The Apple blogosphere and analysts have discussed recently on Apple working on creating a cheaper iPhone. The reason the proponents have put forth on why Apple’s doing this, is so they can sell the device to a broader set of consumers. Some are saying Apple might be doing it, but for different reasons. I recall reading a couple posts saying Apple will never do it.

I believe Apple is working on a cheaper to manufacture iPhone. To understand what they’re aiming at with the new model, and why they’re developing it, we need to look at what they’re doing now, and the cons of that approach.

Apple’s current strategy for providing cheaper devices to the market is by continuing supplying up to two generations of old models, and selling those to operators at discounted prices. The operators in turn offer the devices to consumers with locked contracts against no or almost no upfront cash payment.

While this seems to have worked for Apple brilliantly, it has a few deep issues:

• As an app developer, the fact that iPhone 3GS was sold up until September 2012 makes me want to poke fingers into my ears and go “Lalalalalaa I can’t hear you” until I forget what I heard. The device, with it’s 2009 capabilities, is frustrating to develop against. And I bet the iOS devs felt the pain, too.
• Apple seems to get massive scale benefits for having so few iPhone models out at any given time. But having three generations of iPhone on sale simultaneously, where they share no (or almost no) parts, works against them in this regard.
• Related to above, in manufacturing old models, Apple is married to component supply chain deals made years ago, which they might want to get rid of. With the Samsung / Apple competition heating up, Apple would probably love stopping supplying phones to the market that used a wide array of Samsung components. With the current strategy, iPhone 5 will continue to be supplied until some time late 2015. That’s quite a ways off.
• While the older models of iPhone are cheaper, there’s nothing cool about purchasing a phone launched almost three years ago, so the current strategy cannot possibly be helping Apple in positioning them in the market. The latest generation iPhone does well as a device when you compare it against the Android competitors, but when comparing the older iPhones to similarly priced Androids, the devices suddenly look pretty tired.
• Slow technology rollout schedule – Apple is now selling a phone with the 30 pin connector, and with the past scheduling will be until 2014, unless they update iPhone 4S with Lightning or significantly shorten the product update cycle.

Additionally, I have no data on how the bill of materials changes over time for the phones, but I doubt the total manufacture costs of an iPhone 4 can drop dramatically over the period of two years. The bill of materials for iPhone 4, 4S and 5 have all been estimated at around $200 at launch. The consumer price difference of each step is $99, where iPhone 4 on contract goes for $0, 4S goes for $99, and 5 is $199 on contract. For Apple to get the same amount of money from 4S sales now, the cost of manufacture for the model needs to have dropped around 50%, which it probably hasn’t. If that’s true, Apple is making less profit on the old models than with the brand new one.

So what’s the alternative to Apple that’d get rid of the above issues? Create a new iPhone design where they can manufacture two versions of the same generation device, where one phone is the high end and one is lower spec. The high end is sold as the main new generation mode is now, and the lower spec version replaces the operator subsidized models. This is:

• Great for devs: a down-specked version of the latest generation iPhone would probably be much better than 2-3 year old model.
• Great for consumers: you’d be able to purchase a hip new phone, regardless of your budget, and probably get better tech, too.
• Great for supplier management: faster turnaround time on supply chain management, which should be great for Apple’s ability to pick strategic partnerships and move away from undesired partners.
• Great for component scaling: potential scale benefits for some components such as CPUs, where the parts rated at slower spec would be used in the cheaper model.
• Great for staying current: being able to update the entire phone line speeds up rollouts of new tech – with only current generation devices on the market, there’d be no delay in rolling out new technologies such as the Lightning connector.

With a cheaper bill of materials for the new cheaper to manufacture model, it’s entirely possible Apple would be able to get similar profit from the phone that’s similar to the current significantly subsidized old models, but have a much more desirable product.

With the above benefits, I’d not be surprised if Tim Cook introduces two models of phone the next time he goes on stage, and discontinues iPhone 4 and 4S. Apple doesn’t need a phone that’s cheaper to consumers – it needs a brand new phone that’s cheaper to manufacture.

I blogged about John Browett and visiting Currys last August. I had the micro-switch of another mouse broke today, so I went to get a new one. For the heck of it, I wanted to try the same store. (For those not in UK, PC World Currys is a big chain of electronics stores, that carries computers, TVs and everything between.)

The store had redone the shelving since last visit, so I walked around taking peeks of what the product placement was. I couldn’t see mice spread around the store this time, but stumbled upon a shelf that promoted the exact thing I wanted to find – a red Logitech m185. It’s a simple wireless mouse that feels great in my hand, and the batter lifetime is awesome. Price? £11.99, down from £14.99.

I couldn’t immediately peek other mouses but I wanted to check if the mouse was a good deal, so I peeked around and found the actual mouse shelf at the other end of the shelf. The setup felt confusing with no price labels placed near any of the product packages, until I realized there was a display with demo units on top of the shelf, with prices. The way the demo shelf had been placed made it hard to spot, so I suspect it was a failed adaptation of the original demo shelf design to fit that particular shop. And of course, not all units were being displayed. To make things interesting, the same red m185 was also being sold on this shelf. Price? £9.99, down from £12.99. Dafuq?

Good news was, £9.99 is what I had to pay. I’d again already committed to the higher price, so Currys lost £2 on my transaction. Their loss, and confirms my view on the chain being mismanaged. Maybe Browett can get his job back at Currys, and apply his new Apple knowledge to fix things.

John Gruber is wondering if hiring John Browett, their new head of retail, was a terrible mistake for Apple.

I was certain it was, the day his hire was announced. Why? I’d just visited London Apple Store, and Currys, an electronics retail chain I believe he managed as part of Dixons.

The difference between the experiences was stark. At the Apple Store, three employees came to ask me if they could help me in any way. The one that I had a discussion with was helpful and knowledgeable, and by problem was sorted – I got Lion on a USB stick to recover my laptop. The atmosphere of the store was also pleasant, so I strolled around and admired the architecture to the point where I had to later come in again and show the place around to my wife on a subsequent trip. Three floor high glass staircases FTW!

Now, I went to Currys to purchase a wireless travel mouse. Nobody at any point asked if they could be of assistance. One clerk was sitting bored behind the counter, two guys who looked like they might have been working there were too busy talking to each other to care about me. The mouses were spread to three separate locations in the store, making comparison between the devices super hard – they had on promotional location for Microsoft products, one location for cheap junk being offloaded from the store and then the actual shelf for mouses. On the mouse shelf, none of the price labels were positioned next to where the mouses actually were, and it seemed about a third of the devices were missing pricing information.

After deciphering the shelf puzzle for five minutes, I noticed a simple Logitech travel mouse was on a discount from ~£20 to ~$15. Great, just what I was looking for, and on sale, too! Strangely it was hidden on the floor level shelf away from the discount label, so maybe Currys didn’t want me to pick it up.

Next I go to the counter where the bored dude takes mouse and scans it. The actual price for the mouse? Around £10, one third off from the price I’d already committed to! I confirmed if that really is the price and the clerk said yes, it’s on discount. I can’t understand how any manager anywhere can think it’s a good idea to have a discount on a product without telling your customers, but that’s what Currys did. Not only were they probably losing sales due to people not knowing about the discount, but also losing profit due to undercharging the people who did purchase the mouse.

Needless to say I have no wish to return to the store unless I absolutely need something, and can’t order online, which is incredibly cheap and fast in London.

If Currys is the yardstick for what future Apple shopping experience looks like, their retail is doomed.

When Apple originally announced phasing out device-specific UDID API, I proposed they instead do a change in what the UDID call returns which would provide privacy for users and tracking for developers: generate the UDID based on the application bundle ID and device UDID, in a manner where if the user deletes and reinstalls an application, the UDID would not change.

However, as the ID would be unique to each application, tracking user behaviour across applications would not be possible unless the user identified himself in a manner that’s shareable, at which point the user should understand cross-application tracking is possible. Also, for certain uses, like banning device IDs of game cheaters, would be possible with this API change.

There’s speculation that Apple will introduce changes to APIs that provide