How Well Would A $99 iPhone Sell?

 
Apple has spent all of its eight year life selling iPhones at the premium end of the market. Even when the much heralded iPhone 5C arrived - the 'cheap' iPhone - it was an upper mid-range phone, in price at least.
 
What if Apple wanted to shake up the market? Could it play in the slim-profit / high-volume market if it wanted to? And what would the effects be on the smartphone market if it did?
 
A low end iPhone - sold outright for $99/£99/whatever sounds cheap in your local currency - could sweep away hoards of low end devices, effectively wiping away the bulk of Android's sales in the process. In fact there's even an argument to say that Apple would benefit from subsidizing this sort of low end phone itself in order to severely damage the viability of Google's mobile platform.
 
Given how much money Apple makes from its current iPhone operation this probably isn't even a consideration. However if Apple were able to add a 100m sales per annum and net $10 profit per phone it adds a billion dollars a year to the bottom line. That's the least it could expect to achieve.
 
That's doesn't account for the potential income from app and media sales that such a growth in Apple's customer base would bring.
 
Would it harm Apple's premium device sales? No I don't think so. The iPhone could be retained as a premium brand and the new line branded the ePhone - in the same way that the eMac and iBook represented entry-level Apple devices in the past.
 
Apple's ability to control the supply chain, buy big on components and manage third party OEMs guarantees that it could deliver not just a profitable $99 iPhone, but a whole range of profitable phones at every price point.
 
It's the same logic which has driven car makers like BMW and Mercedes into the smaller car market to boost profits and suck up young, thrifty buyers before they become older wealthy buyers.
 
Considerations like average selling price and per device profit margins make this an unlikely scenario, but were it to happen the carnage amongst the competition could be truly awful.

0 comments: