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

Concluding thoughts – making the smart move again

When Apple Inc. (NASDAQ:AAPL) launched the iPhone in China, it got a superb response and soon it captured a huge share of the space. But once Apple satisfied the affluent consumers and came to the next segment of consumers, it lost its lead to Samsung. However, that was not the case with tablets. Apple could satisfy the affluent ones with its 10-inch iPad offering and also could satisfy the following segments through its iPad Mini. Even with the iPod, Apple played a similar game. Apple had introduced the iPod Nano for $199 which was significantly costlier than the other available mp3 players; still the device was a huge hit since it was cheaper than the then $299 iPod Classic. Apple can make a similar smart move by introducing a cheaper iPhone.

But we can’t also expect Apple to make phones which will compete with the lowest of the Android smartphones. We have to live with the fact that no matter how cheap it becomes, it will still be priced higher than those from Samsung, Motorola and LG. Like AllThingsD said,  the low-end iPhone is really a mid-end iPhone. Even analysts at J.P.Morgan think that if Apple launches a cheaper iPhone, it might be priced around $350-$400 (before subsidies). This way, it will be priced lower than present iPhone which costs $650 (without subsidies), but still be costlier than the $200-$350 Android smartphones. In fact, with this price tag, Apple maybe able to bite off a significant share of the $200-$350 segment that Samsung dominates presently.

Rita Chattaraj has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.