Apple Introduces Price Cuts to iPhones and iPads

Apple Introduces Price Cuts to iPhones and iPads

Apple introduces price cuts to iPhones and iPads amid spiralling market share reports and consumers upgrading less frequently than in the past. Apple is refreshing their new iPhone 5C, with a model that will only be available in the U.K., China, France, Australia, Germany, featuring 8gb of memory and a price of $660 without a contract, $64 less than the previous 16GB model. As well, the iPad 2 got an upgrade with a new improved processor, a higher resolution display, and fine-tuned wireless connectivity. The price remains at $399 for the Wi-Fi only version, and $529 for Wi-Fi cellular models.

The announcement of new models comes on the heels of lowers sales than expected in the quarter that ended in December. Apple’s trademark high price has begun to work against them as the wide range of capable and relatively inexpensive Android devices have claimed 79% of the smart phone market, with Apple’s share falling from 18.7% to 15.2% in 2013. This isn’t the first time Apple has tried to break into the price conscious market segment while still trying to maintain their exclusive image, the iPhone 5C recently made its debut in India where workers are generally paid a dollar a day, but despite being available for much less coin than in the States, it was still several hundred dollars more than the next most expensive competitor. Despite this, the billions of potential customers convinced Apple to start making inroads into the new market.

The strategy is similar this time around as well, with last year’s 5C, essentially the same hardware as this years but with a different name, being offered at a $100 discount over the current model. There has been heavy betting on encasing the electronics in a colorful plastic shell, and although it has not been a failure, looking at app traffic paints a somewhat disappointing picture. Nearly triple the amount of traffic comes from 5S traffic than 5C, which does not mean the 5S outsold the 5C by three to one, but points to many choosing the more expensive model despite very similar technical specifications. But with the opulent market seemingly saturated, Apple introduces price cuts to iPhones and iPads in an attempt to reach thriftier technophiles.

Tablets have also been a losing battle for Apple in the last year, with 2013 being the first year that iOS did not hands down dominate the market. Android tablets held 63% of the worldwide market, compared to 36% for iOS devices. Last year however Apple says it sold the iPads it ever has, reporting that 26 million of the devices were shipped out around the world. This is good news, even as Apple introduces price cuts to iPhones and iPads it is clear that there is a still a large portion of the population that craves the social statement an Apple product makes. Offering lower prices walks a fine line between being too inclusive and driving away those looking to stand out, and being inclusive enough to keep sales numbers growing.

By Daniel O’Brien

The Wall Street Journal
The Financial Times

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