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The 'S' Stands for Strategy: Apple's Plan
By: Greg Dorn
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By now, the dust has settled in Cupertino as Apple, for the first time, released two iPhone models in the same year. Despite Tim Cook’s pledge to “double down on secrecy,” the event offered no shockers. For months, we saw the rumor mill spin frantically with talks of fingerprint IDs and a “cheaper” yet colorful, plastic phone. When the likes of Cook, Schiller, and Federighi hit the stage, we got exactly what we expected. However, the media missed one major aspect of this year’s iPhone rollout: the strategy and long-term goals behind the two handsets.
 
In an illogical manner, Wall Street has berated Apple over the last few years with accusations of not innovating. Look no further than the plunging stock price, which went from over $700 down to $483 in a year’s time. Stockbrokers assumed that the only way Apple could return to its former glory was by offering a cheaper device to emerging markets. After all, Apple’s main targets (China, India) do not offer subsidized iPhones as predominantly as the U.S. Therefore, The Street figured an iPhone 5C would be drastically less money, even without the cushion of a carrier’s two-year plan. Boy, were they wrong.
 
In reality, the iPhone 5C simply replaced the 5 in Apple’s lineup. Instead of knocking off $100 for last year’s model and offering its predecessor for free, Apple decided to shake things up. Their plan was genius and will no doubt yield tremendous profits. Let me explain.
 
The iPhone 5C is by no means a cheap phone. Many people in emerging markets (which analysts thought Apple was trying to target) still have to plunk down over $500 for the colorful contraption. So why release it? That can be answered by looking at two major objectives: increased profit margin and luring customers with a “new” product.
 
We know now that the 5C can be described as an iPhone 5 with different hardware; hardware that costs a significantly smaller amount of money to make. In September of 2012, the 5’s impossibly sleek design put a fairly large dent in Apple’s profit margins. This year, the same can be said for the 5S, which shares the same casing as the 5. So why not make a phone identical to the iPhone 5, but slap on a cheaper shell, therefore increasing profit margins and attracting those looking for a colorful new product? That’s exactly what Apple accomplished, leaving the 5S as the “premium” version for the iPhone power user. Well played, Apple; well played.
 
Analysts may have gotten the products right, but their insight into Apple’s strategy was way off the mark. 


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About the Author
Greg Dorn is a blogger, writer, and obsessed with everything technology and social media. Greg is absolutely captivated with the recent advancements in mobile gadgets, making our world more seamlessly connected. You can learn more about him on his own blog here
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