As you might already know, a few weeks ago Apple announced its plans for new iPhone SE. The second generation phone announcement comes amid Coronavirus pandemic, which is about to create a recession and guess what? It is going to be cheapest iPhone ever. The company has targeted price-conscious customers with iPhone SE and this move has already raised eyebrows among fans and critics.
This is not normal for a business to reject its traditional high-quality brand identity. Is it a desperate bid to deal with the crisis, or is it a tactic that has been in the works longer than we have noticed?
iPhone SE is the cheapest iPhone ever
Launching products, or even companies, is not new during the economic recession. In his book The Silver Lining, author and business strategist Scott Anthony claims that “customer issues do not disappear in challenging economic conditions; in addition, formerly concealed issues are exposed and old issues are intensifying.”
Apple’s previously “secret problems” include rising competition and a growing decrease in smartphone demand from 2018.
In less than a decade, smartphones have become quite pricey, with gradual product enhancements that contribute little value from generation to generation. So, once the previous iPhone SE was introduced in 2016, its success in the mid-range market was not shocking.
Like its predecessor, the brand new SE is very relatively small. It’s the same style as the iPhone 8. And while it’s the absolute cheapest iPhone to date, it’s filled with a variety of useful features that mimic the iPhone 11, including the A13 bionic chip.
The SE brand has aroused interest as the product range represents a departure from Apple’s conventional high-end marketing. SE has left fans worrying about price labels on more costly iPhones over a cheaper alternative with many of the same functions.
Coping under pressures
With sales now slowing down and strong competition, it makes perfect sense for Apple to expand its product range. Gartner’s survey reported a global 1.7 percent decrease in smartphone revenues in the second quarter of 2019.
Apple and Xiaomi have been the only companies to achieve even poor growth in the fourth quarter of 2019, while Huawei, OPPO and others reported a decline. A heated rivalry continues between Samsung and Apple, with Samsung having the largest share of the market at 17.3 percent.
These competitive burdens are amplified by the imminent world economic crisis caused by the coronavirus and fragile market outlook. Unemployment forecasts show that consumers actually do not have the surplus resources they once had. And those on the lookout for a new smartphone would be more vigilant about their expenses.
Preppy vs Targeted Products
Some claim that Apple’s lackluster iPhone sales success in a challenging market fulfills the “haunted empire” theory – popularized by former Wall Street Journal journalist Yukari Iwatani Kane in her book by the similar name – which suggests that the company has lost its way to Steve Jobs’ death. But we believe it’s a simpler explanation.
Apple, once a market pioneer, is already experiencing the “innovator challenge” identified by late US professor Clayton Christensen. He clarified how leading companies are challenged by smaller, more agile companies that begin by selling cheaper, low-quality goods to low-end consumers. These goods play their role and ultimately these businesses – such as OPPO, Xiaomi and Huawei – should boost their products to target a more prosperous audience.
Apple is likely to understand that it now has to change its approach to cope with increasing competition and changing market circumstances. It must consolidate its product portfolio in order to deliver more appeal to customers across the scope of the industry.
The move to introduce the new iPhone SE is a long-needed break from tradition. It puts consumers in a winning spot by offering more value at a cheaper price. This is clear from the elimination of features like the Face ID and the wide screen. Rather, the emphasis is on key features such as a fast processor chip and a high-quality camera.
Although it may appear that Apple is losing its grip on the high-quality brand identity that it once built a reputation on, this move might be helpful to Apple and enable it attract customers from a wider audience.
Transforming in a difficult market
Smartphone market penetration is now at higher than 85 per cent in a variety of countries, and these nations are usually “wealthier.” This suggests that the gap left for smartphone sales is in developing countries where people are more cost-sensitive.
As high-end retail demand continues to decrease, Apple’s success will probably to in software solutions and services such as music, games, applications, Apple Pay and subscriptions. But this business is also packed. Although services and apps often have better margins, they’re not going to give Apple the amount of hardware growth it previously did.
Expanding, not ending its brand
The first SE generation’s launch in 2016 marked the start of Apple’s diversifying of its high-quality smartphone policy.
That being said, the company’s popular brand retains a devoted following as it interacts emotionally with clients and offers an unparalleled range of products and services. Apple aims to pursue other consumer choices, such as smartphones powered by 5 G (but development has been stopped by the disease outbreak).
With an estimated valuation of about US$ 140.5 billion, Apple’s brand remains one of the most successful in the world. And offering a lower-cost option to consumers throughout an economic distress is likely to improve rather than harm the brand.