Since the first iPhone went on sale, there have been calls for a cheaper version, but Apple isn’t interested. Its first effort was to reduce the price of old models by $100 when new models were launched. Then, the company launched the iPhone 5C in 2013 but it was mostly just “old wine in a new bottle” and priced $100 cheaper.
Apple tried again in 2016 with the iPhone SE. The $399 price tag is appropriate, but the design quickly becomes outdated. The SE today costs $429, not a bargain considering the missing features. Chinese brands like Xiaomi, Transsion and Oppo are offering models with larger screens and multiple cameras for as little as $150 each.
Next year, Apple is planning to upgrade the SE, switching to an all-screen design that makes the device look more like a modern smartphone. But with a faster chip and premium materials, it could cost over $400. If Apple is really serious about emerging markets, they should develop a $250 iPhone, financial news outlet Bloomberg identify.
Apple could reduce costs by using an LCD screen instead of the more expensive OLED and reducing the number of cameras. This device will use an older but still usable chip and probably a plastic case. Additionally, the device should only be sold in emerging economies.
This will require a change in thinking. Apple will have to forget its vaunted profit margins and simply chase revenue and market share. It could help build the Apple brand in developing countries and ultimately sell more expensive devices to new customers. Many of them will be drawn to Apple’s services and applications.
Apple avoids this strategy for fear of diluting its premium brand. That’s why discussions about selling a really cheap iPhone are not progressing, according to Bloomberg. “We don’t provide bad products”, The late founder Steve Jobs said many years ago and Apple still lives by that philosophy.
However, the market is changing. Competitors have advanced and the stakes are higher. Apple has also shown it’s more open to new ideas: the company currently sells the $699 MacBook Air M1 through Walmart, which it doesn’t advertise on its own channels.
There are billions of people in the world who don’t use Apple products, and that may not change without more affordable options. The biggest opportunity may be India, where Apple is expanding. Not only is it a potential consumer market with a rapidly growing middle class, the South Asian country is also becoming a production center for the company.
There are other interesting markets in the vicinity such as Vietnam, Indonesia, Thailand and Malaysia. Apple already has two stores in Thailand and is about to add its first location in Malaysia. Last year, the company opened an online store in Vietnam. That move is often a harbinger of a bigger push by Apple in a region.
It’s no surprise that CEO Tim Cook toured Southeast Asia this past week – visiting Vietnam, Singapore and Indonesia – and pledged to increase local investment. There are other opportunities beyond Asia, including parts of Eastern Europe and Latin America. Further down the line, Apple could even make a meaningful push into Africa. There are still infrastructure limitations, but Apple is clearly studying the prospects here.
That doesn’t mean Apple will wipe out China, the mainland is still the key to their business. Still, the company needs to be less dependent on the country, and developing an entry-level iPhone could help with that.
(Theo Bloomberg)
