What should be the price of the budget iPhone, about which
so much has been said in the press that Apple did not lose profits? This
question was asked a journalist Jean-Louis Gasse, who worked for
"apple" Company from 1981 to 1990. He published a number of possible
scenarios that can predict the next steps of Tim Cook in this niche.
If Apple does introduce a cheap iPhone, this move in the
near future will be positioned as a new era for the Cupertino-based
corporation, and as a signal for another round of war in the mobile market.
According to Hasse, if Apple will decide to enter the market, its leadership is
to solve two problems: what benefits will provide a cheap iPhone and what it
promises for the company?
Suppose the production budget machine will cost $ 100 (about
half of the production cost of the iPhone 5), and given that the margin of the
Apple iPhone 5 is 60%, the cost of inexpensive smartphone Apple should be in
the range of $ 299 - you see, a lot of conventional "cheap iPhone ".
If Apple will seek to segment to $ 199, its profits
immediately reduced by 50% for each unit sold. Moreover, Bloomberg said that
the price tag of the new phone will be around $ 150 - $ 199. At a cost of $ 150
U.S. manufacturer margin drops to 30% - but the phone will be half the price of
iPhone 5. But what about the incredible number of one hundred dollars? Provided
that Apple will have a minimum margin in the same 30% - Production cost is $
75, which is about a third of the price of the iPhone 5.
Will Apple do that? If yes, then it is strongly modify many
business strategies. Especially given the fact that the iPhone - the strongest
brand in the smartphone market.
According to Hasse, cheaper iPhone may be released not to
attract millions of people and for the running of the new strategy to a fight
competitors in other niches. Indeed, in 2007 the iPhone was born on the Rights
of the elite smartphone, but since then a lot has happened, you can not always
milk the same cow - one day it will simply stop giving milk.
The spread of smartphones in the U.S. and other key markets,
such as Europe, has already exceeded the threshold of 50%, so that the victory
in the remaining 50%, and success in emerging markets will be entirely due to
pricing. The Brazilian and Indian markets demand for expensive phones is
extremely low - the most popular proposals do not exceed $ 200. Therefore,
Android is running the show, because the devices on this platform sometimes
reach a democratic price tag of $ 99. Apple with the high prices are not
particularly popular in emerging markets and low-cost iPhone could change that.
In other words, it is pure mathematics: the economic success
of the iPhone is closely linked to the price, but it can not be very low -
Apple margin is 60%, and the production cost a decent amount, the company is
unlikely to compromise and will replace the matrix of prices, given the cheap
8GB model iPhone 4. On the other hand, no one says that the Apple iPhone is
obliged to release the $ 99 - it would be too much. However, it is acceptable
any alternative, like iPad mini - it costs $ 329, that in the context of the
Amazon tablet for $ 199 - $ 249 seems to be less advantageous option. However
compact iPad popular - it's not too expensive, but at the same time,
high-quality product.
Jean-Louis Gasse believes that if Apple will be able to find
a compromise between price and quality, it will start to compete in new niches
for themselves. For example, in developing countries is much more difficult to
offer credit, as few potential customers have access to credit, and generally
are not used to pay for some parts. In these states, much better to sell the
goods at once - but at a low price.
