Apple is losing market share. It should offer a cheap iPhone, but that’s exactly what it doesn’t want to do – MobilMania.cz

The mobile phone segment saw growth in the first quarter of this year, however Apple’s share fell to 17.4% and finished second behind South Korea’s Samsung. The outlook for the rest of 2024 doesn’t look much better either, with iPhone sales expected to decline further in China, one of the most important markets.

After a brief recovery during the Christmas holidays, iPhone sales are expected to fall again when Apple reports its latest results on May 2. That will reduce total sales by about 5%, according to Wall Street estimates, marking the fifth decline in the past six quarters.

Unpleasant market situation

Analysts expect the number of Android devices to grow twice as fast as the number of iPhones. Logically, the question arises as to how Apple could turn this unfavorable situation to its advantage. One possibility is expanding the portfolio with a low-end smartphone with a price tag of around 250 US dollars (approx. CZK 5,930 in conversion).

For Apple, iPhones are one of the most important revenues. The situation in China, which is the second most important market for the company after the United States, is of particular concern. Here, Apple will have to make a considerable effort not only to attract new customers, but also to make the existing ones upgrade to newer models more quickly. The good news is that current iPhone users in China are not switching brands en masse.

The current situation is that the pace of replacing old phones with newer ones is slowing practically all over the world. Apple responded in March of this year by creating a Reasons to Upgrade page where customers can compare what they’ll get from the iPhone 11 and 12 series to the latest models.

Reasons to upgrade to a newer iPhone page

It must be noted that Apple’s evolutionary steps certainly do not motivate faster replacement of phones for newer models. The new versions bring rather minor improvements, and from the point of view of ordinary users, it makes sense to switch to a newer version of the iPhone once every three to five years.

Apple needs a cheap iPhone

They compensated for the fact that iPhone sales were declining for a while income from services and sales of accessories. Even if iPhone users don’t switch phones every year or two, they can still spend several hundred dollars a year on services, apps, watches or headphones. However, this strategy is slowly but surely running out of steam.

Respected tech editor Mark Gurman of Bloomberg believes that Apple desperately needs a low-cost iPhone to gain traction in emerging markets. “I think there’s a way to reinvigorate growth without having to build a whole new facility. The best solution might be to develop a cheaper version of the iPhone.” states.

iPhone SE

Although the company allegedly working on the new iPhone SE model, but it will very likely cost more than 400 dollars (approx. 9,500 CZK in conversion). The new iPhone SE will bring a newer design that will make the device look more modern and premium.

However, with a faster chip and premium materials, expect the price to stay well above $400. Many customers in emerging markets are therefore likely to switch to cheaper $150 phones with larger screens and more cameras from Chinese manufacturers.

Would this be the right way to go?

Gurman is convinced that it would Apple was supposed to make a phone for these markets that would cost around $250. Of course, this would mean certain compromises on the hardware side – such a cheap phone would have to use an LCD screen, an older processor or have a plastic body, for example. That’s probably something Steve Jobs would never do, but a price cut might be exactly what Apple needs right now.

Such a product would require a change in strategy, which currently focuses on high-margin and premium products. Founder Steve Jobs once said: “we don’t offer ripped off, crappy products”, and Apple adheres to this philosophy to this day. On the other hand, however, Walmart started selling the MacBook Air M1 for $699 (approx. CZK 16,600), which may be a way to maintain competitiveness.

If Apple really offered customers a phone priced around $250, it could later sell them more expensive phones and get them for its services and apps. The chance is slim, though—Gurman notes that discussions of making a low-cost iPhone have repeatedly stalled in the past because Apple does not want to weaken the perception of its brand as a manufacturer of premium products.

However, it is necessary to respond to the fact that the market is constantly changing and the competition is growing and strengthening its position. There are billions of people in the world who don’t use Apple products, and that might never change without a more affordable version of the iPhone.