Why Apple won't sell cheap

Nandagopal Rajan        Last Updated: September 17, 2013  | 11:50 IST
The new iPhone 5C on display at the launch event
The new iPhone 5C on display at the launch event. PHOTO: Associated Press

Nandagopal Rajan
Android rules over nearly 80 per cent of the smartphones being sold now , thanks primarily to the fact that it is available on phones across all price ranges. Everyone thought this pressure would be enough for Apple to start playing the volume game and launch an affordable smartphone.

But the guys in Cupertino had other ideas. They launched an iPhone 5C as predicted. But the C here did not stand for cheap. In fact, the phone will be just a tad cheaper than the iPhone 5 which it will replace. That is because Apple now has a new, superior, flagship phone in the iPhone 5S .

Actually, except for the iPods, Apple has never been a mass market brand. It has always been elitist, offering its customers a premium experience for the extra that they pay. The premium tag also works wonderfully for Apple's branding.

For instance, iOS is the most monetised of all mobile platforms.

Those using an Apple phone are much more likely to pay for an app than Android or Windows Phone users. That is because anyone using an iPhone is coming from a price bracket where they can spend a couple of dollars a day on apps, or songs. You cannot say that of the other platforms. Even when it does not have the volumes of Android, Apple's monetisation is much more than Google's platform.

A $99 phone would have diluted this brand equity that Apple has so painstakingly built. It would have sold many more phones at this price point, but without the guarantee that these users would also end up spending their money in purchasing apps online.

This services side is a huge part of Apple's revenue. In India, we can expect the 'cheap' iPhone 5C to sell for anything above Rs 35,000 based on present conversion rates. It will be cheaper only if Apple gives a discount.

That seems unlikely at the moment as iPhone 5C is selling for $733 in China. For now, volume markets like India and China certainly don't seem to have caught Apple's fancy.

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