Less than four months after relaunching the iPhone 4 in India, Apple has decided to ditch the strategy and take the phone off the market again.
The January move had made the iPhone 4 one of the cheapest unsubsidized iPhones in the world, with the aim of growing market share by appealing to a percentage of the population who would not usually be able to afford iPhones.
But Apple discovered what is known in the trade (or, well, by me) as the Android Gambit: meaning that flooding the market with low-cost smartphones might result in more people buying them, but it also takes a massive chunk out of your profit margins. In this case, it meant a reported $41 drop globally in the average selling price of the iPhone to $596 in Q1, which analysts partly blamed on the relaunch of the iPhone 4 in emerging markets.
Tim Cook, however, refuted this by stating that the impact of the iPhone 4 was minimal as Apple sold “a very low single-digit percentage of those” in the quarter.
By dropping the iPhone 4 altogether, Apple is hoping that customers will cough up the extra cash to move up to a more expensive, newer model. To avoid writing the whole strategy off as a failure, however, the company is claiming that the iPhone 4 exposed new customers to Apple’s smartphones, and that they will now be unlikely to go elsewhere.
Overall, it just goes to show that Apple shouldn’t listen to the noise about market share, and should instead focus on targeting the higher-end buyers the company appeals to best.
Android-makers copy Apple and they get the iPhone. Apple copies Android-makers and they get a crummy business model.
- Source The Economic Times