Written by Chrissy Giglio
Due to a report released by the Wall Street Journal, the rumor mill was a buzz with the news that there could potentially be a cheaper iPhone making its way onto the horizon. People were debating whether this move would be a subpar idea or a genius Apple plan. Shortly after this news hit, Apple’s head of global marketing, Phil Schiller, shot down the rumor.
The basic idea that was being thrown around was that this new iPhone would have a cheaper casing than the current aluminum casing we see on our phones. The new, more affordable model was predicted to run in the $99 to $149 range. Just as a comparison: the current iPhones available are starting at $199. This price mark though is subsidized by wireless carriers. The unsubsidized cost would run you at about $650.
The reason behind such a development was quite clear- Apple needs to stay in the game and that may simply not be possible with all of its competitors. Android devices are already reigning supreme in the market. According to reports from the Washington Post; over a span of three months, 75 percent of devices shipped were Android and 15 percent were Apple.
Apple is trying to increase their sales outside of the US and Europe and are trying to break into a new market place, especially China, where a potential cheaper phone may be appealing. People from less affluent countries cannot afford the standard iPhone, yet Apple wants their products to flourish there. It is especially difficult since Android devices are cheaper and are currently dominating in sales and usage. According to a report by comScore, approximately 53-percent of smartphone owners are using an Android device, while only 34-percent are using an Apple product.
There were both pessimistic and optimistic views about the thought of a cheap iPhone. On one hand, Apple needs to stay in the game. The Western markets are already controlled and they need to be able to expand and grow in other environments. In order to break into these environments, the phone must be modified in order to fit the needs of the specific demographics- resulting in a cheaper product.
On the more negative scale- people were worried due to the fact that since a cheaper model would be made available, people would then choose to purchase the cheaper one. This purchase choice could possibly lower Apples profits, which was also a big fear that somewhat came true after the introduction of the iPad mini. This fear is a bit far off though considering the overwhelmingly large profit that Apple already is flaunting around- about $41.7 billion at the end of the 2012 fiscal year. Certain critics are also confused due to the fact that one could purchase an older version of the iPhone (4 or 4s) for a substantially lower price already.
Apple has always been a prestigious brand that prides itself on being the best and most elite. By lowering the quality of the product and therefore lowering the price, it could potentially impact the Apple Empire in a negative way. There’s no need to fear this though since Schiller, for now, has made it clear to speculators that Apple will not be turning to these rumored cheaper materials in order to produce a lower priced model.