Consumer Electronics

Cheap iPhone Will Damage Apple's Image

Douglas A. McIntyre

Published: March 20, 2016 9:01 am

Last Updated: January 13, 2020 11:45 am

The press reports that Apple Inc. (NASDAQ: AAPL) may release a version of the iPhone called the iPhone SE. Based on speculation, or a furtive look at the product, its four-inch screen will be married to ultra powerful A9 chip. Presumably, its price point should undercut those for the much larger iPhone 6 and iPhone 6s. Consumers may well be troubled by a smaller, cheaper iPhone from Apple, which has a reputation for only building and marketing the best of the best.

Apple’s current twofold strategy of cheap and expensive might combat a public that has tired of screens made nearly as large as tablets, heavy and bulky when buyers add a bulletproof case. iPhones break easily, which makes the case necessary. iPhones have not been built to be waterproof either, which the new rival Samsung Galaxy S7 claims as an important feature.

Apple needs a product that bridges the period until the release of the iPhone 7, probably in September. The iPhone SE’s novelty and features eliminate the timeline trouble, presumably.

Apple’s iPhone sits at the top of the smartphone price and feature pyramid and has knocked down every competitor. The iPhone 6s sports $749 base price, which rises to $949 for the high end model — nearly three times the price of the iPad mini 4 tablet. Apple adds to its image further with the 27-inch iMac, with a high-end price over $3,000. The most expensive smartphone and personal computer.

Apple management gambles that a cheap product should not undermine its image, a long-shot decision. A revenue lift from the iPhone SE comes with a brand value downgrade.