As Competitors Slum It, Apple Prepares Android-Crushing iPhone 6
By: Rocco Pendola
| 08/19/14 - 08:00 AM EDT
Stocks in this article:
Despite what feels like ubiquity in the United States and relationships with less than third-party retailers
, Apple remains an aspirational brand. The forthcoming release of a larger-screen iPhone 6 will help further illustrate not merely what this means, but how it functions, on the ground, with many consumers.
When IDC releases the marketshare numbers, the media rarely, if ever, provides analysis and opinion on what they actually mean. Instead they spew surface scratches and intuitive statements that don't hold up to the slightest sniff.
Apple has no problem seeing Google dominate global marketshare numbers via Android. All Apple cares about is making its margin on hardware sales and producing the highest quality, highest-end smartphones available anywhere. That's why -- even with the 5c -- there is no "low-end" iPhone. That would defeat the purpose of Apple's superior strategy from the practical standpoint of its bottom line and
its relationship with the consumer.
Two types of customers will matter to Apple when it releases iPhone 6 later this year. The massive numbers of folks due for upgrades from iPhones 4, 4s and 5:
- At Verizon
(VZ) , 56% of iPhone customers still own the 4 or 4s. Twenty-four percent still pack iPhone 5. I'm part of the latter group, and will be eligible for and fully intend to upgrade to iPhone 6 come late summer/early fall.
- At AT&T
(T) , 42% are on iPhone 4 or 4s; 25% on iPhone 5.
- At Sprint
(S) , 47% use iPhone 4 or 4s; 24% carry iPhone 5.
That, in and of itself, represents a landslide. But the second group of consumers really highlights the brilliance of Apple's strategy.
This second group consists of the folks who could afford an iPhone but opted not to get one because they could not get past the relatively small screen size and
those who told themselves it made financial sense to go with something less expensive than an iPhone. The larger screen -- and whatever else Apple introduces with iPhone 6 -- might be enough to push these people over the edge. To entice them to stretch the budget or spend a little bit more than they probably should. To choose iPhone 6 on or off contract even though they opted not to on a previous release, quite possibly for fiscal reasons.
Apple could have gone to these consumers over the years with a mix of less expensive, low-end options and a variety of screen sizes. Instead, Steve Jobs and Tim Cook opted not to slum it like Android's hardware partners. Apple stayed true to itself by not going after the plentiful low-hanging fruit. It chose to start at the top of the tree, dangling fruit to the people who, over time, make the choice to make what amounts to the switch from something else to iOS.
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Apple's strategy is such that it doesn't require every single
piece of low-hanging fruit to bite. It doesn't even need a majority. It just needs a few here and there, especially this time around. Converting just a relative few in addition to present Apple customers will be significant. Because, coupled with the flood of iPhone 6 upgrades, Apple is setting up for what could be its strongest holiday quarter ever.
--Written by Rocco Pendola in Santa Monica, Calif.