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Apple Inc. Still Has a Lot of Share to Take From Android

Creative Strategies analyst Ben Bajarin in a tweet on Feb. 4 revealed that shipments of high-end Android phones, which he classifies as devices priced at $500 and above, dropped from about 280 million units in 2012 to around 190 million units in 2015.

To be quite blunt, even following the decline, I was quite surprised that the number was as high as it is.

After firing a few tweets back at Bajarin expressing this surprise, he informed me that this number gets "quite low" at the $600-and-up mark and that Apple has more than 80% share.

I believe that in light of this data, it's not hard to make a case that there's still significant amounts of share left for Apple to try to take.

Apple doesn't really play too aggressively at these price points... yet

Apple's cheapest iPhone is the $450 16-gigabyte iPhone 5s, with both the 32-gigabyte iPhone 5s and 16-gigabyte iPhone 6 coming in at $550. Every other iPhone is priced at $650 and up.

Although I don't want to disparage the 32-gigabyte iPhone 5s or even the 16-gigabyte iPhone 6 as they are both fine phones (and I'm sure they do well in the marketplace), I do believe there is room for Apple to get more aggressive at these price points to further bolster its share.

How can Apple do it?

A company in Apple's position has to be very careful about how it goes about grabbing share at lower price points. Straight up cutting prices of flagship models is an absolute no-no for reasons discussed here . Water-falling older-generation models to lower price points is the way to go here, but again Apple needs to be very careful.

Indeed, Apple has to be able to bring iPhone within reach of more and more customers who simply could not afford (or would not be willing to buy) the flagship models, but at the same time it needs to minimize cannibalization of its higher-priced models by lower-priced models.

So far, Apple has done a solid job of pulling this off. However, if Apple plans to push further down in pricing, it's going to get much trickier.

My guess is that the 4-inch iPhones will be the key to Apple grabbing additional share in the $500-$600 price range. The iPhone 5se, the upcoming 4-inch iPhone, is said to pack the processor from the iPhone 6s/6s Plus as well as connectivity and camera features from the iPhone 6/6 Plus.

If the base model of the iPhone 5se is priced at $450 and the 64-gigabyte model comes in at $550, then I wouldn't be at all surprised to see Apple gain some serious share against Android smartphones in this price range.

The nice thing about using the 4-inch phone to try to gain share at these lower price points is that the larger/higher-end iPhones are still clearly differentiated (screen size/quality, 3D Touch, camera). However, for those 200 million or so buyers each year who won't pay for those higher-end iPhones, the 5se delivers near-flagship hardware, iOS, and all of the intangibles associated with owning an Apple product/iPhone.

The new 4-inch iPhone is expected to launch on March 15, per 9to5Mac, so we'll see just how successful such a device is at gaining share in the months that follow.

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The article Apple Inc. Still Has a Lot of Share to Take From Android originally appeared on Fool.com.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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