Apple has unveiled its anticipated iPhone overhaul, debuting a lower-cost model that will be available in a range of colors. But while the new plastic-cased iPhone has been priced down to increase the company’s ability to attract lower-income consumers, industry observers have doubts that the new version will deliver huge results worldwide.
Apple has maintained strong numbers in North America, where iPhones have continued to sell at a high rate. Globally, however, the company has been surpassed by Samsung, whose low-cost smartphones have captured a significant lead in global market share.
A big part of Apple’s incentive to produce a lower-cost smartphone is that the company has struggled to generate sales in regions where the average consumer is less affluent. But the curveball Apple’s announcement throws is that its new, more affordable smartphone is only slightly more accessible — $100 cheaper, to be exact. Industry observers had expected the price decrease to be closer to $300.
American consumers often get a significant price discount when they sign a cellphone service contract, but foreign consumers typically buy smartphones at the full price. Without the discount, overseas consumers may still consider the iPhone too expensive.
Apple’s Moves Affect Marketing Efforts
For marketers, Apple’s current smartphone pricing is an advantage as well as a drawback. Because the device’s users tend to be more affluent, the value of marketing efforts is much greater — ads are consistently displayed to consumers with significant purchasing power.
At the same time, struggling smartphone adoption worldwide is limiting the marketing reach of that platform. A lower-cost smartphone would create new revenue opportunities for Apple, but it would also expand marketing opportunities — especially in countries where iPhone sales have been very low.
It remains to be seen how foreign markets and domestic consumers will respond to the new opportunities, but investors aren’t optimistic; the trading value of Apple stock dropped by more than $40 in the week after the announcement.
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