Why has Apple decided to develop a smartphone that will sell from 1,159 euros (its starting price in Spain)? He will be successful?

The iPhone X of more than 1,000 euros (will be sold from 1,159 euros in Spain, or 999 dollars in the United States) is already a reality. It has already been presented by Apple at an event that also talked about Apple Watch, Apple TV and other new generation iPhone: iPhone 8 and iPhone 8 Plus. And is that Apple has decided to present three new models of its popular smartphone . Why? According to Jeff Orr, director of research at ABI Research , “Apple has been a victim of its own success. While the first iPhone model announced 10 years ago differentiated Apple from other mobile phone manufacturers as the smartphone pioneer , “over the years,” its market leadership has declined. ”

The reason is that “hundreds of other companies introduced their own products” and the competition in smartphones to date is considerable. Orr explains that Apple is forced to respond, on the one hand to the needs of “financial investors” and, on the other hand, those of “consumers. Financial investors want to increase profitability. Consumers want to participate in the adoption and use of new technologies “, differentiates this expert. “However, the iPhone has not been accessible to every market in the world.” Orr diagnoses that “Apple has been unable to become an ‘all for all'”. After overcoming the limitation of “operators’ ability to offer LTE services”, with infrastructure improvements and spectrum availability, the price problem is maintained despite the introduction of entry-level iPhone models such as the iPhone C and iPhone SE.

Now, with the iPhone X, what makes signing the apple bite is fixing a “new level of value” for those customers who want a ” futuristic premium device . A new price level is also implemented to reflect the flagship nature of the iPhone X, “said the researcher at ABI Research. “A similar tiered smartphone offer already exists at Samsung, while other leading OEMs are expected to follow. This new class of iPhone gives Apple the opportunity to separate the expectations of investors and the market. Low-cost iPhone solutions, such as the iPhone SE, can be prioritized for markets like India “and” the iPhone X improves the profitability of smartphonesApple, which will offset the downward pressure on prices and profitability at the lower end of the market, “according to Jeff Orr.

For Loizos Heracleous, professor of strategy at the Warwick Business School , “Apple’s introduction of an” almost “$ 1,000 iPhone is consistent with its differentiation and exclusivity business strategy , targeting the upper end of the market rather than target only a larger user base. Since the iPhone accounts for most of the company’s revenue and profits and its demand curve is relatively inflexible – that is, a price change has less effect on sales – this pricing strategy makes sense in terms of growth of profits and income . ” In his opinion the “measure is also consistent with the image of Applein major emerging economies as an exclusive phone and as the real thing, despite the availability of much cheaper imitations. ”

“While it may limit the rapid expansion of users , ” Heracleous values, the iPhone X “strengthens the brand image and its attractiveness as mobile that most people willbuy when you can do it” . In short, will your launch be positive? Or could it end up hurting Apple? “People have been predicting the demise of Apple for some time , ” says Loizos Heracleous, “but the performance” of the company “has been growing stronger since the early departure of Steve Jobs. This price movement is an example of the essence of the strategy: being able to make difficult decisions that are significant for the performance of the company. ” Thus, although “no movement is risk free”, it seems that “as is the case” isa ‘bold move should be positive for the company in terms of performance , and create a distance from competing brands in terms of exclusivity “, sentenced from Warwick Business School.

And will Apple sell a lot? ABI Research point to potential supply chain issues to favor “production volumes at levels similar to previous iPhone presentations.” In this sense, his estimate is that “the supplies of the new premium models are limited until 2017 and in the first half of the calendar year 2018″. For its part, the consultancy Strategy Analytics bet that the iPhone X will become a sales success, driven by hooks like the screen with AMOLED technology. This way it would have many ballots to end up being ” the best sellingsmartphone in the world in the last quarter of 2017,” ahead of the other newly announced iPhone.