Apple's Focus Is On Gaining Users, Not Market Share, With Cheaper iPhones

Some interesting thoughts over on the LA Times about Apple 's product range, and the worries that some analysts are having over customers looking to purchase 'older' iPhone models such as the iPhone 4 or the iPhone 4S instead of the latest handset, the iPhone 5. This lowers the average retail price of the handset, reducing the short term profit of the new users.

Hold on a minute, though, aren't the analysts out there pushing for Apple to release a 'budget' iPhone to capture market share at the lower price points? The price points where Android is currently making inroads, and Windows Phone is heading with some smart handsets from Nokia ? Surely Apple already has a budget handset in the iPhone 4?

This is where Apple's long term strategy needs to be considered. The short term value of handset sales and the profit from a single new customer is not necessarily their ultimate goal. They want customers for life, who will buy into the Apple ecosystem, and make regular purchases over many years.

In that sense, a customer who would not buy an iPhone 5 with a two year contract but would buy an iPhone 4 is not a lost iPhone 5 sale that Apple has somehow failed to convert to their flagship, but a new addition to the Apple ecosystem, with a strong chance they will buy more Apple products in the future.

I don't think that becoming the leading smartphone manufacturer is one of Apple's main priorities. It would be nice, but they are far more concerned about the long term health of the company than the short term results analysts are expecting.

When an iPhone that is cheaper by design arrives, then it will be geared towards customer adoption and retention, rather than a push for a percentage.

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