With the rumored low cost – plastic! – iPhone for emerging markets Apple would confirm the choice it already made when it delivered the low cost, low spec, 7x " mini iPad.
To quote tonight´s news: "Some sources claimed that they have seen the sample of the low-cost iPhone, which will come with a larger display, meeting the prevailing trend for the adoption of 5-inch displays for high-end models. They added that the low-priced iPhone will also have a brand new exterior design."
We can´t be sure but it would fit into the Apple strategy of releasing the relatively low-spec / low-cost iPad Mini.
For a while Apple seemed to cater to all segments. The iPhone was extremely popular while keeping it´s premium brand image ánd margins. Of course this was an anomaly. You either make Porsche´s or Volkswagens, you can´t have the profit margin of the Porsche on top of the volumes of Volkswagen. Economy 101, but Apple got away with this impossible mix until they reached or actually surpassed market saturation of their niche.
The tablet market, other than the smart phone segment, has never been a high margin sector for Apple. They took control of the market ánd kept on top of it by using volume production and the resulting economies of scale. An iPad is perceived as a premium product and yet the price is low enough that it´s hard for competitors to make huge inroads.
The phone market however has been the Apple´s forte: extremely high margins combined with almost market domination. An impossible combination in the long run, so Apple needs to make important choices: keep the premium brand or diversify and produce phones for every budget and market.
If the rumors by the Digitimes are correct Apple will confirm their ambition to be a full spectrum supplier. Cloning Samsung´s strategy so to say 🙂
Will it work? Can Apple pull it off and keep the high margins and premium brand while diversifying? Or will they cannibalize their own image? #Tech
Apple will roll out a low-cost version of the iPhone for China and other emerging markets in the second half of 2013, according to supply-chain sources.
While people are willing to pay for the devices they will continue to be dominant. Even there has been such a backlash against Apple with iOS 6, I personally don't think that it has massively affected Joe Public's perception of the company. As long as they don't continue making these kind of mistakes I think they could pull this off and still ask for high margins.
+Chris Westcott Dominant by what measure? iOS market share continues to drop. How many Android devices were announced at CES, and how many even work with Apple products?
It would work out if… and here comes the most crucial if for the whole industry… if they could produce you enough SoCs, get enough displays, memory, etc.
A lowcost iPhone could create a demand that Apple can't handle.
We all know these rumors that Apple will move away from Samsung and let TSMC produce their SoCs. Well good luck with that, we are already running out of fabs and the semiconductor industry struggles to keep up with this insane demand for new mobile devices.
Sooner or later Apple will need to have its own lab. This is the only chance for them to compete with Samsung. Cook can't control the supply chain anymore because the manufacturers can sell their output anyways and even at better margins
Everything Apple has done in the last five years has raised questions from haters saying "How will this work? They'll be screwed by **insert rival company name here**" but they're gonna glide right through it. They have one of the best reputations among the common person, which, to be realistic, is all that really matters. Apple releases, people buy. Lots of people. So yes, I think it will work.
+John A. Tamplin look at the majority of users on the street and there is still a desire for the general population to own Apple products. Let's not make this an Apple vs. Google conversation.
Although I agree with your assessment of Tim Cooke´s now failing strategy, I disagree on the fundamental question +Sascha Pallenberg
As the smart phone market matured the supply / demand chain did as well so no more semi-monopolies for Apple, BUT also the normal economical laws kicked in. You´re either a premium brand or a general manufacturer.
Samsung is the one to watch as their profit went up, but we don´t know yet if they really made the kind of profits Apple is used to.
BTW +Sascha Pallenberg no doubt you meant ´fab´ instead of lab.
+Max Huijgen ouch sorry, you are absoutely write… I was multitasking and talking about r&d labs with someone 🙂
I won't pretend to know what is a good strategy for Apple. They seem to be doing quite well without consulting me.
But if I were suddenly placed in control I'd probably think twice before going for low cost products.
+John Fanavans Apple hasn't innovated in a while (unless you count Apple Maps as innovating, albeit in the wrong direction).
+Max Huijgen I still believe you can have a premium brand equity (which Apple has even though they've been still facing some punches and kicks because of Scuffgate and Mapplegate) and release a midrange product. If it's worth it, it won't have any negative impact on your brand and how you positioned it.
25 years ago you were one of the few to have an Apple product. Now you can differentiate yourself anymore with an iPhone or iPad.
"Think different" turned into "think mainstream" anyways
Personally I disagree with it being Jelly Bean when Android caught up / overtook iOS, I just think that's when Apple owners started to realise the fact.
I do think that the next release of products by Apple will change a lot with iOS to put it back in competition or at least catch up. Jony Ive providing aesthetic support will also help there.
Wow, now either Apple will have to severely cut its margins or come out with a cheap crap iPhone … either way that's not going to be good for Apple's 'image'. What will the hipsters say when the Hoi polloi are able to afford an iPhone?
BTW, Porsche is owned by Volkswagen – as is Audi, Bentley, Lamborghini and Bugatti. So perhaps they should sell the cheap stuff under a different name?
+Uwe Raabe I know, that´s why I used this specific example. You can diversify, but it´s hard to do as one brand. Samsung is more or less the exception to this rule
It'll kill their high end, but save the company longer term. That everything is tied to 1 phone, 1 tablet (with versions of course, but still basically the same product), doesn't take much to pull the rug from under them and lose everything. This should expand the market, and upsell owners of cheaper models to later better iphones, than risk them going to Android's ecosystem and never seeing them again.
Very logical thing to do (and is working great for Samsung), but again, something we'd not have seen with SJ at the helm I suspect.
When talking about Apple, +Robert Mahon, killing their high end is pretty much killing the company.
+Alex Balcázar It wouldn't be the first time Apple rode diminishing market share of an overpriced product until it went away, but this time they can't bring Steve back to right the ship.
+Alex Balcázar Very much so, but it /might/ be recoverable long term. If they do nothing, there'll be a few million sold for each release, but the non-US markets will shrivel up. Certainly a risky move to do, but don't know what else they can do.
Ideally for them +John A. Tamplin, +Robert Mahon, they could come up with an upgrade to iOS that was revolutionary. I remember when the iPhone first came out I kept saying to anyone listening to me that there would be other manufacturers with better hardware in the short term but not better software. That's what made the iPhone and later the iPad special.
When the software is no longer special (to put it mildly) they need to at least try again. Just saying we give up and forget the client base that has made us who we are and we are now going to compete with Chinese manufacturesrs of low cost phones could hurt them very badly. It is a complete change of the company culture.
I consider it as a risky and desperate strategy. They'll hardly be able to compete in the low price segment. They might have done outsourcing to China, but other companies are entirely in China and offer useful Android products.
After having lost 2 years or so, trying to defend their old ideas, what they need is some kind of a revolutionary idea (well, ok, again). Otherwise the continuously busy improving themselves Google people or even Microsoft just take all the market.
+Chris Westcott yepp, I agree, GB overall was probably as good as iOS at it's time, but ICS was essentially in front and it is only now, that this is becoming more and more common sense.
iPhone has peaked, iTV is not ready yet. Apple needs something to grow its numbers, silly as it seems, it is the only thing they can try now.
Why doesn't the almighty Apple roll out a low-cost iPhone for the US market? Jeepers! They are very expensive and so is the service! PLUS…they're 3G!