Apple Inc. (AAPL): Product Development To Cater To New Markets

Cheaper, not bigger, is needed

Many analysts are of the opinion that Apple Inc. (NASDAQ:AAPL) must introduce an iPhone with a bigger screen in order to battle Google Inc (NASDAQ:GOOG) Android powered devices. However, Google’s own statistics indicate that phablets and other large-screened smartphones on the Android platform actually form just 10% of active users, while 80% belongs to Smartphones with a normal screen size (i.e. 3.5-inch to 4-inch screens) and 10% belongs to smaller devices.

Apple Inc. (NASDAQ:AAPL) already has iPhones available with 3.5-inch and 4-inch screens and if it decides to launch a bigger iPhone and not compromise on quality (which is Apple’s golden rule), the company will have to charge a higher price for the device. Making a bigger and better iPhone and also making it cheaper is not a possibility unless Apple decides to sacrifice its share of profit.

Again, the smartphone market is not growing as rapidly as it used to. Analysts doubt whether there is enough scope left for a another high-end phone from Apple, as prices are being increasingly driven down by affordable phones from Samsung and Google Inc (NASDAQ:GOOG).

What I’m trying to say is Apple Inc. (NASDAQ:AAPL) needs to make cheaper phones and a 5-inch iPhone will definitely not result in that. Secondly, as per statistics, Apple doesn’t actually need to launch a bigger iPhone. We must keep in mind that Apple is targeting an audience which is price-sensitive, and this audience will choose to pay a decent price and get a decent device, rather than paying a premium and getting the best in class.

The majority of so-called phablets and large-screened devices have their major markets in developed economies such as the US and the UK, and Apple has already triumphed in those markets. As per the latest report from ComScore, as a smartphone manufacturer, Apple has the highest market share, 39%, while Samsung’s share is just 21% and HTC, Motorola and LG account for 9%, 8.5% and 6.8% respectively. So, in these developed economies, Apple as a phone maker is already leading. But, as a software platform, Google’s Android is way ahead of Apple Inc. (NASDAQ:AAPL) with 52% market share as against Apple’s 39%. So if Apple wishes to defeat Google’s Android, it needs to launch affordable handsets; just the way Google Inc (NASDAQ:GOOG) is trying to reach out to almost everyone through the highly affordable devices running on Android.  Even Apple will have to figure out a way to attract newer customer segments through a more-affordable offering.