When Apple launched iPhone SE, all of us looked on in amazement. Except that it wasn’t an “Oh-my-god-that’s-so-awesome” kind of wonder. It was more like “Are-they-kidding-us-with-this-crap” kind of disbelief!
Turns out the SE wasn’t a blunder at all. It was a well calculated move on Apple’s part, a masterstroke, in fact. Here’s how their iPhone SE strategy is finally paying off.
What’s the strategy?
Apple sells itself as a premium brand and wants to rule the high end market. This means it cannot make inexpensive products or sell an iPhone for Rs. 10,000 or Rs. 15,000. However, more than two-thirds (66%) of the market is dominated by phones under $500 (Rs. 30,000 approximately) . In India that figure shoots up to nearly four-fifths, or 80%.
Apple desperately wanted to tap into this lucrative mid-range market segment. And that’s exactly what it did with the iPhone SE. Priced at Rs. 39,000 and Rs. 49,000, the SE was a perfect device. It had all the latest features and the body of an older phone.
This way, Apple didn’t have to spend money designing new moulds. At the same time, it also saved on cost by limiting the size of screens, which is one of the costliest pieces to produce.
And that’s how Apple was able to lower its prices without compromising on its “premium” branding. Talk about killing two birds with one stone! Well played, Apple!
The SE was also instrumental in establishing Apple in emerging markets, like India. Although the handset didn’t do very well here, it did bring in the on-field experience Apple needed to make a marketing strategy for its upcoming model iPhone 7.
Playing to its strengths in India
For Apple, it was never about sales in India; at least, not entirely. India is a different market than the US, and the iPhone SE Strategy had a different purpose here.
Morgan Stanley is right when it says “many Indians view Apple as an aspirational brand”. For a lot of us, an Apple device is not something that we need, but something that we want, because we think that it’s going to improve our social standing. The idea behind developing a targeted iPhone SE strategy was to play to that sentiment, while building a presence in the country slowly and steadily.
Apple has a long way to go to get to the top of this chart.
“India is poised to overtake the US to become the second-largest smartphone market behind China in 2017.” Says Quartz.
Notice that it says 2017. That’s next year. Not half a decade down the line, not in the distant future. It’s next year.
It’s now or never for Apple in India. The market is accommodating outside players, the government is bringing policy changes to encourage investment, and the middle class has grown enough to move one step higher in the purchasing power slab.
The full impact of this strategy will only be known to us after another 6 months or so. Meanwhile, as the launch of iPhone 7 draws closer, there’s a certain sense of inevitability that this could be the big test for Apple’s future in India.