Apple needs a $250 iPhone to boost sales but it doesn't want to make "stripped-down, lousy products"
Despite the wider market growing during the first three months of 2024, Apple saw its market share swallowed by other brands. The prospects for the rest of the year don't seem any brighter, with the company projected to see a further drop in sales in China, one of its most important markets. Meanwhile, Android is expected to grow at twice the pace of iOS. One insider believes that Apple should release an iPhone priced around $250 to turn things around.
The iPhone is Apple's biggest moneymaker and China is the Cupertino giant's second largest market. And while not all current iPhone owners in the country have lost taste for Apple's iPhone, the company needs to do a better job of attracting new buyers and making existing owners upgrade sooner.
The pace of upgrades has also slowed down in other places, which explains new initiatives like the new reasons to upgrade section on Apple's website. And with Apple not making much of an effort to create greater differentiation with each successive iPhone generation, buyers don't have much of a reason to upgrade frequently.
For a while, the revenue generated by the services and accessories categories made up for the fact that iPhone sales were slowing, but that strategy has been milked hard.
Bloomberg journalist Mark Gurman thinks that Apple needs to make a cheap iPhone to make inroads into developing markets.
The company is rumored to be working on a new iPhone SE model but it's likely going to cost $400. Consumers in emerging markets will likely pass it over for $150 phones with larger screens and more cameras from Chinese companies.
Gurman thinks Apple should make a phone for emerging markets that costs around $250 and uses cheaper components like an LCD screen and a plastic body.
Such a product would require a shift in strategy, which currently centers around high profit margins and premium products. Steve Jobs once said that "We don’t offer stripped-down, lousy products," and Apple still adheres to that philosophy.
Apple recently started selling a $699 M1 MacBook Air through Walmart though, so it might be warming up to new ideas to stay competitive.
Once Apple breaks into developing markets with a cheap phone, it could upsell consumers to pricier phones and get them hooked on its services and apps.
Don't count on Apple making a low-end iPhone though as Gurman notes that discussions about making a cheap iPhone have stalled as Apple doesn't want to dilute its premium brand.
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