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The Apple blog: iPhone 11’s success shows it is about selling cheaper, but not reducing value

The Apple blog | We start brand-specific blogs to curate the big and small news updates related to a certain name in the smartphone space so that you, the user, do not have to go about fishing for the stories.

Written by Nandagopal Rajan | New Delhi |
Updated: February 3, 2020 10:34:23 am
Apple, apple news, Apple iPhone, Apple 2020, iPhone 11, iPhone SE 2, Affordable iPhone, iphone 12, iphone earnings, iphone pricing Apple Blog | What you need to know about Apple this week. (Express Photo: Nandagopal Rajan)

Apple is a company people love and hate. A lot of those who hate it ultimately hope to be able to afford it and become lovers of the brand. Yes, affordability has been a problem for many consumers when it comes to Apple products. But for the company, this is what differentiates it from the scores of other smartphone makers out there.

Yes, Apple is premium and the company knows there aren’t a lot of companies who can claim that. This also means pricing has not really affected its sales and the so-called price elasticity is less. This means that as demand tapers down with more people delaying upgrades because their present iPhone is working fine or because they have not seen a big enough feature in the new one, it is able to push up the prices and keep revenues stable. This has been the reason why Apple has been pushing up the average selling price (or ASP) of iPhones for a few years now.

But it also knows that it can no longer afford to ignore markets where the price sensitivity is much more. In countries like India, older, cheaper, iPhones have traditionally sold more than newer models. It has over the past couple of years tied up with banks to make the purchase easier with cheaper loans and the like. It even brought out the iPhone SE, a budget iPhone aimed at emerging markets and consumers who could not afford the best the company has to offer. But these weren’t very successful strategies for the company. That was till it launched the iPhone XR.

The iPhone XR was different from the iPhone SE. Here was a phone that was fully specced and did not cut corners. Yes, it did not offer some features which a lot of users would be happy to forgo for a more affordable price tag. A year on, the iPhone XR has been one a runaway hit even in markets like India where the company has periodically offered more discounts on the model.

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And it seems Apple also learnt from the success of the iPhone XR. Last September, instead of the new version of this phone it decided to co-opt these learnings into the base model of the iPhone itself. So, the iPhone 11 came at a price point way below that of even the iPhone XR. This too has been a good change in tact from Cupertino, a strategy that seems to have paid rich dividends in the first quarter itself.

According to the latest analyst reports, Apple has hit an all-time high, not just in India, but also globally. Canalys says it shipped close to .925 million iPhones in Q4 2019, growing by over 200 per cent annually and recording its best numbers in India ever. Globally, the research firm said, Apple led Q4 “exploiting strong demand for iPhone 11 models to increase 9 per cent to 78 million units”.

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With these numbers, we can say that Apple has learnt the art of bringing down the price without reducing the value of the brand. This again is crucial for Apple, which is still an aspirational brand in many markets. People will still pay more for an Apple device because they see the aspirational value being fulfilled. If the company plays the budget game beyond a point, it might erode its value. And this is where Apple has hit the right balance for now.

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