Ronnie05's Blog

Will Apple’s “Volksphone” re-invent its Smartphone strategy?

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 5, 2013

In 2007, Steve Jobs launched the iPhone and created the touchscreen Smartphone category. Apple had a 5 year window of opportunity and dominance, before Android touchscreen smartphones of comparable quality came anywhere close to the iPhone. Android rode on its strengths combined with Samsung’s distribution and LCD panel strengths to finally offer a comparable device to the iPhone in 2012. Android was also quick to capitalize on the low end opportunity to create volumes for itself as Samsung built dominance in smartphones with successive launches of Galaxy Note and Galaxy S series phones.

In the coming months, Apple will see a shift in strategy in the way it has driven iPhone with the launch of iPhone 5C.Its equivalent to Apple “Volksphones” – a device that targets the mid range of the markets. in doing so, Apple would go back to Jobs’s 1997 advice to Apple: take everything of value you can from the leading product and repurpose it into the next great thing.

iPhone 5C and 5S

Arguably, iPhone has hit its peak aand the way forward would be a decline if it were to persue a high end – high margin – low volume strategy. Instead Apple will now need to shift its strategy from high end – high margin- low volume to mid segment- low margin – high volume strategy. If Apple were to do this, it would be marked shift from the strategy that it has successfully pursued this far. In order to stay relevant and stay in the game, Apple would have to risk cannibalizing its high-end line (while continuing to add to its specs), by repurposing their resources into a mass-market device. There could be additional pickings through the iCloud, Siri and its Application store. Interestingly enough Apple would need to open to other arrangements such as Operator billing for Applications bought on the Apps store.

Apple has already reworked iOS into tablets and the AppleTV, and seems to have a vision for a wearable next device / phone peripheral – iWatch. Also the new Macpro by Apple, promises to be a technology disruptor with new and very high end media or gaming experiences. Thus Apple’s technology flagships are now poised to change from the iPhone/iPad to other devices – most signficatly the iWatch.

Apple has had a great run with its currently-for-sale smartphone strategy, but nobody, including certainly Apple, assumes it can continue. The question is how quickly they can re-invent the smartphone… again.

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