Why Did Apple Introduce Its New iPhone at a Lower Price?
Last Week's Tech Sector Highlights: Apple, Red Hat, and Telecoms
iPhone priced at $399
On March 21, 2016, Apple (AAPL) introduced a smaller iPhone with a four-inch display at an event at the company’s California headquarters. Apple stated that it would offer the iPhone SE at $399 with 16 gigabytes of storage. This is ~$50 less than the $450 starting price for the iPhone 5s.
This is the lowest starting price ever for the iPhone. The iPhone SE is equipped with a four-inch display, a 12-megapixel camera, and the ability to use Apple Pay.
According to Apple, its latest iPhone will be the “most powerful 4-inch phone ever.” It has an A9 chip and a graphics processor that enables it to have the same processing and graphic performance as the iPhone 6s.
“Many, many customers have asked for this,” Apple’s CEO Tim Cook said about the upgrade to the smaller phone.
Market penetration in India
Apple is looking to increase its penetration and market share in emerging markets such as India (INDA), where it accounts for less than 2% of the overall smartphone market. Although the iPhone is considered to be a niche product in most developing countries, the recently launched iPhone SE could attract users due to its competitive pricing.
Apple is also seeking government approval to import and resell used iPhones in India. India is one of the largest smartphone markets in the world. It’s the only country expected to see double-digit growth in 2016. Apple is eyeing India as a lucrative smartphone market.
One of the main reasons that Apple hasn’t been able to successfully penetrate India’s flourishing market is the price of its products. The above strategies could help the company to gain a stronger market presence in India.
According to a report from the International Data Corporation, Korean (EWY) smartphone manufacturer Samsung (SSNLF) continues to lead the smartphone segment in India, with a 24% market share. Samsung is followed by domestic players Micromax and Intex with market shares of 16.7% and 10.8%, respectively. China’s (FXI) Lenovo (LNVGY) has a market share of 9.5% in India.
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