Why Apple Needs a Really Expensive iPhone

Why Apple Needs a Really Expensive iPhone

Some pundits are predicting, and others are advocating, that Apple launch an iPhone that’s much cheaper than the current iPhone in order to keep up with Android phone sales.

This is crazy talk.

Apple doesn’t need a cheaper iPhone. They need a more expensive one — much more expensive. Here’s why. 

Android Gets Big Market Share with Small Profits

Android phones are selling in vastly higher numbers than iPhones. So high, in fact, that Google Chairman Eric Schmidt says the market share numbers are comparable to Microsoft vs Apple in desktop operating systems in the past 20 years.

The difference Schmidt didn’t mention is that Microsoft always made money from Windows.

The main reason Android is selling so well is that most Android phones are very cheap.

Sure, a tiny number of handset models like the Samsung Galaxy S3 are both very good and profitable. But the high-end, best-of-breed Android phones aren’t the ones driving massive market share numbers for the Android platform.

Those big Android market share and unit shipment numbers are being generated by China. In the world’s most populous country, with a population of more than 1.3 billion people, roughly 2/3 of the phones sold are Android phones. In fact one-third of all Android phones sold in the entire world are sold in China. And a huge chunk of the phones sold in the third world these days are Chinese-made Android phones. For example, one of the most popular phones sold in Kenya right now is a Chinese Android phone called the Huawei IDEOS that costs $80 unlocked.

These phones for the masses are not profitable Samsung Galaxy S3s, but instead no-name, no-margin Chinese-made pieces of junk, for the most part. They use Android in part because it’s free.

You’ll also note that, although there are hundreds of companies making Android phones, Apple makes far more money in mobile phone profits than all of them combined.

To say that Apple should make a cheap phone in order to keep up with Android market share is madness.

It’s like saying Ferrari should make a low-cost family car to keep up with Toyota. It’s like saying Starbucks should make cheap, low-quality coffee in a can to keep up with Folgers. It’s like saying Nordstrom should open a floor of cheap, discount clothing to keep up with J.C. Penny.

Apple is a premium, aspirational brand. It successfully targets the most profitable sweet spot in the market.

To slug it out in the muck with cheap Chinese phones for small margins would not only tarnish Apple’s image, it simply wouldn’t be worth the tech support, supply chain and manufacturing trouble.

Instead of a cheap, low-margin phone Apple should come out with an expensive, high-margin phone. A satellite phone.

Why Apple Should Sell a Satellite iPhone

A satellite phone lets you make calls from anywhere — while hiking, traveling, sailing, or when your carrier just sucks and becomes unavailable. They’re great to have, but they can be expensive.

If you think satellite phones are ugly, boxy, heavy gadgets from the 90s with horrible, fat, swing-out antennas, then you may be unfamiliar with the TerreStar Genus phone.

The Genus is a Windows Mobile smart phone, so nobody wants to buy it. It looks to me like a BlackBerry phone with extra heft in the back, presumably for the satellite antenna and electronics.

The TerreStar Genus costs $800 unlocked on Amazon.com. It works like a normal GSM phone, but you can switch to satellite mode for both voice and data.

It’s on the AT&T network, and the charge for the satellite feature is an extra $24.99 per month above the regular amount you would pay, plus 65 cents per minute for each satellite call.

The phone enables users to switch into satellite mode, which supports voice, texting and data.

The TerreStar Genus is not a great phone, and the satellite service isn’t great, either, nor is it global (it’s North America only).

The point is that a relatively compact, satellite-capable smart phone is possible, and the rates for usage are more reasonable than you might expect.

Apple isn’t in the business of cheap products that do the same things other phones do. Apple is in the business of re-inventing industries.

Apple needs to re-invent the satellite phone industry. (Yes, I’m suggesting that Apple needs a space program.)

Just to give you a sense of scale and proportion, Apple could probably buy any one of the existing satellite phone providers for less than $3 billion. (Apple has more than $125 billion in cash.)

Better yet, Apple should develop it’s own high-speed, high-capacity global satellite network, which it could do for less than $5 billion, I would imagine.

Note that running its own satellite system would be expensive. But it would make Apple a wireless carrier, and a global one — for decades.

So the company would not only be able to get large profits from each handset, it would be able to earn hundreds or thousands of dollars from each user in carrier fees.

I would guess off the top of my head that Apple could sell a satellite iPhone for, say, $1,500 unlocked, or $600 to $800 with a contract.

The price should be whatever it costs Apple to make the phone, plus a fat margin of $500 or more.

While Android phones scramble to match the iPhone feature for feature, rendering it somewhat ordinary by comparison, a satellite iPhone would be almost impossible for competitors to beat.

Plus, a super high-end iPhone would be an aspirational item that elevates the image of the entire iPhone brand.

And who would buy such a phone and pay such prices for handsets and service?

  • Business travelers with expense accounts
  • People who live outside cell coverage areas
  • People who work or live on boats
  • World travelers
  • Government workers
  • Military people
  • NGO workers
  • Emergency workers
  • Contractors
  • Digital nomads
  • Journalists and bloggers
  • Posh rich people
  • People who enjoy outdoor recreation
  • Apple fans who want the very best of everything

The reality is that Apple’s iPhone — once the industry’s new hotness — is quickly becoming old and busted as the rest of the industry copies, catches up or exceeds the iPhone in specs and features.

The solution to this problem is not for Apple to come out with a cheap piece of crap.

The solution is for Apple to do what it does best: re-invent an industry, seize control of its ecosystem, think big and come out with the very best product in the world.

Apple needs an expensive satellite iPhone. And the high-margin, big-spending, jet-setting world needs one, too.

Would you buy a satellite iPhone?

(Concept photo courtesy of Jsus)

Related
  • MetaWeb20

    I would buy an Apple satellite phone since I live in Mexico where a TelMex/TeCel monopoly overcharges for everything anyway.

  • CGJack

    Umm…really expensive phone? £529 is expensive enough for a phone…considering the iPad costs £399.

  • imajoebob

    I wouldn’t buy a satellite phone, but then I rarely use a cell phone. If I were Apple, I would certainly look at this proposal very seriously. One big question not addressed is bandwidth. How does satellite compare to 4G, and what are the future limitations when you’ve got 40 million subscribers that “aspire” to stream movies to their iPad “S” ( as in “S”atellite)?

  • craighyork

    I climb mountains, and would buy one in a heart beat! I like your call, though it would be a small niche market. Would be a great brand enhancer!

  • TheMacGuy

    JCPenney not J.C. Penny.

    It think Apple should release both a cheaper and more expensive iPhone (iPhone 5 being the middle ground). Why?

    I have a friend who had an Android phone and wanted to get an iPhone, but he need the Verizon model. So he waited until the iPhone 5 came out and went and got a new iPhone 4 VZW for free on a contract. I think if Apple is able to reach more budget minded consumers AND the adventurous people with a satellite iPhone, they could gobble up the market!

  • Bootneck

    Great idea. As a sailor I’d buy one for sure.

  • Market_Mayhem

    I have to agree with your call on most of these points, but there’s still the problem with Wall Street and Apple’s valuation. Even though Apple is making the most profits, Wall Street is only giving companies good valuation on high market share and cheap products. Wall Street fund managers have this stupid idea in their heads that only cheap products in high numbers will outlive even the best brands. Already Apple is being valued for zero growth. A more expensive product isn’t going to help change that valuation. It would only make it worse. Supposedly, by Wall Street’s judgment, Apple’s iPhone isn’t that superior a product anymore and that it has already been surpassed by the less expensive Samsung Galaxy S3. So, they ask, why would a consumer pay more for an inferior smartphone like the iPhone.

    As TheMacGuy says, Apple would have to come from both ends of the cost spectrum to please both BRIC consumers and Wall Street. I’m really beginning to suspect that Wall Street hates Apple for being an elite brand. Apple isn’t even being valued for superior customer support. I don’t really trust analysts and their perception that Apple should sell cheap products, but I suppose a partially-featured low-cost iPhone might be useful to BRIC nation consumers. There’s also this buzz about carriers doing away with subsidies and a more expensive iPhone would be out of reach of most consumers hands if it were to cost $900 unsubsidized. Like the Mac Pro I’m not sure that such a high end product would sell to consumers at all.

    If there’s one thing I don’t really like to do is second-guess Apple’s plans. They got as far as they did without my input. I’m certain Apple knows what it’s doing, despite my shareholder unhappiness at the present moment. I’m just upset that whatever Apple does, Wall Street only yawns and downgrades the company. I don’t think a high–end iPhone is going to change Apple’s already too elite perception. Having expensive products is fine, but as a shareholder I don’t like the idea of it further degrading Apple’s already shrinking P/E. It appears decent profits don’t bring investors to a company, anymore. They’re only looking for short-term mega-profits or long-term mega-growth. Personally, I think Apple should get into the credit card business because their hardware business isn’t cutting it anymore to pull investors.

  • digitalAudio

    I have a satellite phone and Apple products. Apple should just add satellite capability to their phones, using an existing carrier like Inmarsat. Then if that works out, they could start a space program.

  • leoberaldo

    In Brazil we already pay USD 1200 for an iPhone without satellite capabilities. Imagine when Apple launches it’s “expensive” phone.

  • hoopdancer24

    apple doesn’t reinvent the industry, it shows a new way to do the same old thing in a sexier case.
    I am all for Apple doing this type of thing, but I think we need to be honest with how/what will happen that way. Once Apple dose this so will other companies and Google has a satellite network, not big enough or expansive enough for this over night, but it wouldn’t take them much to match it and they could be the back bone for this type of feature. If Google didn’t fill the hole then some other service could.

  • Marciokoko

    Satellite Networks, Space Insurance, Death Stars!!

    What an exciting time is coming up!

    http://quique456.wordpress.com/2012/12/18/usa-nasa-mars-exploration-global-recession/

  • Darxler

    “Almost Impossible to beat”

    Microsoft is making smart-phones now, they’re working on an actual Microsoft Phone. If anything, the new WP8 system makes iOS6 look like just a service pack for an antiquated system that hasn’t changed almost at all since it first came out. Apple doesn’t re-invent, or even invent anything. They take existing technology and make it look pretty. Even iOS uses the GNU Linux kernel, much like Android does.

    Satellite phones are a technology that is too niche. The average consumer wont want to pay $25/mo + $0.70 cents per call for a feature they may never use, and thats in the US where phone rates are not ridiculously expensive. Imagine how much you’d have to pay for GLOBAL Sat service!

    Also, Apple doesn’t have nearly as much disposable income as either Google or Microsoft. Hell, even Samsung has more money in the bank. All of those companies have multiple sources of income, not just based on half a dozen devices and services. If Apple decided to take the gamble and make a Sat phone, and it worked, what makes you think Google, a world networking giant, wouldn’t be on their tail almost immediately, WITH a cheaper service.

    Get real.

  • theejohndoe

    Not sure if Darxler is brilliantly sarcastic or astoundingly stupid. iOS does NOT use Linux; to even intimate such is an obvious indicator of brain damage.

    Needless to say the reality is that Apple has more cash, more profit, and more income than Google and Microsoft COMBINED. Apple’s iPhone business ALONE makes more money than Microsoft’s ENTIRE BUSINESS. So satellite telephony is certainly within their reach. Whether or not it makes sense is up for debate.

  • csdxMKii

    Re: “Chinese-made pieces of junk”
    You do know that Apple makes it’s phones in China too right, heck my iPad was shipped directly from there according to the tracking info from the apple store. I’m not contending that everything they make in China is great (nor would I make that claim of “Made in the USA” goods), the two words aren’t synonyms, no need for xenophobic shots.

    @Market_Mayhem I don’t think that Wall Street is too irrational in its worries. As noted Apple’s business model is to sell premium goods and be ahead of the curve. The problem is that as of late, its gap has been closing or even lost, so given the current landscape the flat assessment seems fair. Of course given Apple’s secrecy we don’t know what they’ve got in the works, it may be amazing and revolutionary. But for investors they like to see a sure thing, and selling volume is much easier to predict than whether or not a new CEO can keep Apple releasing new game changers.

    Also no, I wouldn’t buy the phone, but I don’t really leave civilization that often, and even when I do, there’s a decent chance I’ll still get reception anyways. Plus, businesses do have to rationalize costs, expense accounts aren’t magic fairy money. Given that many business travelers meet in well connected corporate locations, and not the wilderness or remote mountain peaks, I suspect many business may claim that there’s no legitimate business need for such a device for the majority of employees.

  • Nexus7Forum

    Android also has over 60% of market share throughout europe. Apple is about 20% less. That’s a pretty big omission there…so it’s not just China that’s responsible for Android’s success.

  • Atienne

    As an Apple lover….. Apple needs a Cheaper phone $99 and a beast of a phone $800. They also need to bring on a serious feature set update. We have essentially gotten the same phone since the beginning. I love them, but its time for change.

  • takeshiyoung

    Yes, Apple needs a space program! Sign me up for a satellite phone!

  • TheMacAdvocate

    Is there a narrative equivalent to Tourette’s? I think Mike may be patient zero.

  • lakerice

    Great idea! This makes me anxious.

  • GeeksOnHugs

    Hopefully it is not by design but this article reeks of the unattractive elitism that Apple aficionados are stereotyped as. I’m not sure if I’ve read other articles of yours or not so I won’t make that charge based on this.

    Mobile and other computer technologies are a great passion to me and many others. Fortunately my work and income give me unlimited access to a bounty of toys. However there are masses of people who have as much passion but find themselves unable to afford Apple’s arbitrarily high prices. I would like to see Apple offer more affordable options.

    For example the new iPod Touch – the entry level for an iOS device starts at $300. $300 for a media device! I cannot imagine selling it for $200 would destroy Apples image or seriously affect their incomprehensible wealth. The Mac Mini starts at $600 but does not include the mouse, keyboard and monitor that is over $1100 more (yes you can add cheap parts but that defeats the purpose as Apple’s design is a huge reason to buy Apple). So the price of entry for a full Mac experience is $1300 (for entry level iMac). Offer a down graded and smaller display for $200-$300 and include a mouse and keyboard (the non magical wired kind if nothing else) with the mini for a TRULY sub $1000 Mac.

    So, yes, I fully support Apple making some truly affordable entry level products so that everyone who shares our passion can enjoy these products and is not stuck on the outside looking in: young people, students, people with families and people with careers focused on doing good or following other passions rather than making the most dollars. Apple is currently cutting a lot of those segments out.

  • duncanfurg13

    Really well worded. Good post.

  • shanesap09

    Good article and I agree to an extent. I would actually like to see a Apple sat phone with lower rates but with technology advancing the need may disappear in the near future. In October 2007 I took my newly bought iPhone and a Verizon flip phone with me up to Advanced Base Camp on the North Face of Mount Everest (21k ft.) and had a full set of bars…I even made phone calls with crystal clear clarity to my sister and parents. Pretty much anywhere I traveled in the Himalayas I had a signal.

  • egoattack

    Well done article and also good idea for Apple. current iPhone for Carrier can still keep on and Apple also can make Satelite iPhone for their own company network for global also. Can consider. This won’t crash with current carrier business and also can expand iPhone ability and user choice for better usage like you mention. Apple got enough money to do that…

  • jonshf

    Apple should not include satellite capability into a phone. It would be too small a market and satellite communications takes a lot of power and would quickly drain any slim iPhone.

    How about leaving it to a third party as an add on. I’m visualizing a case connecting to lightning with an extra battery and satellite communications. You need satellite when you’re out of cell range which is usually when you’re out in wild nature. Better have extra battery power too.

    Maybe a better Kickstarter project than Pop.

  • nikster

    Yeah I like the idea, and the scale of the project. Unfortunately, technological limits make it utterly impossible. Satellite bandwidth isn’t good enough to serve hundreds of millions of devices. Even with the few and the proud devices out there, data speeds are slower than 2G. And in a global, Apple-scale network, one satellite is supposed to serve what hundreds of thousands of devices at a time? Millions?

    Which is why there isn’t a mass-market global sat network yet. And there won’t be for a good long time.

  • nikster
    As an Apple lover….. Apple needs a Cheaper phone $99 and a beast of a phone $800. They also need to bring on a serious feature set update. We have essentially gotten the same phone since the beginning. I love them, but its time for change.

    Well unless you have some revolutionary idea as to what they could add.. I don’t know.

    I have a pet peeves list of things that need to be fixed in iOS, but none of this is revolutionary. First and foremost the iPhone needs to get better at sharing files – ok let’s call them documents. Data, if you will. It needs a file system and a free exchange of files on the OS. Android does it, there is no excuse on iOS, all they need to do is steal the model.

  • elpamyelhsa

    When do preorders start?

  • Zod Buster

    seeing there’s no economic problems etc.. we should make them in solid gold too…
    then build guillotines

  • jtt1975

    I always find most articles concerning the future development of the iPhone lack any real imagination. A lot of commentary – perhaps not specifically this one – criticise Apple for their alleged ‘incremental’ changes to the iPhone. Yet, here we have a mock up of a future iPhone with the words: “This is a revolution again” and yet the concept image is nothing more than a morph of iPhone 4/5 with a curved back. It’s hardly a “revolution” is it?

  • mvmaastricht

    You’re totally missing the point in your article. To speak with Steve Jobs: “it’s not about the hardware. It’s the software that matters!” That’s what Apple focused on until now, and that’s what they should focus on even more! And becoming more and more in the position of an elitist company with only high margin profits won’t help the software part: why would a developer program for an elitist company with a small market share?

    I really think Apple needs to reconsider their focus, especially because the competition is approaching Apple in quality, speed and obiquity. Apple should keep making the best phone in the world and they should keep that phone expensive, but they also should consider to retain their market share, especially in education! Why education? Because that’s the place where young people get accustomed to the (high quality) Apple-ecosystem: that’s where it all starts. And that’s also the place where price DOES matter, which happens to be the only market you forgot to mention in your article.
    If competing companies (Microsoft and Google) will offer comparing products in the near future, education will switch to them if Apple will keep being the most expensive option.

    And then it will be the obiquity of the software that will matter: why would a school or university invest in an elitist system while there are cheaper options with as much software and comparable quality? If Apple will let that happen, it’ll be the beginning of the end: students will get in contact with, and get accustomed to, competing systems, making the step to the unfamiliar Apple ecosystem, after their school career, les obvious.
    Actually, I think this is already happening in the most Asian countries!

    At the moment, Apple is still in the position of the most obvious (and best) option for education (like they were in the eighties). But because the competition is approaching (and will probably be on par with Apple in one or two years), Apple should accept the profit margins to shrink, while staying true to high quality. That’ll be the only way to stand the competition and probably the wisest spending of a part of their huge money reserves.

  • pmcgivern

    I think this article speaks more about the modest improvements of the iPhone over the last iterations as more companies emerge in the smartphone market with cheap, little-to-no-profit phones.

    Android has been amazing, Google have taken a mobile operating system, left it open source and claimed a large portion of the smartphone market. I wish we could see that with the Linux operating system in the desktop/laptop market, but that’s a discussion for another time.

    A satellite-ready iPhone may not be the next revolutionary idea, but speaks to original idea that Apple needs to find and change a market in a big way with a fresh idea.

    I think Apple has a problem where the dynamic range between the best and average smartphone is now at most 20%. Apple made its success on finding ‘never done before’ innovations (app-centric phones) and truly changing people’s lives.

    “1,000 songs in your pocket was the phrase that sparked the creation of the iPod, iTunes and the movement to selling music over the internet. From that, we have the have the iPhone and now the iPad.

    However, I think Apple, now that smartphones are everywhere and done by everyone, has to find another market and invoke some fresh ideas. And that’s what I’m taking from this article.

  • technochick

    For a guy saying Apple must do something, there’s way too much guess work about costs, profits etc. all those ‘I figure’ and ‘I guess’ are likely way off base and frankly make you look rather stupid. Hard to accept the first half of the article, which originally came off as knowledged, as anything close to accurate once the faith is lost by the second half

  • technochick

    it needs a file system and a free exchange of files on the OS. Android does it, there is no excuse on iOS, all they need to do is steal the model.

    Don’t hold your breath. Apple could have done an open filing system etc from day one but make the decision not to. That is something that isn’t likely to change no matter how many ‘X does it’ statements are out there. If you want that kind of system in your phone, go buy something else.

  • Bob Smogango

    Correction; Android sold well LAST month because the iPhone 5 hadn’t been released until the last few days and they hadn’t build enough phones to meet demands, nor did Apple release it to their entire market place. I think we’ll find out that Apple actually has more like 40+% worldwide sales. They would have had even more if they announced two different sized iPhone 5s (4 inch and a 4.5 or larger). But hopefully, Apple will announce a bigger model to go after those that want a larger screen so they could have two different screen sizes. I think there is a big enough market for 4.5+ screen sizes and 4 inch. Satellite phones? If they want to go after the super rich jet setters and military/government market, sure, but that has to be a big enough and growing market which i don’t think it qualifies.

  • SupaMac

    TL;DR

  • Rowanova

    I’d like a device that is 4G cellular and satellite capable. But I just don’t see it happening. Satellite phones are mostly not global anyway, at least to my understanding, and it is due to governmental regulation by the governments of the individual nations. I don’t see Apple changing all that. I’d love it if they could and did do it, but just can’t see it being a reality any time soon. If at all..

  • Cowicide

    >To say that Apple should make a cheap phone in order to keep up with Android market share is madness.

    Apple should make more affordable phones to stay RELEVANT. As Apple’s iPhone market share continues to crumble, there’s less and less incentive for website developers to make sure their websites are compatible with them and will focus on Android compatibility instead.

    When consumers start finding that Androids function better with websites and brands (have more options with them, etc.) – Apple iPhone (no matter how expensive and “fancy” they are) won’t be purchased and will become nothing more than a polished turd that costs more, but functions less.

    Your idea that Apple shouldn’t offer more affordable phones is a recipe for disaster. When it comes to smartphones, lower market share will mean lower relevance and options down the road.

  • Jacob

    What I’m wishing is that the iPhone 5 would have had a curved enlargement like that, but instead of rarely if ever needed satellite capability it contained really useful stuff like a killer battery and perhaps enabled things like a memory expansion card. The lack of such features (and the small screen) prompted me to choose a non-iPhone when recently upgrading. But ….. when comparing my wife’s iPhone 5 to my Android, gotta say the touch reaction on hers is vastly superior.

  • Atienne
    As an Apple lover….. Apple needs a Cheaper phone $99 and a beast of a phone $800. They also need to bring on a serious feature set update. We have essentially gotten the same phone since the beginning. I love them, but its time for change.

    “Well unless you have some revolutionary idea as to what they could add.. I don’t know.”

    Honestly, I am not sure. I agree with the file sharing issue. I think a $99 8 GB phone closer to the ipod touch, would fill an area where parents would give one to every child and even the poor could afford them. I think a lot of people who wont pay $300 for an iphone want one and would buy one with slightly reduced feature set. Every other maker on the market has a cheaper minimalist phone and a flagship phone.

    Maybe its time to discontinue the iPod touch and introduce the iphone touch.

  • Ksec

    Which is basically saying Apple should create their own Global Mobile Network that is expensive but gets quality assurance.

    And that is exactly what Steve Jobs wanted to do. But then this isn’t something 150B cash could accomplish. The price for world Wireless Spectrum would have cost more then that not to mention the Network Operator would use everything to defence their Turf.

    And Global satellite mobile network would have been a great idea if the tech is really that good. And it is not. It is slow, expensive, and isn’t worth it.

  • Ksec

    For Some reason it wouldn’t allow me to edit even i was within the 15min time frame.

    I think Apple should create a Global WiFi Network. The Backbone of those WiFi Network should be speedy enough to not be the bottle neck. Which means if would have to be Multi Gigabit Network. The Wifi would be placed in Chains Restaurant; McDonald, KFC, BurgerKing etc, Public Services Places like Library, Post Office, Sport Stadiums like BaseBall, Basketball, FootBall, etc, Cinema, Casino, Train Stations, Gas Stations etc.

    The problem with this approach is completing directly with upcoming Femtocell, or MicroCell. Which should hope to smooth out those Black Spot of Radio Signal and Slow Connections. I think Apple is playing a wait and see game. They would rather pressure the Network Operator to improve then to do it all themselves.

  • jpadhiyar

    Apple’s core philosophy has been to have the best product in a particular industry and not *many* great products. I’m not sure if Cook would abide by that philosophy because it was basically Jobs’s idea. Still, I think I’d align with Cowicide’s comment: that Apple should make itself more relevant by making affordable iPhones so that the rest of the world, where there aren’t contracts to go by can afford the iPhone and make it an even more popular smartphone of our times.

  • ozymandias

    Intriguing idea. Take it one step further and add satellite reception capability into Mac laptops. That would be a killer feature.

  • GMDS

    Reday for a $10,000 Gb? Might want to research sat comms a bit before proposing a pancea. There will likely be more movement on other technologies for providing ubiquitous connectivity before sat comms.
    It should also be noted that the capacity of a single satellite of the type proposed for even such ambitious (but failed) intiaitives as the recent Lightsquared plan, is less than a single ground tower. The plan was to use a network of existing towers (ie.e Sprint unti lthey bailed out) for the heavily pouplated areas and sat comms for trhe rest of the country. The terms LTE and broadband assume high speed and high capacity; the capacity of any one of the few satellites is very low, relative to terrestrial. Per LightSquared’s own submittal to the FCC [http://tmfassociates.com/blog/wp-content/uploads/2012/02/Waiver-coordination-meeting-Nov-2010.pdf], released under a resisted FOIA (Freedom of Information Act) request (see footnote #8 on the 8th page) the capacity of the fully deployed terrestrial network would be 2,800 terabytes per hour, while each applicable satellite has a capacity of only 100 gigabytes per hour. 100 GB per hour from each of only a few satellites would not enable anything close to “broadband” or “LTE”.
    Price; The details on pricing for this same plan were closely guarded, and it was not until the same FOIA document release [http://tmfassociates.com/blog/wp-content/uploads/2012/02/Waiver-coordination-meeting-Nov-2010.pdf] that the preliminary pricing plans (as related to the FCC) were revealed. From their own document: “The company’s pricing is integrated charging $6 per one GB of terrestrial usage and providing 500kb of satellite usage as part of the integrated price, with a charge for satellite usage above these levels of $0.01/kb”. The $6 per Gigabyte for terrestrial is pretty amazing if that wholesale price could be preserved through retail, but then the satellite service price of $10 per MB (or $10,000 per GB) is not quite “LTE” or “broadband”.

  • seaaalex

    Mike, I guess you don’t use satellite phones much ( ever ? )
    I do often at work, one word “lag” it gets pretty annoying at times. If I don’t need use a sat phone I don’t…….

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  • SuperSam64

    The basic flaw in this logic is that Apple is already charging more money for less phone (I mean that in terms of specs and features, which are the only measurable differences; as far as OS it is strictly a matter of preference). You get far more bang for your buck with Android. Let’s look at the Galaxy S4 and the iPhone 5. Virtually every specification is higher on the S4 and there are a ton of features on the S4 that are not on the iPhone. Even after stripping the S4 of the admittedly gimmicky features, there are many useful qualities that remain that the iPhone just doesn’t have. In terms of design, performance and fluidity, the iPhone has always done extremely well, but at the end of the day, the S4 just has more to offer in terms of capability. And the S4 is *the same price* as the iPhone 5. See where I’m going with this? The only way that Apple could justify selling a more expensive iPhone is if they added a very large amount of significant capabilities to it, because the average consumer, for better or worse, is more concerned with whether or not their phone will do everything they want it to than whether it will do it smoothly and provide an aesthetically pleasing interface in the process (not to say that Android doesn’t, but those are some of Apple’s strengths).

    I disagree with the article, and feel that a less expensive iPhone would do very well, particularly if the primary difference is the build material. The aluminum looks nice, but scratches easily, and I don’t think I’m alone in saying that if I saw an aluminum phone and the same phone in polycarbonate for half the price, I’d go for the polycarbonate – not just to save money, but also because flexible materials absorb impact much better than rigid ones (which is incidentally the same reason cars are made of flexible metal) and if I drop my phone I’d rather the outside get a little banged up than have the internal components take all the impact. What people don’t understand is that they are paying more than they have to for their phones to be “pretty”. I’d rather pay less for the same phone if the price difference is based primarily on the material.

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Mike ElganMike Elgan writes about technology and culture for a wide variety of publications. Follow Mike on Google+, Facebook and Twitter.

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