Mobile Leadership Strategies

Since its release in 2007, Apple’s iPhone has set the standard for the high-end of the mobile phone market. But now it seems the consumer electronics giant is focused on expanding the reach of the device.

According to the Wall Street Journal, unnamed sources have told the newspaper Apple is working to produce a low-cost iPhone targeted at the low end of the market, which to this point has been dominated by phones run on Google’s Android platform. This is certainly not a new way of thinking for Apple, as a low-end version of its popular device has always been a possibility, but it appears to be the company’s most significant move into offering an affordable device to date.

Altering the iPhone’s parts and materials is one way Apple may look at bringing down its cost. For example, the news provider noted, the casing of the low-end version could be made of polycarbonate plastic instead of the aluminum currently used.

Yankee Group VP of Research Carl Howe comments

“I’m very skeptical this new low-priced iPhone rumor. Apple’s product strategy is to produce the best possible product it knows how to, not the cheapest. While a cheaper body might save a few dollars, it’s not enough of a change to suddenly make an iPhone 5 an affordable phone for emerging markets. Further, Apple has done very well selling older models of iPhones for entry-level prices, and that tactic has yielded huge revenue and profit dividends for Apple because of the massive economies of scale already developed in those devices.

What I think may be happening, though, is that Apple is developing new products that address a different customer segment. I don’t see Apple creating an iPhone 5 with a plastic instead of aluminum case, but I could see Apple creating a family of ‘good,’ ‘better,’ ‘best’ iPhones in different form factors for different uses; we can already see this trend in iPads with the mini and regular iPad. Yes, the iPad mini is cheaper than a full-sized iPad, but its design and use cases are distinct as well. iPad mini isn’t just a cheap iPad; it’s the best 8-inch tablet Apple could make and it appeals to a different set of customers.”