iPhone: High-end market has ways to go

Posted on by Mike Evans

So the high-end smartphone market is oversold and dying? So the only way for Apple is to cut prices and compete (at zero profit) with the pile-'em-high brigade? Nothing could be further from the truth. The iPhone 5C, by all accounts is not the runaway success "respected analysts" expected. Instead, buyers are clamouring for the high-end 5S, expecially the gold version. iPhone 5S sales are outnumbering 5C takeup by more than two to one with 64 percent opting for the premium product against only 27 percent interested in the colourful and cheaper 5C.

I am not surprised. The iPhone is seen as an aspirational, high-quality item with a sound eco-system backing. While other manufacturers scrabble for the low ground, Apple is content to make big profits on sales to those who are willing to pay top-dollar. Woe betide Apple if they are ever tempted into the crowded lower end of the market.

Back in April, Apple CEO Tim Cook was quoted in Forbes:

There’s always a large junk part of the market. We’re not in the junk business. There’s a segment of the market that really wants a product that does a lot for them, and I want to compete like crazy for those customers. I’m not going to lose sleep over that other market, because it’s just not who we are. Fortunately, both of these markets are so big, and there’s so many people that care and want a great experience from their phone or their tablet, that Apple can have a really good business.

The events of the past month have proved him right. "Respected analysts" are fast joining the select band of the unloved. It already includes politicians (aka "lawmakers"), lawyers and estate agents. These analysts just do not understand Apple.

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