Cheap iPhone

Apple doesn’t do cheap.

I don’t what people expected of yesterday’s Keynote, but a cheap iPhone was never a real possibility for me. Why? Two reasons: History and Culture.

Culture

Apple has a culture where they offer the best or better.
There’s a saying that when you order something there are three factors: price, quality, speed. And you can get two. So if you want something fast and good it’ll be expensive. If you want something good for a reasonable price, you better don’t expect it to be ready tomorrow.

I think with technology you have a similar approach. Price, Build Quality and Speed. Where speed can be replaced by battery life if you want.
Apple always goes for good quality and either a good battery life or a decent speed. They never ever put price first, choose the low-priced option and release a sub-par device.

That’s why they can’t release a cheap iPhone with low speed, crappy display or mediocre battery life. It’s not a part of the iPhone brand. It doesn’t fit the product.

History

Have you ever seen a sub 1000€ MacBook? Apple’s low-end laptop has always been a 1000€ MacBook with specs and battery life way better than what you find in the 600€ range PC laptops. People kept pushing Apple to release a NetBook, a cheap laptop. They released the iPad and redefined that category.

“We don’t know how to build a sub-$500 computer that is not a piece of junk,” – Steve Jobs

When Apple released the iPod in 2001, people laughed at it’s ridiculous expensive pricing. Similar to the iPhone the product slowly and than rapidly reformed that market and became the Music player people wanted above all others. But people asked for a cheap version. A low-end version.
And what did Apple release? A 249€ iPod mini, with a big (at that time) 4GB hard drive. It came in nice colors. It was a fully functional iPod. It made no compromises.
People where shocked at the price. Apple didn’t create a cheap iPod, but adapted it’s product and although they lowered the barrier of entry, they ignored the sub-200€ market.

Conclusion: Apple doesn’t do cheap.
There’s this marketing idea that you should always create three products. The one you want to sell, one a bit more expensive, and one way cheaper. You loose margins on the lower one, but people will always go for the one in the middle. It’s only a bit more expensive, and has way better features.
For Apple, all the Androids and Blackberry’s in the world are that low-end category. Full of compromises. Sure they loose money in that market.
But they make it up by customers choosing the middle product, their middle product. The iPhone 5c.

People expecting Apple to release a cheap phone don’t get Apple.

Maybe that last sentence is a bit arrogant. But hey, I’m from Antwerp.