“Apple’s phones start at $400 and average $550-$600 where the average for phones globally is about $180 and the average for Android is $250-300. Apple’s sales are entirely high-end. This has taken it to around 10% of all the phones sold on earth each quarter – it appears to have about half to two thirds of the high-end segment, with Android (mostly Samsung) having the rest,” Benedict Evans writes for Seeking Alpha. “However, the bulk of Android’s sales are actually at lower prices: hence Apple has 10% of sales and Android has another 10% selling at the high end but a further 40% selling at lower prices. Windows Phone and BlackBerry have 2-3% and the rest is feature phones, which are converting to smartphones at prices under $100, which means Android.”
“This difference between market share and pricing is, incidentally, the reason why the iPhone has 10% of handset unit sales but a third of revenue, and why the iOS app store has two thirds of app store revenues,” Evans writes. “So, maybe 20% of the phone market is premium, of which Apple has half, and 50% (say) is at $100 or lower (though within that there’s a lot of people trading up from lower prices).”
“Apple says, over and over, that the objective is not to sell the most phones, but to make phones that it can be proud of. In 2007 the iPhone was an MVP lacking industry standards like 3G and a decent camera, yet it still needed to be $600 or more to deliver the vision. Today Apple could perfectly well make a phone it could be proud of at $300,” Evans writes. “There is absolutely no technical reason why Apple could not make a great iPhone and sell it for $300 or so today. It wouldn’t be the same as the premium product, but then the iMac was not the PowerMac.”
So far, “Apple chooses not to do a large screen phone, and it chooses not to go into the mid range, and it chose not to allow, say, third-party keyboards. There were strong technical challenges for all of these, but those have probably now been removed (certainly for the third point, given the extensibility of iOS 8),” Evans writes. “This means Apple has more cards to play than we’ve yet seen.”
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