Apple and its CEO, Tim Cook, have increasingly focused on shifting their brand on high end consumers. It seems to have fully become an upscale brand.
Apple’s new product line has locked itself in on $1000+ phones and dropped its least expensive phone model. They have undeniably made it clear they are not concerned with selling to consumers with little money. Instead, Apple wants to become the Ferrari and LV of consumer tech.
Apple’s focus on high-end consumers has proved itself in the near-term but may be a poor choice in the longer term. Less and less customers will choose Apple for their first phone, and more customers will be switching over to competing brands.
While Apple has always been more on the high-end market with their Macs and iPhones, for years Steve Jobs made an effort to appeal to the mainstream market. When the iPod was popular, Apple offered the shuffle and nano. The iPad offered a mini version, and the iPhone kept old models for discounted prices. Apple did all of this to make their products and brand more accessible to a wide range of people.
Apple seems to have turned away from Job’s vision lately. A year after launching the iPhone X at a $1000 starting price, Apple has launched the XS and XS Max at the same $1000 starting price. The company released a “budget” XR, starting at $750. This 25% discount seems to be a bargain, but when you compare it to the iPhone X’s little brother, the iPhone 8 which released at $700, there is no bargain.
This price jump could help Apple in the short term, with its higher prices. Long term, however, this shift of focus could hurt the company. Apple followers are more likely to hold onto their phones for a longer period of time, upgrade less often, and opt for lower-end models when they need replacements.
Apple relies on repeat customers. Specifically, it relies on getting these customers into the “Apple ecosystem”. The ecosystem is simple, buying all apple products. From the iPhone, Macbook, Apple Watch, iTunes, and more, Apple needs to persuade their customers to buy their first product. This is most times an iPhone. If Apple fails to grab these consumers, they lose out on initial sales and subsequent sales in the ecosystem.
Keep an eye out for Apple. You may see a jump in profits in the next quarter, but don’t be surprised when the company ends up regretting their pricing jump.