“As the bad news on the new iPhone sales continues to build, was Apple’s key mistake pivoting towards the luxury high margin smartphone market by sacrificing the iPhone SE line?” Ewen Spence wonders for Forbes.

MacDailyNews Take: What “bad news?” Oh, you mean the ludicrous “iPhone sales are dying” blather in the echo chamber that’s based on specious data points and so-called “channel checks?” We’ll see how “bad” the news is when Apple reports all-time record quarterly results in January.

“The strategic issue with the iPhone SE was that – no matter its popularity – it was much cheaper than the rest of the iPhone portfolio,” Spence writes. “The entry-level model is now the iPhone 7. That handset is arguably $150 more than what the iPhone SE would be priced at for this festive season.”

“Apple would rather push the iPhone XR as the ‘affordable’ handset and bring people into the iOS ecosystem with a handset priced at $749,” Spence writes. “[An updated SE] would have boosted the unit sales of the iPhone, it would have created a less expensive route to bring new users into the iOS ecosystem, and those users would be feeding Apple’s software and services for the next few years.”

Apple's 4-inch iPhone SE

Apple’s 4-inch iPhone SE


 
“Instead the ladder was pulled up and the iPhone became a luxury brand, Tim Cook took the decision to hide the unit sales of the iPhone from the quarterly reports to reduce the impact of lower sales, and Apple as a whole moved to increase the profitable rake from each user,” Spence writes. “The iPhone SE was Apple’s route towards the mainstream smartphone market. The current expensive handsets show no sign of increasing Apple’s share of the smartphone market…

Read more in the full article here.

MacDailyNews Take: Let us state this plainly:

Bargain hunters, cheapskates, and the poor do not purchase services, apps, accessories, etc. after the sale.

Apple certainly has data regarding how much SE users brought to the services table and the result speaks volumes: No more iPhone SE.

Apple has never been about amassing market share for market share’s sake. Newsflash: Apple sells premium products at premium prices to premium customers.

Last Christmas, Apple’s iPhone dominated smartphone industry by taking 87% of the industry’s profits, not by peddling low/no margin phones sold two-for-one in order to rack up meaningless market share. Every story you hear that calls Samsung “the world’s largest smartphone maker” is a lie by omission. What’s “larger,” a meaningless number of units peddled or owning 87% (likely more this year) of the industry’s profits?

Apple targets high-value consumers. Apple separates the wheat from the chaff with their value proposition. Android phone assemblers generally do not target high-value consumers (they target price-conscious customers with endless BOGOF promos) and when they do go after the high-end, they simply do not compete well against iPhone.

Apple customers are the wheat. [Those who settle for Android] for whatever reason, failed to make the cut; they are the chaff. — MacDailyNews, November 13, 2013

Android is pushed to users who are, in general:

a) confused about why they should be choosing an iPhone over an inferior knockoff and therefore might be less prone to understand/explore their devices’ capabilities or trust their devices with credit card info for shopping; and/or
b) enticed with “Buy One Get One Free,” “Buy One, Get Two or More Free,” or similar ($100 Gift Cards with Purchase) offers.

Neither type of customer is the cream of the crop when it comes to successful engagement or coveted demographics; closer to the bottom of the barrel than the top, in fact. Android can be widespread and still demographically inferior precisely because of the way in which and to whom Android devices are marketed. Unending BOGO promos attract a seemingly unending stream of cheapskate freetards just as inane, pointless TV commercials about robots or blasting holes in concrete walls attract meatheads and dullards, not exactly the best demographics unless you’re peddling muscle building powders or grease monkey overalls.

Google made a crucial mistake: They gave away Android to “partners” who pushed and continue to push the product into the hands of the exact opposite type of user that Google needs for Android to truly thrive. Hence, Android is a backwater of second-rate, or worse, app versions that are only downloaded when free or ad-supported – but the Android user is notoriously cheap, so the ads don’t sell for much because they don’t work very well. You’d have guessed that Google would have understood this, but you’d have guessed wrong.

Google built a platform that depends heavily on advertising support, but sold it to the very type of customer who’s the least likely to patronize ads.

iOS users are the ones who buy apps, so developers focus on iOS users. iOS users buy products, so accessory makers focus on iOS users. iOS users have money and the proven will to spend it, so vehicle makers focus on iOS users. Etcetera. Android can have the Hee Haw demographic. Apple doesn’t want it or need it; it’s far more trouble than it’s worth.MacDailyNews, November 26, 2012

“All men are created equal.”

Well, not when it comes to users of smartphones and tablets…

The bottom line: Those who settle for Android devices are not equal to iOS users. The fact is that iOS users are worth significantly more than Android settlers to developers, advertisers, third-party accessory makers (speakers, cases, chargers, cables, etc.), vehicle makers, musicians, TV show producers, movie producers, book authors, carriers, retailers, podcasters… The list goes on and on.

The quality of the customer matters. A lot.

Facile “analyses” that look only at market (unit) share, equating one Android settler to one iOS user, make a fatal error by incorrectly equating users of each platform one-to-one.

When it comes to mobile operating systems, all users are simply not equal.SteveJack, MacDailyNews, November 15, 2014

SEE ALSO:
No one wants a ‘cheap’ iPhone: Apple sells premium products – December 10, 2018
Apple’s focus is not iPhone market share, it’s on dominating the higher end of its markets – November 3, 2018
Apple’s iPhone just had its best year ever – November 3, 2018
Apple’s App Store is destroying Google Play in services and subscriptions – April 18, 2018
Apple App Store users spent nearly double that of Google Play users in Q417 – January 26, 2018
Apple’s iOS continues to attract content apps first, despite smaller unit share – October 30, 2017
Bernstein: Google to pay Apple $3 billion this year to remain the default search engine on iPhones and iPads – August 14, 2017
Higher income U.S. states use Apple iPhones; lower income states use Samsung Galaxy phones – September 27, 2016
iOS users are worth 10X more than those who settle for Android – July 27, 2016
Apple’s App Store revenue nearly double that of Google’s Android – April 20, 2016
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]