I saw on 9to5mac this week a very interesting tidbit from Mark Gurman. It was about the possibility of Apple selling the iPhone SE for $199 to make market share inroads in Android dominant countries.
For years, the technology industry has been clamoring for a low-cost iPhone aimed at emerging markets.
A device priced at $200 could make inroads in regions like Africa, South America and parts of Asia that are currently Android strongholds. That would let Apple Inc. sign up more customers for services, potentially making a low-end iPhone quite lucrative for Apple in the long run […]
when Apple introduces a 5G version of the iPhone SE, which could come as soon as early March, the company has a great opportunity to make a change. I suggest Apple continue to sell the older iPhone SE at a new, lower price—namely, $199. – Mark Gurman
For a few years now, I’ve written about how Apple could very effectively compete in the low-price market if they ever chose too. They have the volume to effectively get better material prices than anyone else. Plus, only Apple can effectively repurpose fully depreciated chips from prior years and still meet modern demands for performance.
But there are two financial models that need to be cleared before Apple would ever sell a $199 iPhone.
First, Apple would need to model how a low-cost iPhone would impact the current lineup of products. Could Apple offset the loss of higher-margin premium handsets through selling many more low-margin iPhones? Make it up in volume so to speak.
Also, more iPhones means more Apple services like iCloud and TV+. I even postulated back in 2019 that Apple’s big push into services might warrant them taking a look at launching a new brand. This would allow them to sell cheaper phones without having to live up to the vaunted Apple design and service expectations.
Second, Apple would take a look at the opportunity cost of launching a low-cost iPhone. There are many ideas for new products but only so many man-hours to spread around. If Apple was to tie up people to launch this product, those are man-hours that can’t be used on other potential new products. Does the financial gain from the low-cost iPhone outweigh the financial gain from those other potential products?
I suspect that a low-cost iPhone might be inevitable. The more services that Apple sells the easier it is to make the financial model work. Plus, the iMessage lock-in grows much stronger if Apple can start winning market share in those Android dominant countries. But only Apple has the requisite gross margin and unit data that would be required to make any recommendation.
A device priced at $200 could make inroads in regions like Africa, South America and parts of Asia that are currently Android strongholds. That would let Apple Inc. sign up more customers for services, potentially making a low-end iPhone quite lucrative for Apple in the long run […]
when Apple introduces a 5G version of the iPhone SE, which could come as soon as early March, the company has a great opportunity to make a change. I suggest Apple continue to sell the older iPhone SE at a new, lower price—namely, $199. – Mark Gurman
For a few years now, I’ve written about how Apple could very effectively compete in the low-price market if they ever chose too. They have the volume to effectively get better material prices than anyone else. Plus, only Apple can effectively repurpose fully depreciated chips from prior years and still meet modern demands for performance.
But there are two financial models that need to be cleared before Apple would ever sell a $199 iPhone.
First, Apple would need to model how a low-cost iPhone would impact the current lineup of products. Could Apple offset the loss of higher-margin premium handsets through selling many more low-margin iPhones? Make it up in volume so to speak.
Also, more iPhones means more Apple services like iCloud and TV+. I even postulated back in 2019 that Apple’s big push into services might warrant them taking a look at launching a new brand. This would allow them to sell cheaper phones without having to live up to the vaunted Apple design and service expectations.
Second, Apple would take a look at the opportunity cost of launching a low-cost iPhone. There are many ideas for new products but only so many man-hours to spread around. If Apple was to tie up people to launch this product, those are man-hours that can’t be used on other potential new products. Does the financial gain from the low-cost iPhone outweigh the financial gain from those other potential products?
I suspect that a low-cost iPhone might be inevitable. The more services that Apple sells the easier it is to make the financial model work. Plus, the iMessage lock-in grows much stronger if Apple can start winning market share in those Android dominant countries. But only Apple has the requisite gross margin and unit data that would be required to make any recommendation.
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