Does Apple Need to Change Its iPhone Sales Strategy?

fresh-fruit-hold-the-insulin_1The recent moves in Apple’s stock price as a result of the company’s performance, suggest that investors aren’t exactly satisfied with Apple’s current position on the market. Although the iPhone, iPad and Mac remain the gold standards, the company’s core market seems to have reached saturation, something that investors are afraid of.

In other words, Apple’s strategy which has led the company to its current position, may need some sort of change, and a recent Reuters report states that executives at phone carriers and component suppliers are suggesting there is room for “at least some shift in the balance of power”.

Canadian and US phone companies mostly subsidize handsets in return for two or three (Canada, eh) year contracts, as the possibility of customers paying the full price for an iPhone could drive them away, or at least considering cheaper alternatives.

In other words, while the user pays $179–$200 for the iPhone 5, carriers pay roughly a $400 subsidy for each iPhone they sell, compared to other Android phone subsidies, which usually vary between $250–$300. However, it is worth mentioning here that from Tim Cook’s perspective this is a relatively small subsidy, compared with the revenues gained over a three-year contract.

A new strategy was adopted by T-Mobile USA, which will start selling the iPhone without paying a subsidy. This however, suggests that Apple is ready to switch strategy if this means it can reach new customers, just like the rumoured launch of the cheaper iPhone, which also highlights that Apple does have the answer to market demand.

But more interesting is the fact that T-Mobile will likely use its European model to sell the iPhone, which looks like this: You can purchase an iPhone 5 for the full $649 price, but you don’t have to pay the whole amount in full when you sign up for a two year contract. Instead, you’ll be asked to pay for roughly 42% of the device, and rest you can pay in 12 monthly installments.

The only question is will the ‘Big Three’ carriers in Canada adopt this type of strategy. Would this type of transparent monthly-installment payment plan make an iPhone an attractive purchase for you?

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • http://twitter.com/Chrome262 Chrome262

    If it was unlocked then yes. T-Mobile said it would be unlocked out of the box.

  • http://twitter.com/erikkappel Erik Kappel

    Agreed. This would be a pretty interesting alternative to the current methods of buying an iPhone.

  • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

    Agreed. This can work if the phones are unlocked.

  • AAAA

    1. Let users choose default App (ex. web browser, map app, etc.)
    2. Make iOS more customizable. For the last 5 years, there has been no change to the look of iOS. Also, customizable UI and keyboard will be musts.

    3. Improve battery life much much longer if you are not going to make it replaceable.
    4. A little bigger screen size. People’s taste has been changed.

    THEN, I’ll stay with iPhone this year, or it will be the end with me.

  • Mark

    #1… Wouldn’t surprise me if that’s coming.
    #2… Customizable UI?
    #3… seriously!?
    #4… YOUR’s, maybe. I think those bigger phones are bulky and ugly.
    You needs to get yourself an Android, so that you can complain about IT for the next couple of years. Grass is always greener on the other side.

  • WatDaPhuck

    1. I’ll actually be surprised if they don’t have this in iOS7.
    2. Lots of improvements were made to the functionality of the UI in the last 5 years, main reason for not changing is to maintain familiarity between devices, and that it is working for millions of people.
    3. Considering the amount of technologies and background services it is running every second, I’d say the battery is doing pretty good, since it is NOT replaceable. People don’t complain about Android’s batteries because you can change it, but they don’t think about why they have to change the battery… it’s because Androids drains it!
    4. Your change of taste doesn’t mean it is everybody’s. Do people really think Apple don’t do research on people’s needs and just make a product however they want? I agree iOS is getting boring, but you can’t deny that it actually works very well as a mobile OS.

    Why are you still using iPhone? Sounds to me Android suits you better.

  • Claude Hénault

    I would gladly pay full price for an unlocked iPhone if it got me lower data rates. But, in Canada there would be no such offset, which is ridiculous, as I told the CRTC in a recent submission.

  • Randy Ritraj

    I hope Apple doesn’t change its strategy to align with what investors want; that would be catastrophic. And this is coming from an investor.