Apple Wont Battle for the Midmarket

 
 
By Don Reisinger  |  Posted 2011-06-27 Email Print this article Print
 
 
 
 
 
 
 


 

5. This isn't the iPod

After the iPod became successful, Apple released several versions of the device to appeal to consumers looking for different things from their music players. The company now offers the iPod Touch, iPod Classic, iPod Nano and the iPod Shuffle. And it has made billions of dollars over the years because of it. But it's important to point out that the iPhone is not another iPod and Apple is following a much different strategy with its smartphone. Apple wants to make each iPhone unique-it doesn't want to water it down for different markets.

6. Customers are already buying the more-expensive option

If Apple were having trouble selling the iPhone to customers around the world, the idea that the company would release a cheaper version would make some sense. However, iPhone sales continue to rise. If people around the globe are willing to invest in Apple's smartphone now, it wouldn't make much sense for the company to invest in a new device that would generate less revenue.

7. The logistics are too costly

Earlier this year, Apple announced the launch of the iPhone on Verizon's network. With that, the company made production far more difficult. Rather than simply manufacturing GSM devices, it needed to prepare CDMA options, as well. From a logistical perspective, things became more complex. Considering that complexity can sometimes cut into margins, it wouldn't be the best idea for Apple to prepare another new smartphone designed for GSM and CDMA carriers. It would be a production and logistical nightmare that could cut into the availability of its flagship smartphone. At this point, it seems that releasing two versions of the iPhone would spawn too much risk and not enough upside.

8. How will carriers respond?

It's important to keep in mind that Apple isn't making decisions in a vacuum about its smartphone's future. The company must consider the impact its decisions will have on its relations with carriers around the world. Offering up another smartphone at a cheaper price with the option of prepaid service might have an impact on carrier relations. Whether or not that impact would be good or bad is unknown, but it would weigh heavily in Apple's decision-making. That must be considered before one believes that Apple will release an iPhone 4S solely for its own gain.

9. Competition is too fierce in the midrange

Whitmore argues that Apple's decision to release a cheaper iPhone this year would be directly related to the issues the company's competition is having. Whitmore specifically cited Nokia's and RIM's struggles as prime reasons to jump into the "midrange smartphone market." Though Nokia and RIM are struggling, the companies are still competing. With the Nokia N9 coming out soon, there's no telling how the world's consumer base will respond. Combine that with the many other companies, including HTC, Motorola and others, that are competing in the midrange space, and it quickly becomes clear that Apple might face too much competition in that sector for it to justify launching another smartphone for the midrange market.

10. Apple has always employed a "pull" strategy

When one considers Apple's product strategy over the years, they will find that the company has consistently used the "pull" method to attract customers. Rather than find a market and try to compete in it, Apple has found a way to coax consumers to its products, which in some way or another break new ground. Considering that, it doesn't make much sense for Apple to push another iPhone model into a space that it's not necessarily comfortable competing in (see item 2). Apple pulls customers to devices that consumers never knew they wanted. It doesn't try to sell me-to products that are following a well-worn path that consumers have already passed over. That alone could be enough to scuttle a midrange-focused iPhone launch this year.

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Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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