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October 07, 2011



Hi there, I don't follow you this time. The iPhone 4 from last summer has the microSIM, the original iPad had it as well, the iPad2 of course and now also the Nokia N9 I'm holding in my hand. So my last 4 gadgets have all had the microSIM, did I misread your post somehow? Keep up the good work btw, I love your blog!


I think apple in fact _introduced_ "entry-level lower-price model". It is iphone 3gs, which is free on contract, and to lesser extent old iphone4, available for $100 on contract. And I think this move effectively nailed the wp7 coffin, because ms only hope was to massively underprice wp7 phones. But why would now anybody want to buy wp7 phone, when there is iphone for free/$100?

And Elop chose US as his main and strategic market. LOL.

Troed Sångberg

I find the analysis of the virtual SIM turning physical and subsequent redesign intriguing, but I have to agree with Digithoughts post above.


Like Digithoughs, I'm ??? about the microsim.

I'm ok with the 4S not having nfc. Its not like the Galaxy S2 with nfc actually is purchasable unless you're in Korea.

Also glad the 4S didn't come with LTE. The LTE phones at Anandtech had horrible usage times.



You claim the dual GSM/CDMA is "expensive to add". Quite the contrary. They are using the same Qualcomm dual mode chip they were using in the Verizon iPhone 4. Now both GSM and CDMA phones are the same -> half the SKUs -> bigger component orders, easier logistics -> cheaper.



The whole "Why delay" section is painful to read. Facts you seem to be unaware:

1. Already iPhone 4 did not have "normal SIM", but a micro-SIM. It was not something new and rushed for 4S.

2. iOS 5 nor iCloud were not nearly ready for release in June. Actually both were just announced then. If Apple was going to release a new iPhone with new OS, as they have always done they should have previewed it some months earlier for the developers, they did not. They have done so the years before.

3. There was no chatter from Apple's component providers of an iPhone ramp up before June.

4. A certain Apple component supplier, whom I am not allowed to name, knew last spring that firmware software deadline is beginning of September relating to an iPhone part. No way iPhone could have shipped in June/July.


Tommi your analysis of delay is wrong. Microsim came with iphone 4 and ipad 1. So that is not the reason for delay. It makes no sense. And what apple was proposing in spring was to get rid of the whole sim. So that the phone would be the same and you would buy the contract from the phone. Surprise telcos were not very keen on this.

Again like your analysis for Nokia you are building your thought from phone side of things and technology. That is flawed reasoning.

Why delay, i suppose only few people in apple knows this one. But let's speculate.

Ipad is coming in spring. And it seems that that will be the pattern. In a way this makes sense. Light laptop replacement for the summer trips.

And developer conference is allways on june. It makes no sense to publish phone on summer. Summer is slow.
And launching ipad and iphone few month apart makes even apple fanboys thinking which one to buy. Most people can not buy both two months apart. Even less sense makes the timing of developer conference. The third party developers are given lectures of new MAJOR version of the operating system as it launches. And it is also very very hard for apples own developers to lauch iphone and ipad forks so close with each other. Apple is much smaller company than most people think as far as number of developers.

So which one to move. Iphone is most important product of apple, everything else comes behind. So the major version of the software will come with iphone. And besides iphone is cheaper is US if you buy it from operator (from free to 300 while ipad is 400-900). Ipad is too expensive for most people to be given as gift while the phone might be on the edge of gift price range, And right now the potential number for iphone buyers larger.

Ipods are going away. As we live quater year financial economy you cannot launch both of your products at the same quater of year (or in the same half). You got to spread it more evenly. So iphone will take ipods release cycle.

So it makes perfect sense to move iphone launch near autumn near Christmas,

Maybe this year was exception. As you are solely thinking phones you forget that apple also produces computers. They needed to launch OS/X lion. That makes that product line more competitive. Macbook air is the third wave of apples mobile strategy. Old OS was not optimal on little screens of air. And with Lion apple brought iphone/ipad ecosystem and more importantly style of ecosystem to desktop. (apps from store more limited rules and so on)

Apple also has no server side services, no cloud. So they had to create it, otherwise they would end up like Nokia and microsoft in a few years . Unlike Nokia they did not use they time trying to tell how big they are right now, they were focusing on what is the next step. So they created iCloud.

To create iCloud as an seamless experience for consumers they needed to have OS/X lion which again connect to iCloud. With lion you create documents, presentations etc and they are magically in the phone via icloud. And iphones pictures will go to users computer without users interaction, again like magic. This kind of seamless experience is the core of Apple.

And as I said apples pool of developers is quite small. Creating Lion, Icloud and major new release in one year is a huge task. They might just have needed more time to get it finished. More time to build their next step, so that they would not end up like nokia. On a downward spiral.

Tommi you always tend to focus on phone. You really have to start looking broader picture. These are not phones. These are new bread of information devices.



You predict Apple going to smaller and bigger screens. Perhaps, perhaps, but what will happen to the current apps that assume 3.5" screen size? UI would be stretched on the bigger one and made very tiny on the smaller one? Does not sound very Apple-like nor clever.

I see very little need for a small model, the more gains with the smaller screen Apple goes for the more it will distort the UI's of existing apps. An inexpensive model is already there, called 3GS, it could of course be even more inexpensive, but Apple is not going for pure market share, that would be foolish. They go for profit.

Also there are quite hard limits to how big a phone can be. The corners of the screen must be reached one handed. 4" is already a bit too much in my opinion.

Mike Stead

Is the Apple filing in May 2011 for the device to be GSMA-type-approved with a USIM? Instead of being a *new* standard (which micro clearly isn't)?


Tomi: Your analysis here brings up some very good points, but you missed or downplayed others. The iPhone4S has an A5 chip which will improve performance and user experience, especially with games and new multi-tasking capabilities in iOS5. In fact, you make no mention of iOS5 and the new iCloud service. Apple announced these months ago and its quite clear their current strategy is to focus more on them and not as much on hardware and design.

More importantly and much to my surprise, you barely discussed the new pricing of the 3GS and the iPhone4. You have stated many times that Apple needs a lower priced iPhone to compete in the mid-range smartphone market. The 3GS, which will run iOS5 and sync with iCloud, is clearly their answer. Its priced at $375. Yes, its a 2 year old phone, but it still sells and will likely continue to.

Obviously it is far more cost effective for them to get the most out of their existing products than to introduce something new at the lower end. It's also, I believe, better not to compromise on user experience by introducing introducing a smaller form factor. Apple sells software and experience more than they sell hardware and specs. As long as the old models run the current OS and most apps, they will sell.

Apple now has 3 phones on the market ranging in price from $375 to $849. They also dropped the price of the iPod Touch, so entry into the world of iOS starts at $199. I am very curious how all of this will drive market share numbers. There is little doubt the new iPhone4S will sell and that Apple will report massive sales over the next 6 months. What is less obvious, though potentially more impact-full, is how well the 3GS sells going forward. It may very well play the role of the iPhone nano you and others have been calling for.


Curious about your thoughts on carriers. If you had to choose one for the NYC area which would it be?

I'm on AT&T and would like to leave b/c coverage sucks. However, I am grandfathered in on unlimited data and I also read that their data speeds are better. Data is important to me and I probably use about 2GB a month, but what's the use if I can't get a connection. We all know about Verizon's coverage, so Sprint is the real wild card for me.


I agree with Jonathan regarding screen sizes, Apple will not allow what is usual on Android (multiple screen sizes and resolutions), is not the Apple way.

Also I think that you are missing the iOS5 argument, iOS5 is the best selling argument for the new iPhone 4S (even for the old one at $99), just take a look at today leaked images of the Nexus Prime and Ice Cream rememebered me Symbian, those Symbian users that were complaining about the botton bars and waste of screen size will be at home with ICS.

iOS5 is still the best selling point for the iPhone 4S.


The wife owned a '96 M-B C220 w. only 48000+ mileage. We were both very happy w. it; it still looked great(kept in garage), got 30+ MPG on hiway, was nice road car for trips, and was Paid For. Then the new body style came out, and suddenly her car was "over 12 years old"! Tragedy! Of course, then she had to get new shiny car, a Coupe of all things, nice for younger set, but not so good for travel. Or carrying things. Or trying to sleep in back seat. Worse MPG. And she has no use for all the new power, as she drives it only around town. But, she loves it because it "looks great!" And she got a good price when selling a 12 year old car.
My point? M-B, and Apple, build quality products that don't change every 2 years, so resale value is high. Owner satisfaction stays high. Even when looks change, value is still there in older product. So Steve did not see need to be constantly making changes for change sake, or to keep up w. competition. Competition? Most products are built to compete on price, not superior quality. Fords are available for price conscious, but if perceived quality is paramount, you go upscale.
Android is not upscale, it is not 'a common' OS(which flavor does your Android run, and how easy are upgrades?), and those phones are loaded w. OEM froo-fra. And if you really want to get to the power, you have to Root it? That's a phone for Everyone?
iPhone may or may not continue to be top phone in US, but it will always be an iPhone. Steve will see to that.


> Apple now has 3 phones on the market
> ranging in price from $375 to $849

As sams0n1te stated, one should look at the broader picture.

In Switzerland, the 3GS isavailable for 399 CHF, i.e. 432 USD. And that is the cheapest price (the median price is 489 CHF - 529 USD). That is expensive for an "entry level" phone.

As for the other models, the lowest prices for model 4 range (depending on memory and colour) from 543 CHF to 749 CHF -- 588 USD to 810 USD. Median prices are substantially higher, ranging 556 CHF - 844 CHF (602 USD - 913 USD).

The 4S is not yet available, but the announced prices range from 1295 CHF to 1695 CHF -- 1402 USD to 1835 USD, no doubt skimming early adopters and Apple fans. I expect this level to be untenable.

All variants of the iPhone remain high-end, expensive devices.

Since customers are ready to shell money for them, I do not see why Apple would compromise its image and revenue by delivering a "low-end", substantially cheaper model. Making sure that older models keep a high price also means that they keep their value in the second-hand market -- a relevant factor for people who
migrate from one expensive phone model to another, and cover part of acquisition costs by selling their older device (in a completely different sector, remember the Mercedes cars of once?)



iPhone pricing in Switzerland is highly influenced by local carriers and market. My guess is that Android and other smartphones are similarly over-priced. In fact, I just took a quick look and, on contract, the 3GS and 4 undercut a number of smart phones right now.

The point here is that with the 3GS Apple is lowering the iPhone's entry point. Is it offering entry level pricing or competing at the low end; of course not. However I am sure there is a large number of potential users who have not bought an iPhone because of price. Whether the 3GS represents a drop from $649 to $375 or from 1295 CHF to 399 CHF, its still a significant difference.


It's obvious the decision to not release iPhone 4S in June, was made by March (and I presume much earlier, even before the Feb Verizon launch). If Apple was going to release iOS 5 in June, they would've held an iOS 5 developers meeting in March (like they did for iOS 4 and iOS 3) so that developers could add the new iOS 5 capabilities for a June launch, concurrent with iOS 5 release and iPhone 4S. But Apple did not call a meeting in March.

Sources also expected Siri to be announced at the June WWDC but it was not. And now, even at launch, Apple has chosen to still label it beta because they didn't make it available to developers in Aug and Sept for testing (like they did for iCloud).

The smart money would bet it was clear to Steve Jobs in Feb (or even Dec) that Siri would be nowhere near ready by June.

As for form factor, Foxconn said last year that it's not easy to build the iPhone 4 case. They had to buy many millions of dollars worth of manufacturing and test equipment, and the long lead on equipment delivery led to a slow iPhone 4 production ramp. By using the same form factor, Apple and Foxconn will continue to use that same equipment, which can churn out over 20m+ iPhones per quarter, and expand to churn out more with little added risk or new testing. Given that Apple's #1 problem has been the lack of supply of iPhone 4, not customer demand, this will solve the problem at least for the next 2 to 3 quarters.



I've said for years that the reason that you are so often proven wrong when it comes to Apple is because of your myopia. You're thinking that Apple is playing the same phone game that other manufacturers are playing but they are playing a "platform" game. The iPhone, iPod, iPad, Mac, and iTunes all work together.

Apple was *never* planning to release the iPhone in June and that had *nothing* to do with the virtual sim. There were *no* rumors of a supplier ramp up in March. There was no iOS preview in March. iOS 5 was nowhere near ready in June. You have been wrong about your predicted sales of Apple *every quarter* this year.

As far as FaceTime, no one thought that FaceTime was going to be that big of a deal. Honestly, who cares? Apple definitely doesn't. Why would anyone use FaceTime which is iOS and Mac only and only works on Wi-Fi when they can use cross platform video chat apps like Yahoo Chat, Skype, etc. on the iPhone.


> The point here is that with the 3GS Apple is
> lowering the iPhone's entry point.[...]
> However I am sure there is a large number of
> potential users who have not bought an iPhone
> because of price.

This is true, but has also been true for the past 3 years -- with the 3G and 2G already playing the same role. What I do not understand is why this situation is supposed to be something remarkable now, and why some people continue to predict the arrival of an "entry-level" iPhone when Apple has been consistent, and successful, in its approach of releasing high-end devices while selling (well) older models.

As far as Switzerland is concerned: the market plays a role, I doubt the operators play a determinant one: all these iPhones can be obtained unlocked and contract-free; there is no operator exclusivity as in the USA (one can get packages with iPhone 3GS from all three main operators and several MVNO) and all networks are GSM.



Apple has always kept the previous year's model around after launching the newest version. This is the first time they are keeping the previous 2 versions, allowing for a much bigger price gaps in their lineup.

Also, the iPhone 3GS was advanced enough when launched to still be very usable and desirable two years later. Most importantly it can run the most recent OS (though how well still remains to be seen). I do not think you could have said that about the iPhone 3G last year or the original iPhone 2 years ago.

I will be interesting to see how long Apple can keep its older models in the market. Based on Apple's pricing, the 3GS has only depreciated by 30% over the past two years -- remarkable in this industry. If they can continue to amortize upfront design and tooling costs over 3 years (instead of 2 or less) they will be even more profitable.


KDT is pretty much spot on. I don't think there was any kind of delay to "redesign" the hardware at all.

Also, I don't know anyone who cares that their iPhone "lacks" a pico projector or a 3D display -- the actual need for such things has got to be limited to a microscopic (or even "picoscopic") subset of phone users.

Some features may look great "on paper" but are largely irrelevant (and, who needs a projector when you've got AirPlay?).

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