Apple’s 4-inch iPhone strategy could devastate Android phone makers

“The latest leak on Apple’s upcoming 4-inch iPhone suggests Apple might be ready to deliver a two-punch combo to competitors by rolling out not only the new iPhone SE but also keeping the 5s alive,” Mark Rogowsky writes for Forbes. “What does that do? Well, if what KGI Securities Ming-Chi Kuo believes comes to pass, the 5s will see its price cut in half when the new, updated model is announced in late March… Could the 5s really be headed for pricing around $225? And if so what does that mean for mid-tier Android phones?”

“With support for Apple Pay and the current A9 chip, the only important things an SE will lack that a 6S has are the larger screen and 3D Touch. Apple’s goal here isn’t just a desire to have more people running modern hardware, it’s of course that it wants to make money and selling $450 phones with margins around 50% is very good business indeed,” Rogowsky writes. “In the U.S. alone, more than 40 million people are using models pre-dating the iPhone 6 and some are likely wedded to the smaller form factor. The SE could be the perfect upgrade.”

“The second big reason for this push — again, assuming the price cut happens — is to continue a very quiet move to become more competitive in emerging markets,” Rogowsky writes. “This push in emerging markets dovetails nicely with Apple’s third objective, which is to apply continued pressure to Android everywhere but the lowest price bands. The so-called “premium Android” market has been devastated in recent years, mostly retreating away to lower price points rather than trying to compete at Apple’s pricing. Even the Galaxy S7 is launching with bundles and discounts… What Apple is doing here represents a significant break from past strategy…”

Much more in the full article – recommendedhere.

MacDailyNews Take: If Apple plays their cards right, emerging markets like India could be a big contributor to iPhone’s return to growth later this year.

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]

28 Comments

    1. As if Tim ever was distracted of course. Only for disingenuous & doofus Tim Haters & homophobes (with the only sex partner they’ll ever know their right or left hand, pleasuring themselves in Mom’s basement) who fail to realize every CEO deals with multiple battlefronts at once.

  1. This is Apple’s MO. Own the high end market and then start squeezing the competition with lower cost products. The iPod was the perfect example. Apple are also doing that with the Mac and with the iPhone. The strategy is slightly different in that emerging markets have different price points but a lot of potential.

    1. Exactly. The low end just becomes the slow-learner’s non-profit market for Apple mid-range and upper-range products.

      That will be a huge long term strategic win as low margin phone makers are not going to be able to compete with Apple well during future tech transitions to perhaps more capable phones or augmented/virtual reality.

      People thought Microsoft had the market locked up, and they really did. It took a Ballmer sized mistake to lose their grip. But Apple isn’t being run by a Ballmer. Its future looks bright.

  2. Q: Is going after what’s left of the Android market a lucrative project?
    A: Obviously not.

    But an entry level, small, cheap iPhone will save millions from needless Android induced suffering, frustration and stress. So I say Go For It!

    Just don’t expect Android to go away. It’s like herpes. 😉

  3. Reading the comments on any Apple related article on FB and you will see an amazing amount of frustrated, angry android users venting their bitterness. A smaller form factor and older phones, sold at a discount, would be a plus plus for both Apple users and android switchers.
    And to those, angry android switcher, I welcome you to the family. Welcome to a secure OS as well the beauty of Updates for all. :-)))

  4. With development & tooling costs for older phone models completely paid for, these devices can be profitably produced and sold to those price-sensitive customers for whom these devices meet their basic needs.

    I’ve been using both my new 6S Plus and my old 3GS for a few months while selling my house and moving to another part of the country. The 3GS still works fine; I kept my old number and buy basic service from an MVNO for $10 per month. It is convenient to use the 3GS to make “local” calls to that area.

    The 3GS works perfectly fine for phone calls, text messages, and email, not to mention other apps (stocks, weather, etc) and even music. Yes, the chip can be frustratingly slow for web browsing, although it does technically still work…

    The strategy of selling older models at cheaper prices is a smart one. It is an “incremental” profit strategy. More importantly, it will introduce new entry-level consumers to the Apple ecosystem, which is good for the long run. Plus, the strategy will begin to bridge the “security divide” in which typically poorer Android device owners lack security in their phones.

    Hopefully, price-sensitive consumers are also looking critically at carrier fees. It is crazy to buy an inexpensive phone, then opting to overpay on high-priced monthly carrier service. Many might realize they would be perfectly happy with inexpensive service from an MVNO service.

    I am sure the 5S will provide excellent utility to consumers, particularly price-sensitive consumers, who need a good phone but who might otherwise choose to buy an Android device to save money.

  5. LoL Wow. I didn’t know monkeys liked apples this much. Very entertaining watching you guys go at it. People choose Android because Apple doesn’t meet their needs. They’ll never get those needs met by IPhones. Ever. Have you guys even seen what the S7, Gear VR and Gear 360 are going to bring to the game?? Enjoy the wait, like you always do. Ages behind Android.

  6. I think moving the 5s down to $250 is a strategic play. There are rumors suggesting Google will begin pushing OS updates to new phones like Apple does. For Android users this means no more long delays in getting operating system updates and the latest OS. This also means that manufacturers and carriers have to test their software they put on these devices to make sure the devices continue to function after the update is installed. It is unclear if the manufacturers and carriers have to test these updates or if Google is planning to hire any army of testers, but if the manufacturers have to test their own devices then either the money they lose selling their devices will grow larger or they will have to increase the price of the hardware. This could increase the price of many Android smartphones by $50 or more.

    It is also possible manufacturers won’t comply with Google’s new rules, and instead they might install a forked version of Android without Google services. This has occurred in China, but many Android customers in other parts world rely on Google services. So, not following Google’s new rules will significantly decrease these manufacturers’ sales.

    In comes Apple. They reduce the price on a very good phone down to $250 (or whatever price they decide to charge). This phone receives timely updates, has the Apple ecosystem, has Apple’s impeccable service, and has Google services. What is a low-end consumer going to do? Will they continue to buy $200 Android phones that might only last a year before breaking, a phone that can’t get timely OS updates, can’t be fixed because the manufacturer doesn’t return phone calls, and can’t receive Google services? It’s a no-brainer, and as a result Apple increases market share, which also means they sell more services, apps, and other products like the Apple TV.

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