“Apple’s (AAPL) quarterly earnings call provided valuable insights into the possible future direction of a company that is still hurting from its delayed move to larger screen iPhones and the continued wrestling match with carriers over the consumers’ pocketbook,” Ed McKernan opines for Seeking Alpha. “Time is still on the company’s side to adjust its business model; however, it seems obvious, given the worldwide commoditization of smartphones, that Apple must make a significant adjustment on its business model by building only one high end model for the subsidized user and a much lower cost version for unsubsidized users. In other words, the iPhone 5C ended up being a tweener, not good enough to be a significant player in either universe.”
“Apple’s expanded carrier strategy enabled the company to overcome weakness in the US and a late start in ramping the iPhone 5S. Many asked what could have been had it not been short on product in September and October,” McKernan writes. “This is another case of the company placing all its marbles on the newest iPhone to satisfy its yearly pent up demand. It’s a very profitable strategy that tips on the knife’s edge of the company’s extreme logistics. The easier to manufacture iPhone 5C was offered as a buffer to any shortfall, but it looks like customers and carriers won’t buy a plan for a second rate product… However, Apple has yet to move down off of its $549 price point while the rest of the entry market has moved dramatically.”
“It is difficult for a heavily branded company like Apple to introduce the new star to the team while at the same time saying: ‘Hey don’t forget the second stringer on the bench.’ There are plenty of consumers in the developing world who would love to jump on the iOS ecosphere but don’t want to play the carrier subsidized game,” McKernan writes. “Assuming it launches a larger iPhone 6 that refreshes Apple’s current customers this fall, then the dramatic shift to $300 is the key to whether the company grows more in line with the market. It is entirely possible that the iPhone 5C becomes the $300 phone if for nothing else but to fill the gap until a true successor is developed.”
Read more in the full article here.
Apple should buy BlackBerry and sell lower-priced iOS-powered phones and tablets under the BlackBerry brand – November 4, 2013