Recent news releases from Apple state that Apple will be making a cheaper version of the iPhone X in 2018- “a model for everyone” Apple’s cheapest phone till date was the iPhone SE which didn’t exactly cut the cost of the iPhone in half. Apple retained the fact that it was a luxury brand but also managed to cut down the price. The iPhone SE was basically a throwback in time to a smaller screen and a more affordable price tag. It was possibly the phone a tween would use as their first phone rather than a phone for someone who is struggling to make ends meet.
With a current share market price of $180, analysts assume Apple could reach a $215 market value if they introduced cheaper phones. Apple has an iPhone X Plus, a cheaper iPhone and a high-end OLED model with a 6.5″ screen. Apple’s plan to make a cheaper iPhone is acknowledgment that the iPhone 8 was too similar to the iPhone 6. So, Apple is basically trying to replace the iPhone 8 with a cheaper and bigger version of it. In Apple terms, cheaper is a very relative term and it may not be what some are expecting.
A cheaper model could help Apple. Apple depends on the number of iPhones sold and the revenue they get in as their key to give them a high share price. Recently, though, even though iPhones sold have been quite low with Apple selling less of the iPhone X model than they envisioned, Apple is still masking that with crazy revenue figures. iPhone replacement cycle(which is about 2.5 years) and net margin also affect Apple’s overall market value. If Apple were to introduce a cheaper iPhone, even though sales prices would be less, number of iPhones would be more. Also Apple would make much more money on Apple services like iTunes and the App Store because there will be more consumers. A new cheaper iPhone could also serve as Samsung’s biggest enemy yet and what would Apple like more than that? Selling mid range models is a niche that Apple has never dominated giving Samsung less competition, entering that niche could be a huge blow to Samsung’s revenue.
Overall, it may be a good plan to go cheap because even though Apple’s revenue is at an all time high it hides a worrying future. At some point, Apple’s dropping sales will reach a critical point and it will need to be addressed. The consumer’s psychological attachment to the iPhone can only go through so much. With Apple’s biggest asset being the brand it has created for itself with a reputation other brand envy, loosing that to even a small extent can be detrimental.