• Apple's iPhone 4 Continues to Drive Global Growth

    Although Apple’s iPhone 4 was released over three years ago, it remains an important driver of smartphone sales in emerging markets such as India. Strong sales of the iPhone 4 are indeed what helped Apple sell a lot more iPhones this past quarter compared to the number that many analysts were expecting. Apple CEO Tim Cook even noted that the iPhone 4 remains an attractive device for many first-time smartphone buyers worldwide. According to The Wall Street Journal:

    Not that selling older models in emerging markets is a new strategy for the company. And it has potential downsides, as lower-priced phones can squeeze gross profit margins.

    But Apple, despite its image as a premium player, is adopting more aggressive tactics to sell its oldest smartphone in markets where demand is growing quickly and many buyers have never purchased a smartphone before.
    As previously mentioned, the obvious downside to Apple’s reliance on the iPhone 4 as a sales driver is that the device being three years old, commands a lower price point than Apple’s more recent iPhone models. The WSJ notes that while the iPhone 5 costs carriers $649, the iPhone 4 costs only $450. Consequently, while the iPhone 4, which is often offered for free with contract, is a great device to bring new customers in and generate sales on the cheaper end of the smartphone spectrum, it also has a discernible effect on Apple’s bottom line.

    For example, in the most recent quarter, the average selling price of the iPhone fell to $581, a $32 drop compared to the March 2013 quarter. Nevertheless, Apple’s iPhone 4 strategy appears to be working, especially because the device’s lower price point is attracting many first-time smartphone buyers who might otherwise be drawn to affordable smartphones from other manufacturers. This is especially important to Apple because once a user is ushered into the iOS ecosystem, they are likely to purchase other Apple products in the future.

    Regarding this thought, there a are a number of rumors which suggest that Apple will release a lower cost iPhone comprised of cheaper materials this fall. The reasoning is that it will allow Apple to target emerging markets without having to sacrifice as much when it comes to margins.

    Source: The Wall Street Journal
    This article was originally published in forum thread: Apple's iPhone 4 Continues to Drive Global Growth started by Akshay Masand View original post
    Comments 7 Comments
    1. trevorrawson's Avatar
      trevorrawson -
      Why does an iPhone 4 cost carriers $450? Why does even an iPhone 5 cost them $649 when you can get a new iPad with just as much storage for $499? Is it just me that doesn't think any of this makes any sense at all? Is there something about constructing a phone that cost so much more in R&D?
    1. recellseo's Avatar
      recellseo -
      This really is not an issue its so plain...some just prefer a tab and some a phone different usage the price is well set by their features i guess.
    1. jOnGarrett's Avatar
      jOnGarrett -
      how could the iPhone drive Global growth when apple's world wide market share has plummeted 3 years in a row while Android's has skyrocketed?
    1. Villebilly's Avatar
      Villebilly -
      I think it means driving global growth for Apple.
      The difference between iPhone and a $499 ipad is the ipad doesn't have the tuner to connect to the various bandwidths.

      My argument against a cheaper iphone has always been it isn't necessary when they can just keep making the iPhone 4. They could lower the price even further to carriers in poor countries since it doesn't cost Apple anywhere near $450 for the older tech that is included and the R&D has already been paid back many times over.
    1. bigboyz's Avatar
      bigboyz -
      I don't understand why you would sacrifice profit for an introduction? Introduce the 5 to the country and reap maximum profit. Is there some international law that does not allow Apple to sell its newest products in emerging markets?
    1. zrevai's Avatar
      zrevai -
      Law of Supply & Demand.
      Apple has a supply that people aren't demanding based on its price. They could sell the latest iPhone but won't sell very many at full price. However you can create demand by introducing an affordable iOS device to start and bring the more expensive ones in after lower income people get hooked by the cheaper iPhone.
      Do you have no understanding about the fiscal health of these emerging markets?? The average income in most is a pittance compared to more modernized countries, which is why a cheap iPhone makes sense in those poorer markets.
    1. greyhounds's Avatar
      greyhounds -
      nothing wrong with the 4. i'm keeping it until the next jailbreak comes out.
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