14 DAY TRIAL // It’s not a secret that Apple makes some of the most expensive mass-produced devices currently on the market, and both the iPhone and the MacBook are living proof that Cupertino has always been aiming for a premium price tag.
The iPhone X itself has set a new record, as it’s the most expensive iPhone model ever released, with the base configuration sold for $999 in the United States, while the version with more storage can be purchased for $1,149.
This pricing strategy made products like the iPhone be considered a status symbol, as only wealthy people would typically afford them. Carrier plans and monthly payments, however, made the iPhone extremely popular all over the world, so despite the hefty price tag, every single generation sold in rather high numbers in the majority of markets.
For Apple, this approach has always been the right way to go because this made the firm the world’s most valuable brand and brought it close to becoming the first company worth one trillion dollars. In the case of the iPhone X, for example, it’s being estimated that the device costs just $357 to make (without R&D and the other associated costs), so Apple should be making quite a profit with every sold unit.
The only problem for Apple is that the market has changed substantially and launching more and more expensive devices is no longer the right approach.
It’s believed the iPhone X is selling well below expectations, and Apple recently decided to lower production by 50 percent, a move that impacted not only the Cupertino-based tech giant itself, but all of its partners and suppliers too.
One of the reasons the demand for the iPhone X is not as high as Apple expected it to be is the price of the smartphone. Not everyone is willing to pay a thousand bucks on a smartphone, only to have to buy another one when the next generation launches a year later. What’s worse for Apple is that few people find a reason to purchase a $1,000 phone when there are so many more affordable choices in the Android world.
We’re not going to compare phones in terms of build quality, reliability, and performance, but Samsung’s Galaxy S lineup has long been considered a worthy alternative to the iPhone, and the high price of the iPhone X certainly made more people consider switching sides.
While the majority of OEMs have tried to expand their product lineups to cover as many price ranges as possible, Apple has always aimed for a premium, so now that the market’s changing and more affordable models are becoming more valuable assets in the long-term, Cupertino is in deep trouble.
Enter new Apple.
Apple is currently involved in a major transformation process that’s supposed to help the company recover after the recent blunders, and at the same time, expand its product lineup in a way that would make it possible to remain relevant in the changing hardware market.
2017 proved to be quite a fiasco for Apple. Major software bugs, security vulnerabilities, and a controversial battery tweak that Apple acknowledged in late December made such a transformation absolutely necessary.
The firm has already entered the damage-control stage and is now offering cheaper battery replacements, basically admitting that it did wrong when it reduced the performance of old iPhones with degraded batteries. But at the same time, it also promised to increase focus on software reliability, security, and performance, so the next iOS release will be more about these things, and less about new features.
In addition to the software overhaul, Apple is also planning a change of strategy in terms of hardware. And it should come into effect as soon as this year as well.
Apple is investing aggressively in more affordable devices, and the first two products families to benefit from this change of mind are iPhone and MacBook.
The 2018 iPhone lineup will include, in addition to a successor to the iPhone X and a Plus-sized iPhone X, a 6.1-inch LCD iPhone that’s supposed to hit the market with a lower price tag. To make this iPhone as affordable as possible, Apple will give up on a series of premium features, including 3D Touch, OLED display, and wireless charging.
At the same time, a new MacBook Air is also in the works, once again with the goal of lowering the starting price point of Apple laptops. The current MacBook Air is available for $999, and the new model is likely to be substantially cheaper.
In both cases, analysts expect the cheaper devices to account for an important share of Apple’s sales, and it’s all because this is what customers are looking for these days.
Apple’s bigger challenge, however, is to build more affordable products without making too big compromises. And such a goal is undoubtedly a difficult mission. An LCD iPhone without essential features could prove to be just a flop, so Apple has the hard task of creating a cheaper smartphone without pulling the things that users love the most about iPhones.
In the end, if Apple doesn’t play its card right, this strategy could backfire in a minute. And while at first glance more affordable devices could translate to bigger sales for Apple, it’s up to customers to decide if a lower-quality iPhone is worth the money or not.