Obviously, the COVID-19 coronavirus pandemic will really hurt consumer spending this year. Apple’s management teams should look at opportunities to lower prices in order to increase market share in segments in which the company competes as large enough sales volume can overcome potential margin issues, Bill Maurer writes for Seeking Alpha.
Consumers around the globe are likely to tighten their purse strings even after the coronavirus panic subsidies, so this obviously isn’t going as bright of a year as we hoped for with Apple. The analyst notion of sales delayed versus being lost is evaporating, with estimates starting to decline meaningfully for the back half of this year. Perhaps, this unfortunate situation provides an opportunity, however, assuming management is willing to make a change regarding its product strategy.
Today, I am wondering if this year is the time for Apple management to think a little differently. If we assume a new entry-level iPad comes later this year, along with some other devices, why not keep around an extra older generation? The next entry-level iPad will likely have a better chipset and cameras, so why not keep the 7th generation around? Here, you would just cut the price like we normally see Apple do, to perhaps $229, so consumers not wanting the absolute newest tech but a lower price point can take advantage.
I’m not here today saying that Apple should do what many were calling for a few years ago, and that is launch “cheap” products, which would be like a $99 iPad or a $199 phone. What I am saying today is that it might be wise to keep an older generation around a little longer, providing more affordable options for those who want to buy. These older models also won’t be as expensive to manufacture, which helps at lower selling prices.
MacDailyNews Take: Of course, if Apple were to do this, margins would take a slight hit, but Apple Services would have an even larger pool of potential customers to subscribe to Apple Arcade, Apple Music, Apple TV+, iCloud storage, etc. Not only might it be time to keep older models around a bit longer in a recessionary economy, but it’s also a great time to launch “Apple Prime” to make subscribing to multiple Apple services more palatable.