Apple is famous. Not for any one thing but for many. But one of the things they are known for is high-quality at a high-price. Nothing Apple does is cost competitive to competitors. They make the competition come at them. A budget iPhone changes that completely.
Yes, a budget iPhone does not single-handedly change what the company is, but it would signal a paradigm shift. For a decade now, people have wanted OS X on their PCs but Apple has refused because it’s part of what makes Macs special. They could have made a ton of money on releasing their OS for PCs but didn’t.
They could make a netbook. But they don’t. Their margins have always been important. Last year’s iPad mini was the first time they released a product that had an expectation of eroding corporate margins for the sake of maintaining market share. A budget iPhone would take the concept to another level entirely.
All this adds up to the fact that a budget iPhone would imply a change of priorities to Apple execs. No longer are they in the quality and margin game, they will have added market share as a key driver of product decisions. Maintaining market share in competitive industries (such as smartphones) naturally causes margins to erode and build quality to be lower. You can’t maintain the Apple magic at a $200 price target.
And once this happens, something else will occur in the marketplace. Many people buy Apple products for the exclusivity. Paying a high margin at the top of the price range means that fewer people are “in the group.” Exclusivity sells to many. A budget iPhone kills the feeling of exclusivity. If everyone can own one then there is no longer status to having one. It becomes just another device.
I worry that a sea change is coming for Apple and it won’t bode well for their long-term success.