Apple’s iPhone penetration strategy is to not release a lot of conflicting models, but to drop the price on previous iPhone models every time the new one comes out.
Right now, for example, Apple sells the iPhone 5 starting at $199 on contract, the iPhone 4S starting at $99 on contract, and the iPhone 4 with a two-year contract. In this way, Apple can sell an iPhone to anyone, regardless of their income level.
This strategy might be leading to negative repercussions for Apple, though, at least according to a new report, which suggests that Apple is proportionally selling considerably fewer iPhone 5 units during launch than they sold iPhone 4S and iPhone 4 units during their launch window.
The report comes from the Consumer Intelligence Research Partners, who note that the iPhone 5 accounted for only 68 percent of total iPhone sales during its first month at market, compared to 90 percent for the iPhone 4S.
That suggests Apple is proportionally selling fewer units of their premium device by keeping their older devices in the market. And the devices that were sold had lower storage capacities as well.
“This is all about how the pie is sliced,” CIRP co-founder Josh Lowitz told AllThingsD. “In the current launch, the 4 and 4S slices are bigger, relative to the 5 slice than the 3GS and 4 slices were relative to the 4S slice during the prior launch. Similarly, the 64 gigabyte slice is smaller, relative to the 16GB and 32GB slices of the 5 than the 64GB slice was relative to the 16GB and 32GB slices of the 4S when it was launched.”
The problem here is that Apple may be selling more iPhones than ever before, but they are selling them at a lower average price. Since most of Apple’s money comes from selling iPhones at extremely high profit margins, Apple could see the growth of its profits and revenue slow down over time, too.
Source: All Things D