Another year, another Apple Launch event, and another series of absurd naming convention (I thought they would drop the roman numeral after their 10 year anniversary. I’ve been hearing XS as everything from excess and tennis). We will spare you the basic details you may have come across elsewhere and instead highlight some key insights and takeaways from the event.
Placing smart bets on pricing strategy
In a landmark event earlier this year, Apple, for the first time, tumbled into third position in worldwide smartphone market share.
It was overtaken by Huawei while Samsung continues to be on top. Analyst projections for 2018 Q2 and Q3 are being lowered given the dwindling sales.
Apple, however, remains unbothered. The reason being smart bets on pricing strategy. Even though iPhone’s unit sales in June 2018 didn’t increase since November last year, the revenues increased 15%. Their bold gamble of expecting customers to pay $1000 for iPhone X paid off.
This year they only upped the ante. The new iPhone XS Max can reach up to $1800, almost doubling the price of iPhone X. And this is only in the US, with prices even greater elsewhere.
Apple’s magic potion lies in pricing tiers which will draw out more revenue per customer. A former Apple analyst opined, “Factoring in nine new phones with price points above the 2018 average selling price ($745) makes it highly likely that ASPs will trend up.”
Dual SIM, Dual Strategy
A feature that one may have overlooked is Dual-SIM capabilities in all three models of the iPhone X . Dual SIM allows users to have two different phone numbers and carriers on the same phone.
While the rest of the world get a nano-SIM tray and an eSim (can be activated virtually), China (with Hong Kong) gets special treatment because phones there come with two physical SIM trays.
Apparently exceptions were made because people there have a preference for dual SIM. We personally know a number of friends in China who switched from Apple to Huawei because the latter supported Dual SIM.
We do not know why Apple caved in this time (not early not later) – is it because of Huawei’s momentum, or is it a deliberate strategy to even out growth over the years?
The differential treatment towards Mainland China and Hong Kong signify how important these markets are to Apple for customer growth.
The eSIM also opens up possibility of business opportunities if Apple chooses to dictate which carriers to partner with and demand revenue cut for activations made through their eSims.
Apple’s inclusion of the A12 processor with AI capabilities signals its ambitions in augmented reality. Currently the relevance of this is restricted to games and camera effects, but in future it opens up possibilities of smart glasses that can be paired with the iPhone.
This is also the first time, non-Apple developers can run their own algorithms on Apple’s AI conducive hardware. This opens up iTunes store to a richer, diverse options of apps to transform the way users experience social interactions, art, photos and videos.
Watching your Health
When Apple Watch was released in 2015 it was mainly marketed as a wearable piece of luxury. Future generations shifted its focus towards health. With the introduction of ECG this year Apple has shown how serious it is about tapping into the growing health market considering this technology needed serious testing (Apple conducted an Apple Heart Study with Stanford University) and an approval from FDA. The ECG feature may be a little overhyped because the Watch shows only a tiny fraction of the typical heart profile from a traditional ECG (an actual test needs 12 stickers on the heart and wrist, this one captures only the wrist). However the ability to prompt a user of an irregular heartbeat and follow it up with a physician for a more thorough check-up can make Apple go after the grey dollars.
It seems that Xiaomi has a long way to catch up with this trillion dollar company.
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected]