Apple has to be one of the most popular stocks to trade and
their products are arguably some of the most cutting edge and
Since the early days, it has been Apple's mantra to build high
quality, premium products using some of the most unique designs
and materials with a user interface that screamed perfection.
I believe that it's this consistency and innovation that has
propelled Apple and its products to rock star status. When
you turn on an Apple product, you expect it to work extremely
efficiently and be powerful relative to its competitors; you
expect to be WOWED.
I remember when I made the move from blackberry to the iPhone
and immediately noticed the reduction in flaws, more stable
operating system and fluid interface that just functioned almost
perfectly. Features aside, it was a perfect marriage of
hardware, software and form for what it was designed to do.
There are now rumors (denied by Apple) that the Cupertino
empire is going to manufacture a lower cost iPhone with scaled
back hardware and a plastic (polycarbonate) shell as opposed to
aluminum, among other potential changes. The phone
would be almost free with a contract or $400 off contract (about
half of what the normal iPhone costs).
The new device is going to be cheap enough to tap into the
lower end of the Smartphone market (500 million users) dominated
by several manufactures of which Apple has yet to touch.
There is no doubt that this product would squeeze Apple's
gigantic margins, but at the same time it could add big sales
growth numbers of 22 to 23%.
While I think a "sub-par" product deviates from Apple's soul
and mantra, it could help them contain some of the competition
nipping at their heels.
I think the danger lies in reputation and social stigma.
If they do produce a new, cheaper, lower-quality product, does it
diminish the Apple brand value overall? IF the new
device is problematic, will the complaints and media coverage
cause user and shareholders to doubt the brand? Do these lower
end users even want an iPhone? I mean, you can get an
iPhone 4 for free now (with a contract)!
At the end of the day, I would NOT like to see Apple sacrifice
quality. Their reputation is why they continue to lead the space
and frankly I am noticing their most recent product launches to
be not as thought out and their products becoming less innovative
and more "profit driven."
Steve Jobs knew that making a 'magical' product that performed
better than advertized would sell no matter what. The new
Apple seems to think that they should produce a product for
everyone at every price point.
I wouldn't want to drive a "cheap Ferrari" and I don't think
shareholders will either.
What are your thoughts?
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