Apple is poised to launch two new iPhones, a cheaper iPhone 4S and the all new iPhone 5 in rather quick succession, if industry buzz is to be believed. The theory suggests that Apple as a company is at an inflection point with regard to its smartphone strategy and is willing to take daring new steps in the backdrop of a surging challenge from Android OS-based devices.
Deutsche Bank analyst Chris Whitmore kicked up a storm by predicting that Apple will launch a cheaper iPhone 4S in September. Meanwhile, analyst Keith Bachman of BMO Capital Markets said the all-new iPhone 5 will arrive only in 2012. We believe the iPhone 5 will launch in mid-2012, Bachman wrote in a note.
Now, speculation is rife that there is indeed going to be a toned down iPhone 4S soon, which will be intended to capture emerging world markets.
The moot questions are: Why would Apple dilute its brand by stepping down from its vaulted philosophy of 'one size fits all'? What are the benefits Apple will gain from fragmenting the iPhone line? What exactly will be the features of the cheaper version device, iPhone 4S? And, how high is the probability that Apple will indeed launch a cheaper iPhone in the Fall?
To see how this step will fit in with Apple's marketing strategy, one needs to juxtapose some recent industry data. It was reported that activation of Android devices had gone up to half-a-million on a daily basis, beating Apple iPhones and iPads hands down. According to industry reports, the activation rate of Apple devices is as low as 325,000 per day. As many as 36 percent mobile users in the US now use an Android devices, while iPhone’s share has dwindled to just 26 percent.
What Apple can do to easily grab market share is to trim down its flagship device, the iPhone and make it affordable to lager sections of people across the world. Apple holds a little under 20 percent of the smartphone market share now, but it would certainly like to see the numbers go up. iPhone prices have been the biggest detriment to Apple in the emerging markets, where people have to shell out anything to the tune of $700-$800 for an iPhone. Within the U.S. though price may not be a significant dampener from the customers' point of view, carriers have always preferred cheaper devices from Android.
So it makes mighty sense to tone down the iPhone and grab more market share. Looking into Apple's past, it can be easily seen that it was Apple's plunge into iPhones, iPods, iPads and MacBooks that made it a tech company more valued than Microsoft. Obviously the devices market is where Apple sees its future.
And its here that Apple is facing down formidable challenges. The challenge from the Android breed is increasing by the day. Android based phones are hitting the market with specs and features that give iPhone goose pimples. And since Apple did not launch a new phone in summer, customers are finding it tough to hold on against the temptation to switch camps to Android.
The Google Nexus 4G, HTC Sensation 4G, Samsung Gravity Smart, Samsung Exhibit 4G HTC Evo 3D, Motorola XPRT, Motorola Titanium, Pantech phone Crossover... the list of daunting rivals is inexhaustible. Besides being feature rich, these are competitively priced as well.
If Apple offers an iPhone in the range of $300-400, then it can easily grab a lot of market share in the emerging world where prices are steep. That would broaden the iPhone's market to a much bigger one and be more effective to fend of competition from Android phones, said Harry Wang, a mobile analyst with Parks Associates, according to PCMag.
However, many analysts have also expressed doubt about the purported plan to launch a cheaper version of iPhone. Some say the idea of a low-end iPhone 4 is premature.
But the counter argument is that it's not attractive enough to keep the iPhone 3GS as the lower-end phone. Consumers need a new one on the shelf, not a device they are used to seeing around. Besides, Apple will have to really tone down the cheaper version phone so that margins justify the whole project.
This obviously means that the lower-end iPhone 4s will be a downgraded one. Its exact features are a subject of speculation though.