Apple has recently launched a new lineup of its iPhone series named the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max. The new smartphones have grabbed the attention of the technology world just like the previous models did over the past decade. The brand always sells its products at a premium price point as it believes that the quality and brand value it offers is unmatched. Moreover, it never compared its smartphones with other brands but itself.
Interestingly, Apple has never launched a new device or the upgrade of a device from the past year at a lower price point until this year. The Apple iPhone XR, which was the lowest model of the brand in 2018, was launched at a price point of $749 in the US. The upgrade to the same model is called the Apple iPhone 11, which is the lowest model launched by the brand in 2019 is surprisingly launched with a $50 drop at $699 in the US.
The market is the driving force for almost all the brands in the world. However, there are a few who dictate a specific market to flow in a certain way according to their benefits. Apple is one of such brands. It has always been criticized by many tech enthusiasts as well as non-tech personnel and users. However, the love it has garnered across the world was unparalleled until the last couple of years.
Since the demise of Apple’s founder Steve Jobs, the man behind the innovations and superb marketing, Apple has seen a steep decline in its innovation. Currently, the company is trying to play as safe as possible and focus on the products and services that yield them the highest profits. This has led the company to launch a plethora of online services that add up to its huge ecosystem that is criticized for keeping the users within the ecosystem at all times.
The revenue from the smartphone sales has dropped significantly, thanks to a global smartphone market (major economies) slowdown except for the Indian market. However, the Indian market is probably the toughest for Apple as the market share is a mere 1 to 2 % as compared to a global average of 10% in the major economies. The prime reason behind this is the low value for money that Apple products carry with them as compared to other brands which are not sold at such premium prices.
In a first, Apple has reduced the price of its base model as mentioned above to appeal to the large markets that have always been sceptical of the brand just for the high price. Currently, the fastest growing and one of the largest sources of revenue for Apple is from its services such as Apple Music, iTunes, Apple TV+, App Store, Apple Wallet, Apple Arcade and so on. According to a recent report from TechCrunch, Apple earned over $40 billion from its services. This justifies their focus and efforts in the services sector.
Link with the Reduction in iPhone Prices
The decline in iPhone sales has hurt the company really bad. Apple wants to recover from this loss in a different way. It wants to reach out to more consumers through a lower-priced entry-level iPhone. Although the entry-level iPhone is also more expensive than most of the flagships available in the market right now, from Apple’s point of view and its legacy, it is entry-level. A $50 reduction in the price of iPhone 11 is significant for a lot of new users to try out the new iPhone or even some Android users who want to taste the Apple Ecosystem but at a lower price.
Once Apple starts getting more customers through their lower-priced iPhone, they will automatically start getting revenue flowing in from these new users due to its paid services. The Apple ecosystem compels users to get the paid subscriptions for most of their services making it an expensive affair for the users but very profitable for the company. This is the reason behind the brand becoming the first American company to touch the trillion-dollar valuation mark.