Last week a rumor started spreading around the interwebs saying that Apple was to unveil an iPhone Nano. That wasn’t a new rumor as we had already heard that before but the fact that the news came from the WSJ gave it street credentials.
Then the rumor was debunked by the NY Times who claimed that Apple wasn’t looking into making an iPhone Nano, but was looking into making a cheaper iPhone. When I first read about that, I thought I was in my worst nightmare: a world of cheap Apple products…
Historically, and for good reasons, Apple has been perceived as a company that makes expensive products. A basic Mac will set you back $1,000 while a basic PC will only cost you $500. I can’t count how many times I heard “I’m not rich enough to buy a Mac”. Heck, I even said that myself when I was broke.
Apple never was after market shares. They didn’t want to sell zillions of their products. Apple was all about margins and profitability. They’d rather sell a computer for $1,500 and make $600 from it than sell 10 computers at $800 and only make $60 from each one of them.
When the first iPhone came out, it sold for $600. While it wasn’t unheard of to see a smartphone selling for that price, it was unheard of to see such a priced smartphone selling this many units so rapidly. I don’t have hard data on this, but I believe this was a time where Apple was the most profitable.
When the iPad came out last year, the entry model sold for $499. While not cheap per say, it is very inexpensive compared to what it should be priced at. Look at other tablets around. None of them come at a similar or lower price, offering nothing close to what the iPad can provide. Apple priced it so low so it would flood the market and get a gigantic lead on anything Android. It succeeded.
Late last year came the Apple TV 2. A smaller and much cheaper model than its predecessor. Selling at $99, you could tell this was just $99. I remember opening the cheap box and finding a cheap product in there. You could tell Apple hadn’t spent much on packaging. The most shocking thing to me still is how the battery compartment cover of the remote is too small and kinda floats around. The Apple TV 2 wasn’t inexpensive. It was cheap!
But hey, you get what you pay for, right?
The latest noticeable price cut on Apple’s product line is of course the MacBook Air, which used to sell at $1,800 and now starts at only $999. Steve Jobs who once called netbooks “cheap laptops” had just started selling his very own cheap laptop. The reviews came in. As usual, the Macheads welcomed the new MacBook Air as new messiah, while the rest of the tech land gave it good but not amazing reviews.
Over the past 2-3 years, Apple has constantly tried to bring the prices down and it seems their strategy now is to not go for the margins, but to go after market shares. They want to seriously compete with Microsoft, RIM, Nokia, and of course Google. The only way to do that is to lower prices.
But don’t get fooled: when prices go down, quality goes down!
Just like everybody else, I like nice things. I don’t define myself according to what I own, but I like driving a nice car, having nice clothes on my back, and… I like having a kickass phone! But what happens when this phone becomes so cheap that everybody can afford it? Well, everybody buys it, and the once extraordinary phone becomes ordinary, lacking special distinction.
Ordinary is boring, and while ordinary sells, it doesn’t make money. It just creates cash flow.
As a recovering PC user who was slowly introduced to Apple’s world over the past 4 years, I have come to really appreciate, respect and love their products, but most importantly the company behind the products. I don’t wear a fanboy blindfold and while other Mac bloggers praise the company, I often criticize Apple and try to decrypt what, why, and how they do things.
If I had to make an analogy to the car industry, I’d say Apple is like the Audi of car makers. Beautiful, elegant, powerful, simple, clean, but not cheap. That’s what you get right now when you buy an Apple product. You get a beautiful, elegant, powerful, simple, clean product for which you paid a hefty price.
I’m worried that if Apple enters a pricing war with other tech giants, it won’t be able to keep its shine. It will lose all of its appeal. They will not sell products everybody dreams of owning, but they will sell products that everybody can easily get access too.
I have a Masters in Advertising, and wrote a thesis titled “the importance to be a brand”. So yes, I do have a thing for brands. I find them fascinating, and Apple more than any other brand. I just don’t want to see Apple becoming the next Nokia, going from being a glowy company to becoming another soulless corporation.
I want to own an iPhone that makes me feel like I’m driving the Audi S5. I want a phone that makes me feel like I’m part of something. A phone that makes me feel different. A $100 iPhone will not do any of that.