Apple’s (NASDAQ: AAPL) recent release of its iPhone X at a whopping cost of $1,000 has left no doubt in my mind we need a new Dell type company for cell phones. With the price of the iPhone X now costing as much as an (IBM) Desk top, it’s time for consumers to demand more for their money than just an iPod you can call people on.
I remember the computer a war of the 80’s when everyone was trying to get their console into the hands of the consumer. We had the Commodore 64, Apple IIE, the TSR-80, IBM, etc. Each company did something a little different that the next guy, trying to differentiate themselves. This lead to price battles, exclusive software battles, and lots of computer companies liquidating their assets. During this time, Apple basically had to abandon the personal computer space, and focused on the iPod and iTunes which helped them become who they are today.
These console wars led to one of technologies greatest success stories, with the creation of Dell computers and Michel Dell. Dell realized that all of the computers were essentially the same. He created a company that allowed consumers to pick their own hardware, building out their machines however they chose; it’s time for history to repeat itself.
Soon after the computer wars were over the war for your browser heated up, with Microsoft internet explorer coming out the clear winner. Smart phones hit the scene after, and with everyone now owning a device, it’s time for the consumer to battle back.
It’s time for a cell phone battle, and the consumer needs to challenge, some of the biggest technology companies in the world. It’s no longer enough to have a computer in your home, now we have one in every person’s hand. They all have slightly different gimmicks they use to differentiate the phones from one another, but essentially are all the same.
Cell phones in general have reached the peak of their abilities. Until one of these companies makes a phone that can walk the dog, or do the laundry there isn’t much more that you can use it for. All of the phones at the store now boast similar cameras, similar screens, similar colors, the only difference in most is the price, and the types of software you get pre-loaded on the device.
The software innovations have been boasted about recently on Jim Cramer’s show, where Tim Cook claims that Apple has 1,530,000 jobs that can be attributed to the “App Store ecosystem,” which is a network of designers and developers who make the apps. But how many of the Apps are really useful to anyone using their phone? How many apps are on your phone prepackaged that you will never use? All of the phone companies use this myth to create the consumer “value proposition.” I long for the day when my phone has nothing on it, so I can pick and choose what I want.
The Apple iPhone 10 is the most obnoxious price increase in cell phone history. The engineers at apple knew the public wouldn’t buy the devices for this price unless there is a perceived need for them, so as we have seen in the news recently, they actually slowed older phones intentionally, so consumers will purchase a new one. Apple knows that humans can only interface with a phone or computer at a set pace, but still market the speed of the phone to make it a must have. What I mean is, they know it doesn’t matter how much faster the phone is, or if the information comes to you quicker, you can only read and process the information at the pace you currently do. Most people are incapable of utilizing the full power of smart phones that existed 5 years ago!
I read the iPhone X is estimated to include less than $400.00 in parts and it comes in around $370.0 for each phone. This does not take into consideration apples purchasing power and any bulk discounts they would get for the build out of this phone. I’m sure the actual cost is much less. The article I read claims it uses a Samsung screen at a cost of $110.0 per display-which brings me to my next point.
Samsung (KRK)Google Pixel (GOOG)Apple (APPL) and Droid (MSI) are so much alike in almost every spec, there really isn’t much competition or innovation in this space. There has not been innovation or useable advancements in this space for years. The phones advancements have primarily come in the form of a better camera, and filters that make even the most average person, look great. All of the phone makers today boast of new and improved camera features.
In a world where everyone is trying to get the perfect picture to post on Facebook (FB) to make friends jealous, these phones are primarily known for taking pictures that make the people using the phone look their best. It’s my opinion that Apple (APPL) was the first to see this trend, and has since been followed by Samsung and Motorola. Apple tapped into the populations “selfie” craze and love for posting pictures and delivered the most addictive piece of hardware ever developed. Who doesn’t want to look better in their pictures?
I’m not going to get into how the iPhone has affected the dating world, everyone reading this probably has a story or two, but we can just leave it at, “best camera and filters ever.”
The phone market will continue to survive by making you look how you think you should look, and with software gimmicks most consumers don’t want, use or need. Not to mention that these large companies determine how you search on the internet and what adds you will see when you do. They also determine your privacy level, and hold most of your data, that they make billions on selling to advertisers. Yes they actually sell the data you give them for free, and make billions of dollars on it.
If the $1,000 dollar smart phone is here, then it’s time for someone with Michael’s thinking to step up and give us a company that allows us to build our own phone. We can have the type of camera we want, the type of memory; chips, screen, etc. load our own Operating system on it, and pick what software we want it to use.
Imagine a website that will build the phone to your specs, giving you the choice on how it’s going to work, and allowing you to build it for your primary use. This would give people the option of adding enough gadgets to cost $,1,000 dollars for your personal hand held device, or just enough so your child can have a phone for an emergency that also plays games and allows him to watch Stranger Things on Netflix.
A phone of your personal build, built with the hardware you like, and operating system and encryption levels you want, allowing you the user to choose what carrier and cloud you want to use. This would put the power of who has your data, what apps you want, and if you need filter software for your camera or not. This is where the next innovation in this space will be, and it should be an outsider that brings it there.
After all the biggest innovation in this space will be “Choice”, when consumers can choose what they want, it becomes a winning situation for everyone. Mr. Dell, it’s time to revisit this market, it’s your calling.
I don’t own any of the stocks mentioned in this report. I do use some of the products!
