater, a real BMW-crusher, and yes, dare we say it, Audi was more high tech than the Mercedes Benz S-Class. The Quattro drive helped Audi achieve that status especially among car geeks and would soon spawn many of the rivals to also release four-wheel-drive versions of their premium/luxury cars.

Since then Audi has continued its association with Quattro, brough the four-wheel-drive concept to ever cheaper cars too and has also continued in racing, now doing LeMans style endurance racing with turbo-diesel powered Audi prototype cars that tend to win LeMans most years (and again this year). And yes, in America the brand almost died due to 'unintended acceleration' which forced Audi to rebrand the line of cars etc. But my point is, Audi was once a nobody in cars. Then it used a gimmick one might say, of particular racing and perhaps an opening and tech opporutnity nobody else saw, and established itself as a top racing brand. And using that reputation to turn mid-range mediocre Audi brand into a highly desirable and always performance-oriented luxury car brand, for the Volkswagen corporation. And Audi has fierce loyalty, commands a huge premium for its badge on cars built on the same platform compared to Volkswagen brand or Seat brand or Skoda brand etc. And after they had the top end of the luxury range covered, in cars that were very favorably compared to the 7 Series BMW, the S-Class Mercedes and other top cars (while in reality should be considered a closer rival to the 5 Series and C-Class etc), then Audi expanded its range mid-field and low-cost to expand Audi reach - while retaining the luxury brand, into lower cost cars. And last point, after that was done, Audi came with ever more expensive supercars - the Audi A8 (and its mad version Quattro based S8) was a step above in price and luxury into the top of the luxury cars; and then the Audi TT and Audi RS8 were steps into the sports and hypercar directions to challenge Porsche etc.

There is a story there for another tech company with fierce loyalty starting the letter A.. And sorry about the history lesson, I love the Audi brand haha..  

FROM iPHONE 4 TO NANO

We know Apple is working on the iPhone 4 replacement. We have not heard for sure when it will come, but the gossip expects the new perhaps iPhone 5 model (could be sold as iPhone 4G or iPhone 4S or whatever) to come about the end of September, to help generate a few hot days of Q3 sales, and then propel Apple to its best Christmas sales ever.

Where is Apple now? Its the most desirable phone brand by a mile. It is able to charge twice for similar performance compared to any of its major rivals and makes massive profits. Its iPhone mania is propelling Mac sales and iPad sales and its App Store is yet another revenue source as the world's most used smartphone app store market. Apple is poised to become the most profitable company in the world in this Q3 quarter and all looks peachy. Apple's brand loyalty is by far the best in the business, probably better than that in most other businesses too. What makes Apple almost unique among tech brands, is the fanaticism of its users, they actively seek to recruit non-Apple-users to become Apple loyalists. This didn't start with the iPhone, no no no. It goes back to the Mac. It is part of being indoctrinated, you then go - some might say like a cult - and recruit others to join in the religion - sorry, Apple experience. It worked iwth the iPod and iTunes, it still works now with the iPad. If Apple introduced a soft drink like say iCola, all Apple loyalists would buy it and then convert the rest of the planet to try it as well...  (and it would cost twice that of Pepsi or Coca Cola for a similar size haha)

This is all wonderful. Now whats all this we hear about you Ahonen pushing a silly Nano idea? Yeah, I meant to tell you about that. The Nano.. So, if we consider the Audi story, lets think of sportscars as the analogy to smartphones. As Audi came to sportcars and forever changed rallying, so too Apple came to smartphones and forever changed the smartphone. Before Audi, the major car manufacturers did not believe in four-wheel-drive for mass market cars, similarly before Apple, many had tried touch screens but the phone industry didn't believe in it. Today most successful smartphones have a touch screen interface.

Obviously my analogy is not perfect, as we can't exactly say that all cars of the future would be sports cars, or would have four-wheel drive haha. But note, if Porsche today were to tell us that they have 20% market share of sportscars (I honestly don't know what share they have), then the logical question is of course, wow, what is your share Porsche of all cars. So yes, Apple has almost 19% market share in smartphones, but what is its share of all phones. Ah. That is where the Apple story still falls short. The world sold about 370 million mobile phones in the quarter that just ended. And Apple's iPhone had a share of ... 5.5% ... out of all phones sold. That is very impressive for a new brand only 4 years into the industry - but remember, the Macintosh PC typically had about an 8% market share in the PC market for most of the past decade. This is still below even what the Mac was able to do. And Apple was smart enough to give the world more than one Mac model haha, so why restrict the iPhone to one model now?

Remember the iPhone grew market share, gobbled it up, by over to percentage points per quarter for the first two years, now the iPhone has been flat, managing just over one percentage point gain over the next two years in total. So something has happened. I say the iPhone 4 model has reached pretty close to saturation level of its price point. When Morgan Stanley did theri price pyramid for the global mobile phone market in 2009 (sorry I don't have more updated global numbers by any other analyst house released into the public domain, except my own consultancy numbers) they said the premium phone maket of over 500 US dollar phones was 2% of the global phone industry. Apple has clearly expanded that well beyond what Morgan Stanley calculated and proven that there is at least 3 times bigger market at the top, if Apple alone can take 5.5% of the top market with its iPhone costing 600 dollars on average (real price, after removing carrier subsidies). But look hoiw skewed the price pyramid is. The phones costing on average 350 dollars in 2009 were only 11% of the global market. And the vast majority of all phones sold worldwide - 87% of them - cost on average 100 dollars.

If your daily income in say an African country is one US dollar per day, you will never be buying a 600 dollar iPhone. Even a 300 dollar HTC or Blackberry is utterly beyond your reach. You will buy a 30 dollar basic phone by ZTE or Huawei or Samsung and perhaps dream of a Nokia entry-level smartphone if you some day become 'rich' in that context.

That is global market realities. Now, Apple can certainly sell into the rapidly emerging middle class in the Emerging World countries. But even there, a 600 dollar iPhone 4 is massively too expensive. But the Apple brand is very strong, they could sell in modest numbers at a 300 dollar price point, if Apple gave the market a cool new phone at that price point. I am not talking about last year's phone. The customers in Emerging World countries are not stupid. They are very price-conscious and smart buyers. Most of the Emerging World customers do not get handset subsidy benefits, so they are not fooled by the 'one dollar Microsoft Phone based smartphone' or the '99 dollar iPhone' etc. They pay full price for every phone, no subsidies. They also research carefully the real value of what they buy.

NANO SPECS FOR 2011

So here is my idea of the Nano version of the iPhone for 2011, to be sold from end of Q3 or early Q4, well in time for Christmas 2011 sales. First, I think it has to be physically smaller than the current line of iPhones since 2007. Why smaller? So that it is clearly, visibly, distinguishable from the big-brother model(s) like an BMW 3 series is clearly smaller than the 5 Series, the Audi A4 is smaller than the A6 etc. This helps maintain the desirability of the bigger more expensive model and prevents cannibalization. The iPhone Nano needs to be carefully marketed so, that it HELPS sell more iPhone 5 models, not cannibalize those sales.

Secondly, it has to be in some ways 'better' than the 'old model' ie the iPhone 4 that will be replaced this September by the iPhone 5. The Nano needs to be positioned as honestly new and a 2011 model, not just a smaller body 2010 model, thus quite obsolete by 2012, half way into its production run as the model needs to be sold until 2013 (by current Apple patterns, each iPhone model has been sold for 2 years). 

So think of this as creating a sports car model, from the sedan model. Like Audi did with the Quattro from the Audi 80, or how in more modern times, they created the Audi TT from the Audi A4 base model. You add some things and you remove some things. And you tailor it to that need. So lets start with the iPhone 4 as we know it today. Part of its premium quality in 2010 was the 'retina display' screen. That is good for premium iPhones, but it is expensive. I say lets make the Nano physically smaller, noticeably, smaller, but in a similar flat slate glass design like the iPhone 4. As the Nano is smaller physically, we can't fit a 3.5 inch screen, lets make it 3 inches. This gives us a far smaller physical size, and helps make the Nano fit in tight jeans etc far more comfortably. Because the sceen is smaller, it is cheaper. We remove the Retina Display - ie same normal resolution as the iPhone 3GS, we have a far cheaper display component to the iPhone Nano, and the side benefit, the screen eats up most of the battery life, this helps save battery life, we can fit a smaller battery to the Nano as well, further shrinking our size.

That makes it a dumber-cheaper iPhone and 'downgrades' it from 2010 specs to 2009 specs one might say - its like taking a 4 door car, and removing 2 doors to make it more sporty. Then lets beef up the engine. Rather than the 5 megapixel camera in the iPhone, lets make the new Nano with an 8 megapixel camera - the most powerful camera in any iPhone up to now. That is a clear upgrade that makes this a 2011 model, not just a repackaged 2009 model haha. And as Apple is rumored to have Near Field (NFC) in the new iPhone and for it to have a microSIM card slot rather than standard size SIM, do both of these as well to the Nano. Now it is very modern but also very distinct from the iPhone 4 - and critically, most of the components of the Nano would be cheaper than those going into the iPhone 4, so the Nano could be manufactured at far lower cost. When we factor in Moore's Law to the cost of the CPU and memory etc, the price of production of the Nano for late Q3 launch is close to half of what the iPhone 4 cost in June of 2010 - that means, that the profitability of the Nano would be about the same in 2011, as Apple had for the iPhone 4 in 2009. Thus any new customer sales (as long as is not cannibaliizing existing customers) of the Nano would boost Apple profits at the same rate (percent) as with the iPhone 4, and in absolute terms, if the Nano is priced at half point, it means for every 2 Nano's sold, Apple gets as much more profit as one iPhone 4...

Yes, we can do more specs but I think this is the main point,. the Nano needs to be physically different and in some ways 'obviously' less than the iPhone 4 (or iPhone 5) to justify why it is that much cheaper - but also - it needs to be totally modern for 2011, so it has to have some things the latest iPhone 4 did not have.

TARGET MARKETS

Who is the Nano for? It is not for you and me, reading this blog. We are hardcore smartphone users, we drool after the iPhone 5 and we can easily afford to pay 600 dollars for a new gadget to show off at the airport lounge haha.. No, its not for us. Apple will prepare an iPhone 5 for us.

The primary market for the Nano is middle class consumers who just can't afford to spend 600 dollars for their first Apple branded smartphone today. It is - the wealthier half of the middle class in the Emerging World countries. It is kids, students, teenagers in the Western World who really want the iPhone like the kids in class who have rich parents, but who really know their own parents can't afford it - or the kids themselves, really can't get savings enough to buy it on their own money. It is for the family members of current iPhone 4 or iPhone 3GS owners - who love Apple, who want to give an iPhone for their loved one as a gift, but that loved one is not really sold - so the current Apple owner wants to convert them via trial. The next Christmas gift, an iPhone Nano. Try it, honey, if you don't like it, we can always return it, etc.

A secondary market is the SECOND pocket of the current iPhone 4 owners. The really die-hard Apple loyalists, who love their iPhone 4, have bought all previous iPhones and have cabinets full of older iPods etc. For that person who loves the iPhone but feels sometimes it is simply too big and bulky, so like going out partying, and you don't take two phones (most people in the Industrialized world with a job, have two phones now) so you just want the slim small tiny nice cool phone - and yeah, having an 8 megapixel camera on the Nano iPhone, that fits the party needs just fine.. Note, this works particularly well for those who signed on for example on AT&T for another two years, but want a new iPhone in 2011.. So go to Verizon and don't take the same iPhone 4 you already have, take the Nano...

So the Nano would also help displace the SECOND phone from the second pocket, to add iPhone sales to already loyal iPhone users. Make sense?

THE OPPOSITE OF NANO IS..

Ok.. Now the other half of the story. If the Nano is poised for the under iPhone 4 price point at 300 dollars, like the cheap Audis, what of the top range. I think now Apple has clearly a possibillity to go like Audi, above its current model range, like the Audi S8 in luxury sedans or the Audi RS8 in sports cars etc.

I would actually split the iPhone model range not into two, but into three. I would do an upgrade to the iPhone 4 as we know it, upgarde the camera to 8 megapixels yes, add near field, do the microSIM slot, add more memory and faster CPU, that kind of stuff, and keep its price range in the 600 dollar range. Call this model the iPhone 4S (or 4G or whatever). Keep its form factor the same more-or-less. Upgrade the screen size to maximum you can fit onto the form, glass all from edge-to-edge, so up from the current 3.5 inch screen to about 4.2 inches, but also keep the retina display. With Moore's Law, this phone model should cost less to make and some of the electronics be smaller, so we can add some new features. Like maybe Xenon flash or HD TV out, etc. But position the iPhone 4S as Apple's new mid-priced smartphone and make it clearly better than the iPhone 4. In no way worse than the iPhone 4. This is the phone, that every loyal Apple iPhone owner today, will of course want for their next phone ... unless they've seen the iPhone 5.

THE iPHONE

What the iPhone as in 2007 was radical and there was nothing like it. Today many will claim an HTC or Samsung Galaxy will be more-or-less similar, some might even argue 'better'. So its time to go ballistic. Here is what Apple should do. The iPhone 5 - make it an honest hyperphone. Leapfrog the competition. So make this so much beyond what anyone has seen (outside of Japan or South Korea) that the iPhone again sets the stage for all others. LG is rolling out 3D displays that don't need glasses, and they have stereoscopic cameras (to shoot 3D video in HD, wow, that is cool). If LG can do that, of course Apple can do that too. But now think of the gaming world, what is Angry Birds on 3D? Then what of Samsung, they did the pico projector on the Samsung Galaxy Beam last year (I love it on my Beam). Why not put a pico projector into the iPhone 5? Suddenly 98% of rivals are instantly obsolete. And yes, do all the other things we hear about like Near Field and microSIM. Yes, add Xenon flash - and put in a 12 megapixel camera and make it waterprooft, that kind of stuff that superphones now have. And toss in WiMax ie what in the USA is called '4G' haha..  For its screen, like the iPhone 4S, the screen would be the full width glass about 4.2 inch screen size with of course retina display resolution.

But that combination? Nobody has that combination. It would mean that the iPhone 5 would have to be 'thicker' but not more so than say the iPhone 3G, so its still perfectly fine for most users. If you want small, get the Nano, but if you want the very best in the world - there is only one iPhone 5. What in future all phones will have, you now only get on this one phone...

And price it into the stratosphere! 1,200 US dollars without subsidy. On an AT&T or Verizon contract, price it in the 599 dollar range where still the monthly minimum payment is 10 dollars more per month than the contract with the iPhone 4 today..

THIS is the phone that everybody will line up for days to get. The loyal Apple army will show up and buy this iPhone 5 in unbelievable numbers. It will of course not sell as many as the iPhone 4S, and that won't sell as many as the Nano, but think. If you really can afford a thousand dollars for a new phone - and most in the West who have a full-time job can easily afford that, we pay much more for our plasma sceen TV or our last notebook when you add the software we bought for it as well -  haha - this is only about changing the mindset of what is the 'new black' in iPhone pricing. The lines will be long for the iPhone 5. And it will have distinctive features dual cameras haha, stereoscopic video to start - and be noticably bulkier due to the pico projector, etc. So all real Apple hardcore fans can immediately tell what is the superhot iPhone 5 and who is the rich dude who could afford it haha..

Like the S-Series Benz helps sell more C-Series; like the A8 helps sell more A6, like how BMW 7-Series helps sell more 5-series, the new iPhone 5 would help sell more iPhone 4S models. But all iPhone users would asipre to own the iPhone 5. In fact all smartphone owners, whether Blackberry, Galaxy, N-Series, Xperia etc - will now want the iPhone 5. Do it like Nokia once was famous for with the Communicator, or like how the S-Series is for cars, the showcase of the ultimate what can be done in phones now, what all phones of the future some day will have. Price it accordingly so that it is clearly a rich person's toy. And make tons of profits out of it and build Apple's brand leadership image deep into the decade.

That is how I would do it. That way Apple gains more sales, more profits, more loyalty, more customers and more future sales - now when the smarpthone is in hypergrowth stage. 

The Nano model is how Apple can expand its reach past the 5.5% market share it has in all mobile phones. During this decade, all mobile phones will go from dumbphones to smartphones. Appple cannot sit still. It has the chance to gain a bigger share in mobile phones, than it had with the Mac in PCs, but to do that, it has to build that Apple brand loyalty now, get the non-users to try the Nano now, so they can buy the next mid and premium price iPhones in years to come - and buy all other sorts of Apple goodies like the Macs, iPads and if they ever launch it haha, the iCoke too..

Thats what I think today in my little nanomind about some nanothoughts. But Apple obviously doesn't listen to anyone, they certainly won't be listening to me... 

Comments

[Stanil]

iPhone nano- iPod touch
iPhone cheap - iPhone 3GS
iPhone
iPhone big - iPad
iPhone bigger - MacBook air

[Michael]

If all else fails....

"Nokia is the world's most used camera brand, the world's most used music player brand, the worlds' most used clock brand, the world's most used alarm brand, the world's most used calendar brand, the world's most used brand to access internet content (including WAP obviously on low-cost phones), the world's most used brand for messaging, the worlds' most used brand for gaming (Nokia Snake has had more than 1 Billion users) etc."

[Eurofan]

I read some where recently that Apple and Google are one and two in polled answers to question posed to American college students, what companies do you think would be the most desirable to work for? Great triumphs in American PR and mind share. One thought that comes to my mind always is inevitable layoffs and for most Americans Apple/Google region of Brain Map is very distinctly separated from Inevitable Layoffs as Part of Business Model region of the same map. So not only is Apple a class identifier it is almost a magic ticket from world of layoff/redundancy anxiety. It is a Lippu, a Ticket, out of the 80% silent majority of Losers in modern world, Mr. Bill Gates overpopulators/useless eaters. As you say Tomi, if you're seen in an airport lounge you want to look like you belong there and are not just hoi paloi; flash that iPad2 or S8 level super iPhone, not old tech Nokia slider querty! like some kind of bumpkin.

Anyway, And to put it in context, Nokia is the world's most used camera brand, the world's most used music player brand, the worlds' most used clock brand, the world's most used alarm brand, the world's most used calendar brand, the world's most used brand to access internet content (including WAP obviously on low-cost phones), the world's most used brand for messaging, the worlds' most used brand for gaming (Nokia Snake has had more than 1 Billion users) etc. Coca Cola told us earlier this year that 1 Billion servings of Coke are served every day. Many of those servings go to the same user, so the total daily user base of Coca Cola is a fraction of one billion. But 1.3 Billion people use a mobile with Nokia branding - and they use it for phone calls daily, for messages, daily, for telling time, daily etc. The world's second-most used brand is Coca Cola, with much under 1 Billion daily users, many who only use the brand once per day; the world's most used brand - by a huge margin - is Nokia at 1.3 Billlion users almost all of whom use it dozens of times per day or more. The world's most recognized song is not White Christmas or Happy Birthday or Elvis's Love Me Tender. It is Francisco Tarrega's guitar classic 'Gran Vals'. We do not know know the song by its original name, we know it as the 'Nokia Tune' the defauilt ringing tone of Nokia phones, which is the only song recognzied by most of the population in all countries of the world.

Watch Tomi's video from somewhere in europe he posted two weeks or so. Gives this colorful overview and much more and is fun to watch. Love this stuff. We are on the cusp of a new thing and so much money, good employment and fun to be had in this industry. Lets help our Finnish friends and honorary associates by helping keep the cockroach short-sellers scattering from the light of truth: the great Ship Nokia is too big, too slow, too bureaucratic to be easily turned in a short time, even by a determined new captain with orders to hit that iceberg no matter what, at the point of a gun, as it were, as a reader wrote in above somewhere, i think a week ago, i forget who or why but i thought very perceptive; Nokia was too slow to get too rich or to be too successful in last five years but is also too slow to be quickly destroyed/sabotaged, haha; it took all of eFlop's Ingenuity to rig the ship for 5 quarters of losses so far; but he can't just steam around in circles with the bilge doors open forever; at some point he will have to hold a course and the iceberg will slip by and the keel will right and pumps whose names nobody even can remember, built by old slow bureaucrats will keep pumping and the cash flow will come back in to black like original design, I just love how God/fortune/the nature spirits favor little people like the Nokians.

Kind of early in my morning and I am sleeping well these days on new diet. My indigestion is a thing of the past now, as of last 24 hours. Tomi, I think we have saved Nokia on this blog here and now in just 4 months, you and your loyal readership of do the right thingers. They tried to blind us to Nokia's great intrinsic truth, that Nokia will be there in the future proud and independent because it has always tried to do the right thing as a company from ethical and intellectual perspective. But Nokia will triumph over eFlop. A lifetime commitment to doing the right thing gives a ticket to ride life's journey for the long haul, despite what present carnival barker eFlop says when he looks at ticket in his hand outside the door to the big ticket and scowls at the ticket holder kid in front of him and says like WC Fields, "get away from me kid with this ticket, your're bothering me, your ticket doesn't allow entry into the big tent event, I don't care what you think it says, to me it says voided by unavoidable change in climate, go find an ecosystem kid and come back to me, arghgh.."

[Dan Thornton]

Only one complain with your accuracy...

The reason the Quattro didn't continue in world rallying wasn't that it was too dominant - it was that all Group B rally cars were banned due to a number of fatalities in the same season for both drivers and spectators, attributed to the insane speed and power of all the cars produced for those specifications (Ford RS200, Metro6R4 etc).

Hence why it then reappeared in Rallycross racing (along with ice racing etc), but the shorter circuits and stages never seemed to quite suit it as much (certainly in the UK), where the likes of Martin Schanche etc were able to claim success with the RS200, and Will Gollop with the 6R4.

Sorry - were you talking about phones somewhere?

[elmo]

In 2001 Nokia HQ was looking at Apple ?
Loooool
Be serious. iPod was out at the end of 2001. It was more a joke then a product in 2001
In 2001 Nokia was afraid of Microsoft!
Now Nokia is partner of Microsoft, and get Royalties from Apple ... so now, there is no more to fear the competition.
Nokia can fear only itself ... eFlop is the most feared issue in Nokia current live
Tchuss

e_lm_70

[former N900 user]

I don't quite understand you Tomi, if I look back at older post of this blog they are full of predictions, that Apple and the Iphone will fail. It just seems to me, you are desperatly trying to convince us, that your first analysis that "ruling the smartphone world with only one model can't be done" is still valid, while it had been clearly proven wrong by reality.

Just two examples:

On the 11.06.2010 you wrote:

"Apple was the hot phone in 2008 and 2009. Then came the rush of the Androids."

"I do think that Apple is now on a strange path to oblivion."

And on 30.07.2010:

"Yet the world's favorite smartphone by far, the iPhone lost unit sales while the smartphone market was exploding. Apple's world-beating smartphonehas been losing market share from its peak in Q3 - thats now four quarters and counting. Apple lost market share while it was undisputedly the world's best smartphone. Having the best phone is good for profits in the short run, but having the best and most expensive phone will not win you the platform war.

Whatever Google does on Android, Nokia can rather easily copy onto Symbian/MeeGo

The three real contenders to Nokia/Symbian/MeeGo throne are Google Android, Samsung Bada and Microsoft Phone 7."

Your whole writings are a clear example of misunderstanding and misinterpretation of the Apple disruption. No wonder Nokia failed to act correctly if people like you were in charge of Nokia consulting back in the days.

[PERUS]

@LeeBase:
C'mon, just give the old man a bit of happiness by giving him a recognition of his prediction. His mind is so 90' on that time when Nokia was on top of the competition. When it fails, the pride hurts. It takes time until he can realize that Apple is progressing much better than Nokia these days.

And this blog, it's just a thought anyway, a thought based on imagination and presumption with the combination of Nokia way of thinking perhaps? ;-)

@elmo:
about that 2001 story thing, Don't take it seriously, I don't believe it because otherwise Nokia will be still the number one today.

[@rodrigottr]

Tomi

I also believe Apple needs a cheaper phone to really succeed. On my blog I posted that since jan/2010 that Apple products lack flexibility to reach the needs of most of consumers. Those needs are: size of screen, qwerty keyboards, flexibility inside the OS, price etc.

I made an analogy of Apple with Hitler.

Hitler dreamed with a perfect world (on his parameters) of

One Fuher One Reich One Race

Apple dreams with a world of One OS, One Phone, One Store, One Ecosystem, One Factory (Foxconn)

But as Hitler's perfection couldn't see the imperfection of not giving freedom for individuality and his model was defeated by the democratic western nations, Apple was already defeated by the "democratic" Google.

Apple aimed profit but on this business profit is only profit. But marketshare means power, and power means many things beyond profit. Google on their obsession for conquering the world aimed the right thing since the beginning.

I believe if there was space for some sort of democratic way of thinking inside Apple they would already have created the iPhone Nano. I also believe that Apple should start shipping a cheaper phone sooner as possible. But we have to remember. The only approach from Apple to go inside less economic powerful markets yet was the newest 11 inch MacBook Air.

So:

- They don't have much know how on going cheaper
- They must compete with Android phones but can't cannibalize the iPhone 5 (which I believe is inevitable). So, they can't ship a too much simple phone that loses for Androids, but also can't ship a very winner phone for a cheap price that will end up having a better cost/benefit then the iPhone 5. If the iPhone 5 becomes less interesting then the iPhone Nano, that will hurt the flagship product of Apple and at the end will hurt Apple's brand. (something apple never does as they are brand obsessed)
- Making a cheaper phone means reducing their crazy 50% profit margins over iPhone. But reducing that means also making it more cost/benefitable and also more interesting then the iPhone 5, whatever the iPhone 5 have.
- Making cheaper phones means shipping more phones and could Foxconn do it if they are already working beyond limits with workers killing themselves?
- Last announcements from Apple, since the iPad, where all less impressive and less innovative then expected. The iPad, the iPhone 4 (antenna), the iPad 2, the iOS 5. All them where behind was expected for a brand that is synonymous of innovation and perfection meaning Apple is not in their most brilliant moment.
- Could Apple solve this problems on this moment when they are so concerned with Steve Job's health? Could Apple do this without the support and leadership from Steve Jobs and/or demanding/stressing him more?

I doubt

That is why I say: The battle for the mobile ecosystem was already wonned by Google and IF Apple really go cheaper (nobody knows, they are all rumors) will they succeed and/or do it without hurting themselves?

[Eurofan]

@ Plot: Exactly, Plot, exactly. Please, Rodrigottr, lots of things don't "translate" and Hitler analogies pretty much nobody I've ever met would want to make or hear one. I don't even remember the I'm sure valid points rodrigottr might have been making in his note; like Plot said, I stopped reading but I remember my eye moving down through the rest of the sentences for 30 more seconds. I don't want to go back and reread it to find what I might agree with to be nice. I usually enjoy reading your notes rodrigottr and usually agree with them. This one hurt to see and I don't recall what points you might have been making. Rant. Thanks Plot for jumping on that so cleanly.

We are lucky to have Tomi's blog here. Lets protect it from rot and rotten tomatoes. I'm going to read your next post twice rodrigottr to find something nice to say about it since I appreciate your voice. Lee's relentless Nokia Short attitude has made me just skip all his posts now and I feel I am already not doing my job in this global conversation because of that. Anyway, I jumped to writing this note when I saw Plot's comment so I haven't read anything above in between but I can see on my screen Plot giving Tomi a hard time for underestimating Apple or something. Steve Jobs is a genius. Get over it. He incorporated the graphical user interface into the first home computer, Micro$oft copied his interface and took the worldwide market for business desk top OS's because they already had a lock on the precursors to what's bundled in Office (one way or another $$$), Jobs fired back by making desk top Sun type super computers have graphical user interface with his NeXT project aimed at the needs of higher education for modeling things in science, Microsoft won against the Clinton administration's half-hearted and self-sabotaged effort to bust it for monopoly behavior in the bundling of Office and Internet Explorer and then went on to make many nice billions, Jobs returned to Apple.... Jobs is a genius. OK. Do we end history here or rename the calender so there is BJ and AJ, before Jobs and after Jobs? No we don't. Life goes on. The handheld space will continue to evolve. Tomi is 1) observing it and 2) offering free advice to the players. Lets begin all our rants against his quarter to quarter predictions with thanks to Tomi for doing these two things and for keeping the conversation active and open. Wow, where else are you going to go to talk about these issues.

In the mean time, I'm interested in whether eFlop gets a f&&&king clue and realizes he can make Nokia a fairly decent money machine again without gutting the company or forcing it to swallow shit. Nokia makes or made many useful products. Apple makes nice things too, but it helps apple now that people buy there things just to be able to have them without even having uses for them. That's nice for apple and is lots of gravy for apple's stockholders and industry partners. Good on them. Good for Steve Jobs who learned somewhere along the line to only make things which make profits [which implies all kinds of quality control, user satisfaction, robustness, and closed ecosystem issues]. Nokia tries a lot of things I would call experiments in addition to traditionally having a very good model of profitability. I'm glad Nokia experiments. We live in a handheld age today largely thanks to Nokia's experiments and not because of Apple at all. Apple just speeds things up a little and hogs profits, because Steve Jobs got tired of making experiments and getting screwed by others. I want Nokia to survive, independent, semi-proud, and true to its traditions and values [making useful things, some experiments some profit machines]. If eFlop has to publicly eat shit to make this happen, he gets paid enough in my mind he should just swallow and get it over. He's a shithead anyway, so there can be no real harm.

My favorite company of all time is pre-copier toner Hewlett Packard. They helped create Silicon Valley where Jobs grew up. Two guys and a garage, that's HP's early history. Then tons of experiments and profit machines, all useful products. Scientific instruments, small computers and scientific calculators. An experiment made oh my god so good: Reverse Polish Notation. So useful and practical. Then printer toner took over as the two partners retired, research was gutted to meet quarterly needs under Professional managers, yada yada. Fuck that. Finn's have too much self respect to gut Nokia to help Microsoft make ip ripoff of iOS and walk away from Nokia's true calling, which is tinkering in the lab during dark winters, and making kick ass high quality robust useful things year round while giving everyone one month paid vacation in July/August. Long live Mr. Simonson, a man who got it and still is in the wings with his role at NSN, where they make useful things.

Or go the pet rocks route. I'm starting not to care.

[Eurofan]

Forgot to add, Medical Instruments (eg for anaesthesia), super profitable even today, many begun as experiments, to "real" HP's story when run by Mr. H. and Mr. P. There by the way is another killer app for the Lankku. Medical and legal applications. Much money to be made there when usefulness is established and platform is shown to be stable, robust and high performance. The public may never hear about it, advertised in professional circles only, but Nokia could make more with Lankku in these two fields than all of Apple makes in a year, bottom line, every quarter. HP did it for years and other than toner cartridges, medical devices continues today to be a money maker for HP, what part of that field hasn't been commandeered by Microsoft level evil General Electric, another profits before everything one way or another, no ethics whatsoever pioneer of American economic imperialism.

[kevin]

@rodrigottr: Your comment just makes me laugh.

I hope you realize Apple sold millions of cheaper iPod shuffles (dominating low cost market), and that the cheap and old iPhone 3GS is likely still in the top 5 smartphone models sold per month in the world (and definitely in the US).

Finally, just as many people said "last announcements from Apple were less impressive" when iMac was introduced, OS X was introduced, when Apple Stores were introduced, when iPod was introduced, when iTunes and then iTunes Store was introduced, when iPhone was introduced, when App Store was introduced, when MacBook Air was introduced, when iPad was introduced, when iPhone 4 was introduced, ...

You do realize that the less impressive iPhone 4 has sold more units than any single smartphone model ever, and that the less impressive iPad 2 will likely sell more units worldwide this quarter than all computer makers other than HP. (HP will be passed in the Christmas quarter.)

You do realize that people now say what a great idea were those Apple Stores, the iTunes Store, iPhone, App Store, ... And next year, they'll say what a great idea was iCloud.

Yeah, yeah, all those brainwashed people all over the world suckered by marketing for silly toys for the last ten years...

[kevin]

@Baron95: Actually during December 2010 and early January 2011 in the US, Android phones were just plain free ($0) with 2-year contract. No need to even waste time buying one to get one free. Everyone I know who wanted a smartphone but didn't want to wait for iPhone on Verizon, just went out and bought an Android in Decemnber.

[Tim F.]

"Go back and read my stuff, it was pretty incredibly accurate, looking at Apple how it preformed since."

I have read all your analysis in real time and I have often gone back and re-read it. I can only think of one person who has been, and continues to be, more WRONG about the iPhone than you: Steve Ballmer.

You can't even restrain your idiocy to Apple strategy analysis: "And yes, my blog is the root of the term 'jesusphone' - even though I personally never used that term, it was mistakenly attributed to me and my blog. If you hear or read anyone talking of the iPhone as a jesusphone, you know where that came from haha.."

What? You didn't use the term and it was misattributed to you, but you are the root of "jesusphone"? Get off the high-horse. Just because some idiot thought you said it, doesn't make it so: those who know know that it was spawned on Gizmodo.

[Eurofan]

@Piot: Sorry I am a little near sighted even with glasses on and I should push the enlarge button on my MacBook Pro so I can distinguish the i in your name. My mistake and I meant no offense by calling you Plot.

Well I just think sophisticated medical diagnostic and analytic programs and legal research and management programs might work better on a well sorted Linux core OS than on closed shop iOS or Android; I could be wrong. I assume the whole point of Linux is that it is more powerful because it is open source and thus has less bugs and compromises in it. I am a romantic and an idealist, admitted.

My HP digression was to show how a great company can fritter away its position in the universe of useful things and useful employment and become a perveyor of Dell crap laptops and overpriced toner ink thanks to the miracle of eFlop type management, if it gets lucky. Nokia's financial position last year was much weaker than HP's when it bought Dell and started down the road to mediocrity. HP was doing well, like Nokia was when it wasted too much money on Navtek. HP mostly made useful things then. Now it could disappear off the earth and no one would notice or miss it.

Honestly, Apple could disappear off the earth and no one would miss it except fans. The same functions would be accomplished just by more clunky interfaces and more clunky software. My MacBook Pro is flawless and never crashes so it might be a few years before I missed apple, yet I would miss the updates and maybe the ability to buy new batteries every four years. [Once the cloud takes off there will be more tears if apple disappears off the earth.] If Nokia packed up and left the earth with its patents and know-how, we'd all feel a pinch. Yes I "like" Nokia while I admire Apple. Old apple, the one actually founded by Jobs I "love" for being idealistic and romantic. I wrote my undergrad thesis on an original Mac and had a dot matrix printer. Lots easier than using a typewriter and eraser tapes.

As far as skipping entries. Its something I feel mildly guilty about except for Lee's. His entries make no sense to me. They read to me like something: the sky is blue, fish swim, Tomi you were wrong on this date, Elop is killing Nokia, Apple is much better at making phones than Nokia or Microsoft, yada, yada. The order is always scrambled but Lee makes these same points in each note and the yada yada points are something always that makes no sense to me and that I can not summarize because I'm not even sure if they are assertions. So reading LeeBase to me is a series of obvious truths which add no information for anyone along with some weird distinctions incomprehensible to me all of which give off a strongly pessimistic odor regarding Nokia's current position. Since the object of Marketing Muscle, whether of the dollar/ad spending variety or the higher intellectual comprehension/positioning and placement strategy variety is to get nice people out of bad positions, in other words help engineers find markets for their work, I keep looking for LeeBase's suggestions of how Nokia can get out of its current loss making position while still being positioned to support the Finnish way of life for the next decades. I think Lee just enjoys contributing to our unease without really offering hope, whether of the romantic idealistic kind or realistic kind, I don't care. Sell Nokia short to me isn't an interesting position to advance on a marketing blog for the hand held industry.

Regarding spring time for hitler, I just cant work up the interest or courage to go back to it. Maybe I'll see what that Effect was you cited and see why I feel this way. Its a strong emotional block I have to go further along some lines.

Anyway, thanks for keeping me in the conversation, Piot. Cool name.

[kevin]

@Eurofan: I didn't realize the point of Tomi's blog was to offer hope for Nokia fans.

In sum,, the best way for Nokia fans to get out of their predicament is to seek out and understand the truth about how the market has been changing, not simple to ignore and deny any bad news. Denying the truth only leads to even poorer solutions, which at some point, leaves one with no way out but bankruptcy and death.

[kdt]

@rodrigoti

"That is why I say: The battle for the mobile ecosystem was already wonned by Google"

How so? Apple makes over 60% of the entire available profit in mobile phones.

Even from a developers standpoint, the Apple app store generated 17.5x as much revenue as the Google app market last year.

Source: http://press.ihs.com/sites/ihs.newshq.businesswire.com/files/2011-02-15_Mobile_Media_0.jpg

[Mikko Martikainen]

@Tomi

It is obvious that Apple, or any manufacturer for that matter, can only capture a piece of the total market at the price points they serve. Apple seems to be superiour in its capability to take marketshare in the price segments they serve, the high end. I'm sure you read asymco, right? What do you think of Horace's views about the market? He makes the case that internationally, the iPhone still has plenty of room to grow and outpace the total market, meaning that it is not yet necessary for Apple to go downmarket to grow marketshare. However, Apple themselves have said they are looking at the prepaid market and thinking of ways to get there, so I wouldn't be surprised if they come up with something to address that part of the market.

However, in the current situation Apple is still selling as many iPhones as they choose. And, every iPhone customer is worth 150$ for them, each year. (That's taken from Horace at asymco.) So, currently, there is not a great pressure on Apple to change the formula. But at some point they will, we just don't know when. I could be wrong and they could introduce a cheaper model next month, for all we know.

[@rodrigottr]

@Piot @Eurofan

Lol.... Sorry guys. I'm laughing here about how this comment sounded polemic. My mistake. It was a very poor choice of words. I should have thought that comparing Steve Jobs with Hitler would sound like trolling. That was not my intention. I only said that because I was mentioning a post I did on my blog more then one year ago when I said that Android would become the biggest smartphone platform (what ended by happening in the beginning of this year when Android surpassed the Symbian OS). But inside that post I explained this comparison more deeply (and without trolling) and I would invite you to read it if it was not in Portuguese (I believe you don't read Portuguese, right?)

Anyway, my intention was not to troll Apple here. My intention was to explain why Google won the smartphone OS race based on the differences of Google's approach compared to Apple's.

Apple was totally focused on the unity of its ecosystem, standardizing hardware and software as much as possible with tough rules and all things we know. The result was a very safe and stable platform, developer friendly, with tons of apps and other gadgets made exclusively to Apple's products (like those little sound systems). But has less personalization of the platform for the needs of some users and carriers. Also, some complain about how Apple controls it's environment.

Google's approach was more focused on how freedom and heterogeneity its ecosystem could have making the platform flexible so it could work in higher number of hardwares, with different prices and specs and even personalization of the OS as the desire of the hardware maker AND carrier. The result was a wider portfolio of solutions that offer wider possibilities of adapting it self to the needs of the user, carrier and hardware maker. But it suffers with fragmentation and less safety.

Between this two approaches, unity x heterogeneity, which one could win? Both have goods and bads. But on my post one year ago I predicted Google's approach would win because, from my perspective, human societies showed some preference for more heterogeneity. Examples of that could be how Ford's manufacturing model was surpassed by the Toyota's manufacturing model in the 70's. Apple seems a lot like Ford's (both even have this funny taste for black) while Google seems more like Toyota's. Another comparison possible was like the centralized unity focused political states like Soviet Union and Hitler's Germany was technologically and militarily defeated by the democratic heterogeneous countries from west like America. Explanations for that could be the higher capabilities of the heterogeneous western nations to generate technological innovation. That's something we could say but I agree that there are much more to be discussed on this example.

Besides that, I invite you to end the reading of what I've wrote above because I'm pointing reasons why I have doubts that Apple will succeed on going cheaper even if I also believe that this is the right movement (and I've also said that on my blog one year ago).

Thanks for your compliments, @Eurofan. I'm glad to see and I admire how you take serious this "global conversation". I hope someday I have the same faith you have about the impact that our conversation can have over the world.

[@rodrigottr]

@kevin

I'm sorry but you must be delusional or Apple blinded if you believe the iPod Shuffle has "dominated low cost market".

Make some search over amazon.com. I just made it and the cheapest 2GB iPod Shuffle sold for 47$ having no screen, has two times the price of thousands of Chinese MPX sold on ebay with 4Gb, 2 to 3 inches screen, plays videos and maybe even watch TV!

Which kind you believe sells more? haha
Which one you would buy if you where a average Chinese citizen? (if you don't know google how much average Chinese people earn monthly)

http://www.amazon.com/Apple-shuffle-Silver-Generation-NEWEST/dp/B001FA1NUK

http://shop.ebay.com/items/i.html?_nkw=mp4++2gb&rt=nc&LH_BIN=1&_trksid=p3286.c0.m301

About how successful was iPhone 4, iPad, iPad 2, and all other Apple stuff. Well... I wasn't denying they where successful. I agree with you about that. They were very successful. But you can't deny that some blogs and other reviewers showed disappointment about how innovative they where compared to what is expected by a brand like Apple.

And I said that to gather evidences that Apple is not in it's most brilliant moment. This is widely known as caused by Steve Job's health crisis that is causing a complicated situation about his succession. That is having a huge impact over Apple and probably is also causing it's delay on showing the iPhone 5.

Anyway. You showed me 2 weak answers against 2 points I've talked about. Now, where are the answers against the other 4 points you didn't mentioned? Show me them and I will laugh with you about my comment. haha

[Eurofan]

@rodrigottr: Thank you also for appreciating the essence of my message and not being hung up by my words. I very much appreciate your insights and now that I can see what you are talking about in terms of Ford model vs. Toyota model or totalitarian society vs. heterogeneous society I can see that your wits never left you only my capacity to perceive your wit left me there briefly. I was tired and I have taken a nap. Let me now return to mission #1, giving hope to Nokia fans:

As with the automobile space, all industries have their life cycles, their consolidations and reinventions, their disruptions and reorganizations, etc. As with the automobile space, the hand held space is likely to be a dominant and socially transformative one for more than one century -- ie., more than several generations. In other words its a fundamental industry to the way modern humans live and transforms at the same time that life. In ultimate terms: Joseph A. Schumpeter (whose economic theories were the subject of my undergraduate thesis) would find much to be interested in in the hand held space had he lived to see it's birth -- there's money in those there hills.

Money, jobs, profits, communities supported by the money, jobs and profits, it all adds up to an industry you don't want to give up on participating in if you can help it if you want your industrial capacity to be relevant and competitive in a large part of the world's productive output. For Finland's sake, for Europe's sake, I hope Nokia's independence, profitability and style of business making can be preserved as part of the world business ecosystem. Nokia is a colorful fish in god's human fish tank here on earth and while god chooses to sit down and eat his chinese meal in this chinese restaurant that is this galaxy, I hope he glances up every once and a while from his conversation with the devil and God and Buddha and Mrs. Buddha and ponders quietly to himself that the aquarium in this universe's chinese restaurant is unusually a nice fish tank, with plenty of healthy coral and good looking fish, colored and not colored, etc. Lets do our part to be the way we were intended to be and not get down in the gutter of letting "them" do it to us too much.

Oh, and as far as making a useful comment for Nokians, let me say: Nokia is a rich patient run down in its wealth somewhat by suffering and expenses of medical care related to its sad recent case of a rare brain cancer: eFlopitiseemia. Prognosis is complicated and will depend on the following factors: 1) ability to keep paying doctor bills, 2) actual results of first required action, radical eLopeectomy, resection, reversion to Simonsonianismization of the effected frontal cortex region, 3) some possible effects of chemotherapy and radiation therapy [too tired to make appropriate analogies here], and 4) morale during this whole experience, which will last for some 2-3 years. We are the family and can help with 4) above and 1) by sending our thoughts and prayers to our cousin/brother/comrade Mr. Ms. Nokia employee and by sending our dimes and quarters and dollars to Mama Nokia to help her sell the baked goods like N8 and E7 and N9 and yes even WP7.5 she is back in the kitchen cooking now to raise money for her beloved's medical care. Thank god all this surgery and other medical care is taking place in Northern Europe where medical care is subsidized by the state.

By the way Dr. Tomi says the prognosis is excellent for raising some money with many of those baked goods. Dr. Tomi also said that the cancer though ugly, smelly and scary to think about when seen on x-rays is not something to be defeated by, he says it can be cut out and the region of the pre-frontal cortex repaired, and that we should all think too of the strengths of our patient and show courage. I like this doctor.