We can all agree that Apple are smart, very smart. Their business strategy is intriguing. Their practice of selling older generation iPhone’s and iPad’s alongside new devices but at lower prices is proving another very popular idea for Apple and of course puts even more money in their bank account. The iPhone 3GS frequently outsells individual Android handsets, even brand spanking newer models. According to research both the16 GB and 32 GB versions of the Apple iPad were sold out within two weeks of the iPad 2’s arrival and the iPhone 3GS sold better than the HTC Inspire and Motorola Atrix on AT&T.
Android is definitely growing and fast but not enough to affect Apple. Purely because of Apple’s business strategy of dropping the prices of the iPhone 3GS on a two year contract to $49. Apple is ramping the iOS ecosystem and this will surely lead to stronger replacement sales cycle, which in-turn should help drive strong longer term earnings growth.
So, working on this strategy is it suffice to assume that Apple will drop the price of the iPhone 4 when the iPhone 5 is released and if they do would they also be prepared to go so far as to release two iPhone 5’s? One full version and one lite? Apple were quite happy to produce two versions of the iPhone 4. Remember there is the Verizon CDMA edition, this has an alternative chipset and slightly different case design. The iPhone 5 lite would have to go further than that with a smaller screen and in turn smaller battery and probably less memory but it could use the A5 CPU, and to keep the price down further it could have a different back, perhaps polymer rather than glass.
The iPhone 5 Lite will cost less to produce and allow Apple to sell a new phone at an even lower price than the full version. Plus of course, they will most probably be selling their iPhone 4’s at a reduced price too. This way Apple should really clean up both the high-end and the low-end market and really leave Android out in the cold.
What do you think?