For months, there was speculation about what Apple was planning for its new iPhones. In particular, analysts asked two questions: (1) Would Apple introduce two new models of the iPhone at the same time? (It has never done this before.) (2) Would Apple introduce a lower-priced model? (a strategy that the late Steve Jobs probably would have not have allowed)
Now, we know the answers. But, the reaction to Apple’s Tuesday announcement has been mixed, at best — and the company’s stock has taken a hit. Why? Some analysts feel the lower-priced model will tarnish the firm’s high-status image. Others object to the very small discount for the iPhone 5C and think the price is not low enough to make a difference.
Consider these observations from Ian Sherr, writing for the Wall Street Journal: “Investors punished Apple Inc.’s stock after concluding the iPhone lineup unveiled a day earlier wouldn’t usher in a new low-price strategy. The investor response spotlights a particular challenge for Apple, which has long positioned its products as luxury goods: Staying high-end could limit the company’s growth, particularly in the developing world. But cutting prices to go mass market threatens its profitability, and could destroy the cachet that has made it a hit.”
WHAT DO YOU THINK?
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