iPhone 11: How Apple makes tech of the future affordable

Daniel Eran Dilger for Roughly Drafted:

Two years ago, Apple surprised the world with the tech-laden, $999 iPhone X. The usual suspects complained about its stratospheric pricing and assured their audiences that there was no chance it would gain traction because “some users” were assumed to find it too expensive. But this year, Apple made an even better version of that phone available to the masses at nearly the standard $650 iPhone pricing from 2016…

This year, it’s unmistakably clear that Apple has taken what was the far off future in 2017 and drilled the production price down to make it broadly affordable, mass market tech in 2019. It’s not just a matter of price slashing. Apple brought down the price of today’s latest iPhone 11 by building and successfully selling massive volumes of its ambitious technology across the last two years…

A big part of making iPhone 11 affordable, starting at $699, is that its enabling technology was paid for by early adopters in the form of iPhone X. But the other principle that makes Apple’s introductions and innovations impactful — rather than just an irrelevant feature few can actually make real use of — is Apple’s mass production of premium technology, setting up economies of scale that drive the cost of advanced components down.

MacDailyNews Take: Yup.

The well-heeled customer chooses Apple and those users gravitate to Apple’s higher-end products.

These are the desirable customers. These are the customers that pay for substantive R&D. These are the customers that matter. This is why they get the world’s first and only 64-bit smartphone. This is, in fact, why they get the world’s modern smartphone in 2007, years before anyone else gets a serviceable knockoff.

These are the customers that pay for not only the best devices, but also for the best apps and services. This is why market share doesn’t matter for Apple and why Apple doesn’t really care about general market (unit) share. This is why the Mac lived while all the others’ PC businesses slowly died during Microsoft’s dreadful Dark Age of Personal Computing. This is why the Mac continues to thrive today. All of the smart and rich people have Macs. Intelligent developers understand this.

In each market in which it competes, Apple owns the only part of market that matters: Consumers with taste, the ability to discern value, and who possess disposable income and the will to spend it. Google, Samsung et al. can have all of the leftovers. They’re more trouble than they’re worth, which isn’t much, not even en masse.

If you have a billion users who settled for your product because it was part of a Buy One Get One freebie, how much content (music, movies, apps, books, etc.) are they going to buy, to how many paid services are they going to subscribe, and how much are they worth to advertisers? Pretty much bupkis on all three counts.

We’d rather have customers with the taste, the intelligence to recognize incredible value, and the money and the will to spend it. Wouldn’t you?

As long as you corner the market on the best customers, and there are enough of them to support a healthy business (very healthy in Apple’s case), market share doesn’t matter. — MacDailyNews, October 21, 2013

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

3 Comments

  1. MDN loves hearing itself talk. But as usual you miss the forest for the trees.

    You want to know how Apple keeps its supply costs low? It outsources as much as possible to Asia. Just like every other US corporation. No tax or tariff games are going to offset the difference in labor costs. This corrupt administration, despite the tough talk, grants Apple special exemptions that small businesses and entrepreneurs cannot have. That is corruption. Woz, Wayne, and Jobs would never have been successful if such an environment existed at the start. Entrenched large corporations IBM et al would have gotten special exemptions and Apple Computer would have died young.

    Either you are for freedom—which means free trade—or you are a puppet for crony “capitalism” dictated by oligarchs who rig the rules to enrich themselves. There isn’t a middle ground here. The idiots who mislabel properly regulated capitalism as “socialism”, you know who you are, you are stooges parroting the corrupt narratives that brought forth the likes of Trump, one of the most corrupt people ever to inhabit the white house.

    Apple needs to be subjected to the exact same rules and taxation as every other market player. No?

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.