COMMENT: Why Ruslan Kogan Is Right About Apple And Their iPhone X
I had coffee yesterday with Ruslan Kogan, he has a theory about Apple and the iPhone X that I have to agree with.
He believes that bottom line is that it’s not about who has the best smartphone, it’s all about street cred, posing and being seen with a device that cost over $1,800 to buy and at this stage is difficult to get.
Some observers believe that Apple has deliberately created the shortages to further enhance their brand while they sting consumers who want to own one of their symbols.
Let’s face it Apple is a kick arse brand for posers, those who want a symbol over a smartphone that actually costs less and performs better than what Apple has been dishing out for nearly a decade.
They were once a great product for the simple reason that they were ahead of the pack, they were unique, thanks to Steve Jobs and they had little if any competition in those early days back in 2007.
Today, Apple’s iPhone is the equivalent of what Ferrari and Aston Martin sportscars are in the luxury car market, the only difference is that these two car brands actually deliver performance, something that Apple has struggled to do up against the likes of Samsung since Steve Jobs passed away.
So why does Apple’s top end iPhone X cost over $1,800? So, Apple can make a ton of money.
A recent analysis, found that while Apple’s new flagship smartphone does cost 25 percent more to manufacture than the iPhone 8, it’s marked up a full 43 percent higher at retail.
The iPhone X smartphone costs US$357.50 to make and sells for an eye-watering $1,579, at the bottom end of their range, giving it a gross margin of 64 percent, according to TechInsights, a firm that tears down technology devices and analyses the parts inside. The iPhone 8 sells for a gross margin of 59 percent.
The finding is surprising because technology products tend to become more profitable as they age and the parts for them drop in cost.
The iPhone X is a brand-new design that went on sale last week in Australia, to apparently strong demand, while the iPhone 8 is an update on last year’s iPhone 7, which itself was similar to the iPhone 6 released in 2014.
Kogan believes that these two models were technology failures.
After covering the Apple round for over 25 years, one thing you realise is that Apple is unique in the electronics industry for its ability to charge a premium price for its latest devices and for its ability to maintain that price even when selling devices through third parties like telecom carriers.
Apple screw partners and as for that famous quote from Kogan back in 2014 that Apple would pull out of JB HI Fi and Harvey Norman, Kogan said it was all a PR stunt to drive publicity to the Kogan brand.
If you are a partner the terms are set by Apple and the margins are skinny and all in Apple’s favour.
Apple can do this because they are the 800-pound gorilla whose products drive people into retail stores.
Several of Apple’s design choices for the iPhone X pushed up its price. In particular, its 5.8-inch (14.8-cm) edge-to-edge display and associated parts cost US$65.50, compared with US$36 for the iPhone 8’s 4.7-inch display, the tear down analysis found.
That is largely because the iPhone 8 uses older LCD technology, while the iPhone X uses what is called “Super AMOLED” technology, which allows for more vivid colours and a thinner overall design.
Another pricey choice was the stainless-steel chassis of the iPhone X, which cost US$36 versus US$21.50 for the aluminium housing of the iPhone 8.
Tech experts said the steel is less likely than aluminium to bend when flexed, a problem that dogged the iPhone 6 when it came out.
At the end of the day Apple is still living off Steve Jobs.
He not only created the product he created the brand, and the marketing that has delivered Apple’s success.
The big question now is whether there is anyone in Apple who has the same insights and skill that Jobs had.
He like Rupert Murdoch saw opportunities ahead of his competitors, he created products that no one else thought possible or knew how to create, the iPod and the iPhone were just two of his creations. One saved Apple the other made them billions.
Both these products he created from scratch.
Since his passing Apple has failed to come up with one single unique product.