Apple Believes Cheaper IPhones Will Be More Popular

By EconMatters 

The news out on Friday that Apple will focus more on the cheaper LCD (liquid-crystal displays) than the more expensive OLED (organic light-emitting diode) screens in its fall rollout of phones illustrates that even Apple consumers have finally balked at $1,000 phones. The IPhone X release this past year was the first Apple IPhone with the OLED screens, and it obviously hasn't sold well, or Apple wouldn't be offering the majority of their product mix this fall with the cheaper LCD screens. 

However, this points to another problem for Apple, Samsung Galaxy phones have had the better OLED screens for over 7 years, and with a much more competitive price even at the high end of the market. In short, Apple cannot make an OLED screen phone for the $700- $800 max threshold that consumers seem willing to pay for a phone, even a high end smartphone. 

This is the problem with Apple products in general, when you compare Apple to the competition, even at the high end for laptops, smartphones or tablets you pay much more for less product specs. It isn't even style differences anymore as high end lightweight laptops have all morphed into the same sleek design architecture, but you will pay $1000 more for an Apple laptop with far less specs than the top of the line laptops on the market. Apple has marketed themselves as the high end status brand in the market, but the flop of the IPhone X illustrates that even Apple fans have their limits to brand versus price considerations. 1,000 dollars for a smartphone has proven to be too much for consumers, regardless of the logo on the device. 

We have seen this economics lesson play out at the pump with gasoline prices, as consumers seem to have real problems with $4 a gallon gasoline prices, which starts changing behavior in the market from driving patterns to automobile purchases. Thus, it appears that $1,000 for smartphones is the equivalent to $4 a gallon gas prices, and weakening demand starts to gain traction in the market. 

The real question for Apple is why they cannot make an OLED smartphone for the same price as Samsung at the high end? It just finally illustrates once and for all that Apple products are overpriced, and Apple IPhones are inferior products to Samsung smartphones at the high end. Samsung makes a better quality smartphone with better product specs at the high end, and does it for a cheaper price. 

There is also talk that Apple will offer some IPhones priced in the $550 and $650 range going forward, and indicates what we have been saying all along, that the next strategic advantage in the ever maturing smartphone market will be price! As a technology becomes mature, fully commoditized, with little product differentiation, the price wars begin, and prices and margins start coming down in a definable category trend. The next front for market share wars at the high end will be price, who can offer the same commoditized smartphone features at the best price! 

The other thing I noticed in the Apple news on Friday is that since the fall models will not be a major new product refresh, Apple is offering a bunch of slightly different, cluster of incremental IPhone upgrades that is highly cannibalizing and confusing for the IPhone brand in general. This strategy has been trending for apple with the last 3 generations or so of the IPhone, and seems to finally be hitting the ridiculous stage. This seems a little like a company in desperation mode to try and squeeze a little more juice from the dried up marketing lemon, because they really don't have much new to offer on the creative and engineering side of the equation for the next IPhone upgrade! 


This again points to the commoditization and mature market nature for smartphones in general, and why consumers don't need to go and upgrade for the next smartphone every year, two years, or even three years. Consumers will hold onto their smartphones longer as the new upgrades offer very little premium upgrade value over existing smartphones given the price factor for a new high end smartphone of $800-$1,000. If you want to sell the equivalent number of smartphones as in the past Apple, you better start lowering the price. Otherwise, Apple can keep the same high prices, and just sell much fewer phones going forward. 

Remember all the hype by analysts and investors regarding this new anniversary release of the IPhone, going to be a real game changer, frankly it has been underwhelming to say the least. And it illustrates that even Apple consumers are price sensitive in the end! 

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Comments

PrivetHedge MagicalUnicornFarts Sun, 06/17/2018 - 16:13 Permalink

I was all set to buy the Macbook 12 when it came out. I was after a high spec one too.

Then I saw that I couldn't plug my USB sticks in, or my USB cameras, or a USB disc, and the lovely magsafe had been replaced by some stupid non-starndard power connector.

So I bought a Lenovo instead.

Apple still haven't made anything worth buying, they only had to fit a decent screen to the Airbook 13 to get me to buy it. Idiots.

In reply to by MagicalUnicornFarts

brooklinite8 Sun, 06/17/2018 - 05:09 Permalink

Buy a xiaomi brand phone for 150 USD and get a 40 USD fixed plan from verizon or for that matter get a pay as you go plan. You are all set. You can even get a Vonage phone for 10 USD although it is not a cell phone. But it can do all you want. 

Obamanism666 Sun, 06/17/2018 - 05:35 Permalink

I remember it being cool to have a small flip phone, Motorola did the best small phone fitted in any pocket. Now you have large screen Smart phones that fry your gentials or heat your a55 up. I find now having to get a man bag to carry my phone. Wish it was back in the old days

Eyes Opened Obamanism666 Sun, 06/17/2018 - 06:10 Permalink

"Smart phones that fry your gentials ..............I find now having to get a man bag to carry my phone. Wish it was back in the old days"

 

If you're gonna carry a manbag u wont be needin those genitals... 😅😅😅 j/k...

But... I know what yer sayin... spend a LARGE dollop of cash on a device and then go spend more on an otterbox to protect it... not cool... 😠

In reply to by Obamanism666

Eyes Opened Sun, 06/17/2018 - 06:05 Permalink

I have a galaxy S5 and its a great fone but like all the other smartphones its very fragile & I have to be very careful about where I put it... back pocket ?? Don't think so... thats how my S4 passed away.. 😣

Personally I think the bean counters have decided to go all out & flog the brand name & "icon status" to death , LCD screen ???  Gotta be joking... just increasing the profit margin... Apple is now officially a commodity... 

😎

new game Sun, 06/17/2018 - 06:31 Permalink

i buy my phones on craigslist for 1/2 price, like new and meet at verizone to do the deal.

verizon will take the phone if it is stolen. if the seller balks, it is sketchy. bought last 4 this way(wife and I)

2-4Splus's and 2-6Splus's.  i keep them as long as possible.

next phone will most likely not be an apple...

never bought my apple for the status bullshit, just like there simplicity.

JailBanksters Sun, 06/17/2018 - 09:29 Permalink

Given that these Smart Phones never leave the owner hand, even going to the bathroom and are on 24 hours a day, you will be lucky to get 5 years out of a OLED display. No wonder Apple wanted to use them, inbuilt obsolescence.

 

Golden Phoenix RedBaron616 Sun, 06/17/2018 - 18:24 Permalink

Wrong.

Settings. Display. Screen Timeout. 'Keep screen turned on'.

You may have to enable Developer Options to get that choice.

I've had 16 or so Android phones running tasks 24/7/365 over the past 2 or 3 years. They are computing devices you know. Purposely crippled so the buyer doesn't even have admin access to their own phone but computing devices nonetheless.

In reply to by RedBaron616

PrivetHedge Sun, 06/17/2018 - 10:14 Permalink

Apple should try making some computer hardware worth buying.

Their airbook hasn't been meaningfully updated since 2011, still has a lo-res screen and none of the others have the combination of light weight and useful ports.

Then the full size mac costs as much as a small car but does nothing faster than a cheap eBay PC.

Chief Joesph Sun, 06/17/2018 - 10:58 Permalink

$1000 iphones are just a status symbol anyway.  Really don't provide much more usefulness over a generic $200 smartphone.  And they have yet to make any smartphones that have speakers which are superior in sound quality to the old lineland phones, or the old mobile satellite phones.  

arbwhore Sun, 06/17/2018 - 11:59 Permalink

Paid $40 for my Verizon Moto E4. $2 to unlock and away we go. If I lose it, I don't worry. If I drop it, I don't worry. That is priceless.

bluskyes Sun, 06/17/2018 - 12:17 Permalink

You can bet that the cheaper phone will be clearly identifiable from a distance.

The i-phone is a status symbol, and there's no way Apple wants to cut into that lucrative portion of it's business.

Perhaps they will create a discount brand.

Bemused Observer Sun, 06/17/2018 - 12:35 Permalink

Apple's problems with pricing are entirely due to their insistence on retaining that exalted status they've had. Their stuff is more expensive because they WANT it to be, they are just trying to find that line where their customers will balk at paying more, and staying just under it.

This has nothing to do with OLED screens, or whatever. If Samsung has had them, and cheaper than Apple, then Apple can have them just as cheap and cheaper. But Apple just can't bring itself to DO that, not yet anyway. 

It will take another IPhone 'flop' to get them up off their lazy butts and go back to INNOVATING  instead of coasting on the cachet of the Apple name. How about they stop milking the IPhone thing and see what else they can do with all that well-funded talent? Besides driverless cars and space travel that is...which seems to be where 'stupid' invests all its money these days. But Apple can afford to ignore the siren song of malinvestment, they don't NEED the capital, and can afford to tell 'stupid' to piss off and go ahead and do what they WANT.

But instead, we'll get the IPhone 11, 12, 13, ad infinitum. Apple will continue to sell out to the 'stupids' of the world, and go for the sugar-rush of the periodic re-boot and re-packaging of their signature product with its 'designer label' pricing.

PrivetHedge Bemused Observer Sun, 06/17/2018 - 16:21 Permalink

"see what else they can do with all that well-funded talent"

They did that and came up with the Apple Watch, which was possibly the worst piece of crap I'd seen for a long long time.

They need to fire most of their engineers, get rid of the pathetic new HQ in the middle of an expensive house-free where no one can afford to live and brush up their oddball and tired line-up of computers to create some basic useful laptops and PCs that are actually USEFUL.

Oh and the idiot who scrapped magsafe needs to be lined up against a wall with the retard who decided USB ports were not required and shot at by unsold Apple Watches and iPhones fired out of a cannon.

In reply to by Bemused Observer

He-He That Tickles Sun, 06/17/2018 - 13:56 Permalink

iPhone 7 is the first Apple product I have owned and nothing about it has impressed.  The stupidity of it all is that it was a much better investment than Android phones only because some millennial will pay top dollar for my used phone.  I can now say I have had the Apple experience, and just like I had previously thought, the fanboys are full of shit. 

The Terrible Sweal Sun, 06/17/2018 - 14:09 Permalink

I truly struggle to see what benefits are gained from a $800+ phone that differentiate it sufficiently from a $400 phone.

As for Apple in particular, only a trend-sucking idiot or a child would buy their inconvenient, under-powered, over-priced dross.

everything1 Sun, 06/17/2018 - 14:23 Permalink

They hit the wall on price, greed seems to always push the envelope.  Apple has always overcharged for their products.  I worked for an apple service center at one time and the customers hated us because we were the only gig within 100 miles, an accountant owned us, and made employees charge double wholesale price for any service part.  Ever heard of the Macintosh LC, yeah .. that model stood for low cost.  They hardly sold any, it was crap.

Cheaper phones will be more popular, I only upgrade my phone when it either breaks, or the OS upgrades to the point where it forces me to get a different phone with more RAM in it.  So, the question is when will 16GB RAM not be enough for Android, that is when I will be forced to spend the money.  

When they charge to much that means they need money, haha, Apple needs money.