Android handset makers could end up in a world of hurt if Apple cuts the price of the standard iPhone line up.
All indications suggest that the tenth-anniversary iPhone 8 (or whatever it ends up being called) is going to come with a hefty price tag, around the $1,000 to $1,200 mark. That’s a lot of money. But one prominent Apple watcher has suggested that Apple could use the windfall from the sale of the iPhone 8 to slash the price of the iPhone 7s/7s Plus (or whatever the next crop of iPhones ends up being called).
And we’re not talking a small price cut either. That price cut could easily be $100.
Let’s move the focus away from Apple and look at how this could have a devastating effect on Android handset makers.
Despite only accounting for about 20 percent of handset shipments, Apple set the price bar for premium smartphones, and as such pulls in some 85 percent of the market revenue. While there’s no shortage of high-priced Android handsets, the Android market is dominated by mid-priced and budget Android devices, a segment where profit margins are razor thin (or is some cases, non-existent. Companies such as Samsung are heavily reliant on sales of premium Android handsets, and anything that upset that could be bad.
And Apple could be getting ready to upend the entire market.
The company is in a unique position to be able to release a higher-end, higher-priced Cupertino giant and use the massive cash that would generate (and no matter what you think of Apple or the iPhone, be in no doubt that the iPhone 8 is going to be a massive cash magnet) to essentially subsidize the rest of the iPhone line.
As big as the likes of Samsung and LG are, I can’t see the Android market supporting many (if any) $1,000+ handsets. That leaves them in a position where they either have to weather an iPhone price drop and hope that there isn’t a tsunami of switchers to iOS, or follow suit and start slashing at prices without having a safety net in place.
Apple doesn’t engage in price wars unless it has high-priced products to take their place. The most recent example of this being the iPad price cut that followed the release of the iPad Pro. And as it turned out, this price cut was all that was needed to reinvigorate sales following a sustained slump.
My prediction is that a $1,000+ iPhone will no doubt result in $1,000+ moonshots from the Big Five – Samsung, Huawei, LG, Lenovo, and Motorola – and copious amounts of hoping and praying that those premium-priced handsets sell.
As to whether they’ll sell or not, that remains to be seen, although my prediction is that that the Android market isn’t strong enough to sustain uber-priced handsets.
However, if people are openly wondering whether people will pay $1,000+ for an iPhone, that in of itself sets the stage for uber-priced Android handsets to flop.
See also :