Apple Adopting New Clever Strategy with ‘Affordable’ iPhone XR Release

Apple just rolled out a new iPhone model called the XR which offers more or less the same user experience as its predecessor iPhone X, but with a few key differences. The new model has a much bigger LCD screen than iPhone X and retains the classic button-less design first introduced in iPhone X in 2017. But the most interesting spec about iPhone XR is its price point.

Apple just rolled out a new iPhone model called the XR which offers more or less the same user experience as its predecessor iPhone X, but with a starting price of $749

Lowering the Price Point

With a starting price of $749, Apple is marketing its iPhone XR handset as the most affordable from its ‘X’ range. One Wall Street analyst is saying that Apple’s leap into the affordable handset market will allow the trillion-dollar company to unlock demand in China.

On Friday, Dan Ives, who is considered the biggest Apple bull on Wall Street, said that the iPhone maker is finally tapping into the emerging markets in Asia and its pricing strategy will be key in driving stock prices above $250. Currently, Apple shares are trading at $216.30, almost 3 per cent down since the last iPhone release.

Wedbush Securities’ managing director said that Apple has its eyes on China and it wants to use the country’s market to fuel demand in the long term. While interviewing for Power Lunch, Ives said that Apple’s iPhone launches last year were received with little enthusiasm from North American and European audiences, especially since the company had raised its handset prices to four digits. The company has now realized that its luxury-pricing strategy is starting to backfire, and they’re making China the focal point of their new game plan to boost sales.

Wedbush Securities’ managing director said that Apple has its eyes on China and it wants to use the country’s market to fuel demand in the long term

Capturing Demand in Emerging Markets

In 2017, when Apple launched its iPhone X starting at $999, it became an issue for the company to capture the Chinese market, where regional giants like Samsung and Huawei have claimed dominance. But the new $749 iPhone XR could become Apple’s golden ticket to the world’s most coveted market.

Ives also predicted that the Silicon Valley giant will be able to boost sales for its ‘luxury’ iPhones next year, after breaking into the emerging markets with a cheaper model. Apple is expected to release its quarterly earnings report next week, however, the revenue will not include sales from iPhone XR.

Wayne Lam, an analyst from IHS Markit also believes that Apple’s new pricing approach is in fact its acknowledgement that most consumers can’t afford to pay up over one grand for an iPhone. The company has already admitted that some of the advanced features and performance are unnecessary and expensive which is why Apple is making a much needed downgrade to its new XR model, while retaining the sleek button-less design that its X range is famous for.

Some of the specs that Apple opted out of in its new iPhone XR include the fancy OLED screen, 3D touch, camera quality – and of course, the price

Self-Disruption

With the release of the iPhone XR, Apple is trying to convey that it has reached a point in its handset line where no amount of performance or feature upgrades can justify its price point. Some of the specs Apple is rolling out in its iPhone releases don’t even have a demand in the market yet, so it’s time for the company to take a step back and reanalyse its sales strategy.

The analyst says that Apple will still be able to manufacture and sell high-end phones in the future, but the XR release was a clever strategy on the company’s part to disrupt itself before any of its competitors get the chance.

In order for Apple to capture the non-luxury handset market, it will need to understand what design and performance features are valued the most by average users. Some of the specs that Apple opted out of in its new iPhone XR include the fancy OLED screen, 3D touch, camera quality – and of course, the price.

Apple prices have progressively gone up over the past years, but this year, the iPhone maker switched up its strategy by merging the best-selling design and performance features from X and XS series and putting them in a more affordable handset. So far, iPhone XR has been performing a lot better than last year’s upgraded models, which means that the company should expect to earn a higher revenue in 2019 Q1.