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May 23, 2007

iphone

Seeking Alpha: better off when it was Hiding Alpha?

Posted May. 23, ’07, 10:00 AM PT by Dan Moren
Category | iPhone

Seeking AlphaWith the kind of tripe they’re publishing, Seeking Alpha (motto: “All linkbait, all the time!”) has started making MacNewsWorld look good. We’ve previously taken them to task for publishing spurious, ill-researched, and ill-edited pieces on the iPhone flopping and how Apple is on their way down. Apparently, they’ve decided to go for the crazy hat trick with Ary Daquiwag’s The iPhone Effect: What Will Happen to Apple’s Other Products?, a piece which stops just short of suggesting that Apple’s other products will become jealous when the iPhone gets a pony this Christmas, and they just get socks.

iPhone is a revolutionary gadget. With its Wifi and a whopping 8gig memory, these features are enough to communicate excellently through the net and bombard somebody’s ear with thousands of genres of music.
Thousands of genres of music bombarding your ears? Now there’s a feature that Steve Jobs didn’t demo at Macworld. Okay, joking aside—let’s get down to business.
Let’s take Apple’s iPod as an example. What is going to happen to iPod sales (i.e., iPod Nano, video and the micromini version)? These Apple products will probably become irrelevant to a big chunk of Apple’s target iPhone market upon its release. Consequently, a possible billion dollar loss for Apple might be triggered upon the introduction of the revolutionary gadget in the market.
Wait, wait, the iPhone is going to trigger a billion dollar loss? Maybe this is like that myth about water spinning the other way in the toilet in the southern hemisphere, and the billion dollar loss will be matched by a billion dollar gain in the northern hemisphere.

But “irrelevance” is the key word here: how will the iPhone render iPods irrelevant? While the iPhone does include media playing features, it lacks the small form factor of the nano, the large capacities of the 5G iPod line, and the simplicity of the shuffle. People who are shopping for a music player probably aren’t going to base that decision on whether or not it has phone/Internet capabilities any more than people shopping for toasters are going to turn down one that doesn’t also wash the dishes. Despite the overlap in features between iPhone and iPod, I believe they are fundamentally two different markets.

Offering its iPhone to a different market segment to minimize competition for its iPods would be a great option. A key step to mitigate a huge loss of profit would be if Apple offered the iPhone to businessmen and other high income earners, while marketing its iPods to teenagers or fashinistas (This does not mean, though, that there should be a huge gap in the prices of the iPhone and iPod). This way, sales generation for iPods would still be effective. Thus, additional but significant profit would still be realized by Apple. Plus, the good thing about this strategy is it provides distinction or identity to Apple’s products.
First off: if you’re going to use a term as silly as “fashionistas,” at least take the time to look up how it’s spelled. Second, explain to me, if you please, how you suggesting targeting the iPhone to “high income earners” if not by price? Right.

Now, as I said above, the Iphone and iPod are targeted at two different market segments: one to people who want a phone, and the other to people who want a media player. iPod customers who are already happy with their phone are not going to spend the extra money on an iPhone—it’s expensive and superfluous for their needs. And with Apple being among the most recognizable brands in the world, I think they’ve done a pretty good job of providing “distinction or identity” to their products as it stands.

Discriminating the price of the iPhone from the iPod would also be considered a great option. Apple could take the path of letting the iPhone be a high end product by making its price high and letting the iPods become a cheaper option. But, in this case, the price of the iPhone should be able to cover up for the lower price of the iPods so as not create a loss of profit for Apple.
Wait a second—two seconds ago you said that there shouldn’t be a huge price gap. Now you’re saying that there should be? Okay, either way, it’s irrelevant: the highest 5G iPod costs $349, and the cheapest iPhone will cost $499. Hey, look! A price gap!
In this strategy, illusions of making the iPod a very affordable product for consumers would be enabled without revealing the true essence of the strategy.
You lost me. If you were seeking to not reveal “the true essence” of your article, congrats: mission accomplished.
OrApple [sic] could just go for the easy way out by selling all the necessary rights and production facilities of its iPods and focusing more on the production and promotions of its iPhone and its other products, which are not direct competitors of the iPhone. This strategy is a radical one and might, indeed, significantly affect Apple’s stock price.
Yes, Apple should sell its incredibly profitable iPod division to concentrate on an unproven and as of yet unavailable device. Preferably for cheap, so you can take it off their hands, right? I think you meant to write “bonehead” instead of “radical” there.

Three strikes, Seeking Alpha, and you’re out. You’re being put down on my list right next to John Dvorak, Rob Enderle, and George Ou. Enjoy the company.


5 Comments

Mchacur said:

This is just BS.

I'm positive Apple calculated its iPhone margin to ensure it's AT LEAST irrelevant to cannibalize iPod sales. But if you ask me, I'll bet that Apple will make a higher margin with the iPhone.

So, in profit terms, it'll be good for Apple to sell less iPods if those consumers are buying iPhones instead.

May 23, 2007 2:41 PM
David said:

These articles are so preposterous, contradictory, and poorly written that I've come to the conclusion that they're probably parodies. I think I could crank one out myself. A sample paragraph: "The problem is that the iPhone is really just a glorified iPod. Are people really going to pay $700 for an iPod? True the iPhone will have internet browsing, calling capabilities, and a revolutionary user interface, but that merely means that people are no longer going to buy iPods when they can have the iPhone instead. Either way, Apple is looking at several billion dollars of lost profits. The real irony is that Apple could have probably avoided this problem by buying Nokia, shutting down its phone division, and shifting iPod design and production to Finland."

May 24, 2007 12:23 AM
bloodelf said:


It looks very pretty~~I really,really,really want one .
----------------------
iPhone Video Converter
http://www.iphoneconverter.com/iphone-video-converter/

May 24, 2007 2:28 AM
axel said:

Water is spinning the other way in the toilet in the southern hemisphere.

May 24, 2007 6:33 AM
john said:

Total non-sense is what this is. They contradict themselves in there own story so many times its not funny nor does it make any sense at all. The iPod and the iPhone are different and priced different and the iPhone should not be compared to an iPod nano just like the nano should not be compared to the iPod shuffle. They are two totally different products with totally different features and abilities.

May 24, 2007 8:57 AM

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