Today IPhones are the most coveted and sought after phones on the market. But, they do not come by cheap. This is a problem Iphone sales have been facing for the past year. With mobile devices such as the much cheaper Samsung Galaxy III. Most phones these days have the same capabilities and the buyer is left with the decision of how much they want to spend. iPhone now has the decision of whether they should continue catering to the high end phone market and reap the sales of high price with fewer phones OR drop their prices and benefit from a greater amount of sales.
A recent report posted on monday revealed that the company had a reduced order of iPhone 5 screens which leads some analysts to believe that the demand for the phone could be going down. To aid the worry of Apple employees the companies shares have gone down 29 percent from the beginning of September.
Although the iPhone is still a top seller in American markets it has struggled globally. Most global consumers buy phones without subsidies given by a wireless carrier. This means that phones go for top dollar and for apple this isn't a great thing. In countries such as Spain, Germany and an iphone 5 can go upwards of 650 dollars. This means that many consumers are buying cheaper phones thus affecting iPhones shares in global markets and weakening their overall shares. iPhone does have cheaper alternatives such as the 4 and 4s but these are still more expensive than the cheapest Android phones. Tero Kuittenin an independent mobile phone analyst says that most people today buying smart phones are lower income households. These people cannot afford to pay a whopping 650 dollars for an iPhone.
Apple has created a brand that evokes a certain symbol of status. Most people buy iPhones just to have the Apple symbol on the back of there phone. It is rarely due to its specifications or superior abilities. Kuittenin says that if Apple was to become a real contender in the global market it needs to come out with a much cheaper option. Kuittenin stated that Iphones real strategy would be similar to what it did with the Ipad mini. The phone will be siginificantly cheaper than the new 5 but more expensive than the cheapest android phones.
Overall, it will be very interesting what move Apple decides to take. Will we see a cheaper iPhone in the future or will Apple swallow its losses? Only time will tell.
Link:
http://www.nytimes.com/2013/01/15/technology/worry-over-sales-spurs-talk-of-cheaper-iphones.html?_r=0
With Apple's staying power in the market I believe they can take these losses for the time being until their innovative prowess breaks through helping them create a new groundbreaking item for the market. Remember that Apple has built itself with all kinds of different innovative techniques and goods. From what I've learned in economics classes, history repeats itself, so I believe that will hold true here as well.
ReplyDeleteI'm a bit disagree. Though Iphone is still the biggest name in the Smartphone market at the moment, the competition between Apple and other competitors like Google Android or Samsung is becoming fiercer as well. The death of Steve Job seems to have much larger effect than anticipated, as the sales of Iphone 5 haven't been as impressing as its predecessors, while the company's stock is suffering as well. If there is a time where apple need to do some innovation, it's now in my opinion, but I hardly belive they can be as formidable as when they still had Steve Job. We might see other smartphones starting to take over the status that Iphone has been currently occupying.
DeleteApple is such a brand name that every consumers wants or has an Iphone. Apple can take a deficit for a little while, but they need to keep coming out with products that consumers want to buy at a reasonable price. Apple needs to come out with an innovative product that will grab the attention of consumers and put them ahead of other smartphone companies. The Iphone is still a very hot commodity and a profitable one.
ReplyDeleteI agree that it could be very beneficial for Apple to produce a cheaper version of the iPhone. However, they must be careful not to hurt their brand image in doing so. Apple has a reputation for producing high-quality items, and they must be sure to maintain that standard while still making it more affordable. Along with allowing Apple to enter a lower-price market in the U.S., this could increase their market share in other countries as well. The article mentioned that many foreign consumers are forced to pay full price because they can't share the cost with a wireless carrier. A cheaper iPhone might provide these users with another option.
ReplyDeleteKevin your are right. It will be interesting to see how safe apple is when making their cheaper alternative if they chose to. They have to be careful that they don't produce a "bootleg" iPhone which could ultimately effect the integrity of the company as well as their image.
Delete