Tech: Steve Jobs would never do this, but there may be no other way for Apple

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April 2024. 25. 15:03

April 2024. 25. 15:25

Tech

Apple is going through rather stormy days in its history, it is getting hit from here and there. Even with its hit product, the iPhone, all is not well. In the latter case, you may need to take a step that was previously rigidly rejected by the Cupertino company.

Its operation is being investigated in several countries, in the EU it has to take serious, not necessarily positive steps for the company in order to stay on the market, so Apple has had better days. In addition, two traditionally reliable parts of its business are at a low point: the iPhone and the Chinese market, writes a Bloomberg renowned Apple expert Mark Gurman.

Although the volume of the smartphone market increased by eight percent, iPhone unit sales fell, according to IDC’s estimate, the decrease is 10 percent. Overall, Apple’s market share fell to 17.3 percent from 20.7 percent a year ago.

Then there is one of Apple’s favorite markets, China, where the use of foreign brands has been banned, including iPhones in government workplaces, and models from domestic manufacturers are preferred. (It’s worth noting that: this is happening after the US government started using all its means to weaken China’s Huawei, which has a strong chance of leading the market.) Although the current iPhone owners are not switching in droves in China, the big question is whether they will upgrade to newer iPhone models , and how Apple can attract new users to its own ecosystem. During the holiday quarter, Apple’s sales in China fell by 13 percent, and analysts are predicting a further decline in the latest quarter (which Apple will report in early May).

Apart from the geopolitical and global economic difficulties, and the rise in phone prices, Apple is also a bit lazy in its devastating results. Apple’s flagship phone hasn’t changed much since the iPhone 12 was released nearly four years ago. To compensate for this, the company has done everything in terms of services and accessories, so even if phone owners don’t update often, they can spend a good amount of money on it. However, growth has stalled here as well, and according to Gurman, something needs to change.

This kind of move could be some kind of completely new product, but recently we can see problems here as well. A few months ago, news broke that a project was over, that the company had spent a decade and billions of dollars developing a car (Apple Car) that would never see the light of day.

Or there’s the mixed reality glasses, Vision Pro, which isn’t really mature yet, but it’s expensive, so it’s far from making money for Apple.

However, the expert has an idea about what might be the right move in such a situation: breaking into emerging markets by developing a truly cheaper version of the iPhone. Even in wealthier countries, many people want a cheaper iPhone, to which Apple has always kept its mouth shut. Of course, when the new models debuted, it reduced the price of the older ones, by only HUF 30-40 thousand, and although it introduced the iPhone 5c in 2013, this plastic-wrapped model didn’t come cheap either. Then came the iPhone SE in 2016, which was indeed much cheaper than the “big” models, but its design quickly made it obsolete. Today’s iPhone SE costs $429, which, Gurman believes, is not a very good deal considering the lack of features, not to mention that Chinese competitors offer Android models with larger screens and more cameras for much cheaper.

If Apple is serious about dealing with developing countries, it should offer an iPhone at a price of around 250 dollars (roughly HUF 92,000), although according to Gurman, this is something that Steve Jobs would never have done. To cut costs, Apple could go back to full-screen LCD, reduce the number of cameras, and let an older but adequate chipset control the device. It would keep the industrial design while using plastic. Finally, it could limit sales of the phone to emerging economies.

However, all of this would require a change of thinking, the expert writes, Apple should forget about the huge profit margin and focus only on income and market acquisition. This move could help build the company’s brand name in the developing world, which could even promise that users will switch to more expensive models later. And of course, more and more people will spend on Apple services and apps.

“We don’t offer stripped-down, shoddy products,” Jobs said years ago, and Apple still follows that philosophy today. However, the market is changing, and today other winds are blowing, there are more competitors, and the stakes are getting higher. There are billions of people in the world who don’t use Apple products, and that’s unlikely to change without a cheaper option. The most promising market may be India, where Apple is already expanding. All this does not mean that Apple should write off China, it should remain a key business. But the company should be less dependent on the country, and the development of a cheap iPhone could help in this – the expert concludes his newsletter.

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