Originally Posted by Michael Scrip
I don't get it.
Sure... if market share and/or unit sales are the metric... Apple is getting creamed by other manufacturers and platforms. Especially in developing countries.
HOWEVER... Apple's iPhone already
generates about $6,000,000,000 in PROFIT every quarter
. That's billions with a B every 3 months.
Does Apple really need these emerging markets? I thought niche was their thing.
Like Mac vs Windows... Apple sells far fewer Macs than the other guys sell Windows machines. Yet all those other companies would gladly trade balance sheets with Apple.
The cheapest phone Apple makes is $450. Yeah... it's out of reach for most of the developing world. But why does that matter?
We've discussed this in other threads: there are plenty of Android phones that retail for $100 brand new unlocked. And they are garbage... and are primarily used as feature phones in poor undeveloped countries.
Why does Apple need to chase that market?
I think this can be compared to the Apple TV vs. Apple HDTV.
Sure, Apple is constantly focused on making quality products at a high profit. However, that only generates a smaller portion of market adoption. If Apple sold millions of $99 ATVs they would get Millions of new adopters. VS. if they made the HDTV which might gain a lot of profit but much fewer adopters, and a slower success rate. What's the balance? Probably a little of both. If you're going to be a market leader and be profitable, you need heavy adoption. Sure they could make a lot of money going the same way they have been, but in the long term they are going to have to diversify.
It's the same with the iPhone. They sell millions and get billions in profit, but they don't have the majority market share as android does. For apple to survive in the long term as a leader in the mobile market, they need to diversify. They will eventually have to compete.
I think that is also why they decided it was time to introduce the iPad Mini when they did (not to mention that the market was basically dictating that the 7"-8" tablet at a lower price point was much more desirable to many customers). It followed the same path as the iPod and the iPod Mini (then Nano) in the early portion of the past decade. It woks this way in many industries, not just Tech. Look at the Auto Industry. Toyota, GM, Honda, VW...they all have highly diverse array of products...and they are the leaders. None of them can continue to be world market leaders in the Auto industry without a diversified product lineup. Apple is in this same boat now. They are no longer the underdog company.
Selling just high-quality, high profit-margin products worked when they were the minority in the industry...they are a leader now.
Now, I could easily see a "less expensive" (from a retail stand-point, not subsidized) iPhone coming from Apple. I don't know what features it would have or what size/shape it will be, but it's definitely something they are probably looking into, I have no doubt.
Look at all the feature-phones and the likes of less expensive, less feature-rich smartphones out there that sell millions in developing markets and nationally. This could be a huge opportunity for Apple to create something that is truly new, not just a trimmed-down iPhone, but an iPhone that is the bare essentials. Email, Web, Phone, Text. Granted this sounds a lot like iPhone Gen 1, but it could be something much more simple. The iPad is now in a market that truly is portable and many (including myself) only use our iPhones now for a quick glance, nothing more. Quick reply, check email, weather, etc... If we want more functionality, the iPad Mini is now in the portability range where we could basically carry both. Personally, i'm one of those that believes the purity of the iPhone has been too diluted, too saturated with crap functions and Apps. The App Store was a huge factor in the success of the iPhone, but to me, less is more. The beauty of the integrated system is lost in a way on all the saturation of features and 3rd party apps.
Now if all these rumors are true, I really don't see it as a watch or something smaller than the current phone, just lighter, less feature rich, and less expensive. The iPod Touch starts at $199, That is what I see as the starting point for an unlocked iPhone that's less featured than the standard iPhone (i'm not going to call it mini or nano just yet because that infers a form factor that I won't bet on yet). Well the $199 8GB iPod Touch only differs to the current iPhone only by camera and Cellular radio chip at this point. So I could easily see something less featured at that price-point.
Who knows, but it is actually not surprising Apple hasn't come out with anything yet. They want to keep production costs down and productivity up. But now that the Android ecosystem has a very dominant share of the smartphone market...i think it's the time to start thinking about diversifying.