The Case For (and Against) a Cheap iPhone
There’s been a fair amount of buzz in the last few days about Apple introducing a cheaper iPhone this fall and in “The iPhone Is Too Expensive” at Slate, Farhad Manjoo makes a good case for Apple doing just that. But I seriously doubt that Apple will do so because, while the arguments for going downmarket make sense for any other manufacturer, that just isn’t how Apple works.
It seems to me that the surest way to go wrong in anticipating an Apple move, and I have done this often enough myself, is to assume that the company gives a damn about market share. Apple is driven by margin and total profits, not by share, and this strategy has made it by far the most successful consumer electronics company in the world.
Yes, Apple could do a de-featured iPhone that could sell for $200-$250 without a contract and compete with a horde of generic Android handsets. It would undoubtedly increase Apple’s market share, especially if it was sold with prepaid service. All Apple would have to do is accept tiny margins and sell a product that the company knows isn’t as good as it could be. That just isn’t in Apple’s makeup.
Instead, I expect they will bring out a new iPhone in September (I’m guessing about the date, like everyone else) and keep the iPhone 4 in the lineup at a sharply reduced price. (A year after the introduction of the iPhone 4, you can buy an iPhone 3GS from the Apple store for $49. How much cheaper do you want it?)