Apple Will Never Make A ‘Cheap’ iPhone

Apple Introduces iPhone 5

Apple Senior Vice President of Worldwide product marketing Phil Schiller announces the new iPhone 5 last September in San Francisco. (Image: Getty Images via @daylife)

From my Forbes.com blog The New Persuaders:

First Apple was going to make a cheaper iPhone, either to try to blunt the rapid rise of Android phones or to compete in international markets. Then it wasn’t. Now after a new interpretation of comments from Phil Schiller, Apple’s senior VP of global marketing, maybe it could. Or not. It’s all so confusing!

So let’s settle this now: Apple will never make a “cheap” iPhone. Most certainly Apple itself will never use the word “cheap” in association with anything it makes, iPhone or otherwise. Or “inexpensive,” or “value-priced,” or anything of the sort. That has never been the Apple way, and given that it owns most of the profits in the industry with its current strategy even in the face of Google’s Android onslaught, why it would change?

More than that, though, it seems doubtful that Apple would sell an iPhone that anyone else would call cheap, either. Full-freight iPhone 5s bought without a contract start at $649 in the U.S., and even the cheapest iPhone 4 starts at $450 off-contract. It’s very difficult to see how Apple could profitably sell an iPhone of any kind that still deserves the name for a third to a half of those price points. And anything over about $200 is going to be hard to call cheap inexpensive affordable by almost anyone, even in the U.S.

Now, that doesn’t mean Apple won’t make a less expensive model of a smartphone with which it could make inroads into China or other countries where there’s no carrier subsidy, or perhaps simply to head off people who might opt for a truly cheap Android phone. Indeed, Apple hasn’t shied away from offering older iPhones that are inexpensive–or even free!–albeit with a two-year commitment. The consumer-facing price isn’t the issue.

It’s also not beyond the realm of possibility that Apple could offer a different wireless communications and Internet access device. Perhaps that’s even the source of recent rumors about an Apple watch. Other form factors could be cheaper to produce, or at least feature lower-cost components, such as a plastic case perhaps–to be sure, an elegantly engineered plastic excuse me, polycarbonate case.

But it’s simply difficult to imagine that Apple would offer something that could be construed as cheap by international standards–which I would take to mean under $200 for sure, a price that Piper Jaffray analyst Gene Munster has suggested–and still call it an iPhone. The iPhone brand stands for uncompromising quality, and I don’t see why Apple would endanger that.

It’s always possible that Apple will stretch the iPhone line, which customarily sports only one new product at a time. Never say never, especially when it comes to Apple. But I’d be less surprised to see the company conceive a new brand for it. After all, Apple itself carries plenty of cachet no matter what product name comes after it.

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