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As it Turns Out, Premium Positioning Wasn’t a Hurdle in Apple’s Trillion-Dollar Aspirations

Clearly, not launching an affordable iPhone and staying steadfast on premium positioning hasn’t exactly hurt Apple as many naysayers predicted.

Vishal Mathur |

Updated:August 3, 2018, 10:40 AM IST
As it Turns Out, Premium Positioning Wasn’t a Hurdle in Apple’s Trillion-Dollar Aspirations
Clearly, not launching an affordable iPhone and staying steadfast on premium positioning hasn’t exactly hurt Apple as many naysayers predicted.
When Timothy Donald Cook took over as chief executive officer at Apple Inc. in 2011, following the passing of the legendary co-founder Steve Jobs, there was considerable apprehension from many quarters. Everybody seemed to wonder about whether Cook would be able to take forward the legacy that Jobs was leaving behind. Apple had a $350 billion stock market valuation at the time, and analysts wondered if Cook would be able to find another winner product, apart from the iPhone and the iPad.

Fast forward to 2018—and Apple is now a trillion-dollar company. It would perhaps be an understatement to say that Apple and Tim Cook are doing fine.

Along the way, Cook has ensured that Apple never let go of the positioning, as a premium brand, despite tough competition from more affordable products and new brands. Surely there would have been the temptation to, at certain points, to launch a range of more affordable iPhones or make a lower priced version of the MacBook. But the numbers of the current quarter have vindicated Apple’s stand. The iPhones that Apple sold in the robust Q3 2018 were quite a bit more expensive, with the average iPhone selling price in the quarter pegged at $724—this is significantly higher than the $606 average selling price for iPhones in the corresponding quarter in 2017. A lot of that has to do with the success of the iPhone X selling well.

So much for the doomsday analysis which suggested no one would pay as much for an iPhone X.

It is not just the iPhone which Apple relied on over the years. The wearables space has seen the Apple Watch consistently remain the largest selling watch in the world—the Swiss watchmakers are not too impressed, but then again, the Apple Watch does build on the appeal with a genuinely slick experience.

Then there are the AirPods, the truly wireless earbuds. These spawned a completely new devices category when they were first launched in 2016. Apple hasn’t updated them since. They were criticized for having a slightly unappealing design. According to numbers by research firm KGI Securities, Apple is expected to ship more than 25 million AirPods in 2018. A new version is expected to be unveiled alongside the new iPhones in September.

As it turns out, the sales of the iPad also went up, clocking 11.55 million units, which is up from the corresponding quarter last year as well as Q2 2018. With a very powerful iPad (2018) being the entry point to a line-up that includes multiple variants of the Pro line-up too, the alternate computing category is pretty sorted for Apple. While tablets as a category may not be growing fast enough, it clearly isn’t going away anytime soon.

Apple services, which includes Apple Music, iCloud, and App Store are growing fast too. These services combined for a 31 percent increase in year-on-year revenue, clocked at $9.55 billion.

It is not all about bright spots for Apple. The MacBook isn’t doing as well as expected, but that could change in the next quarter now that the refreshed line-up is now out. The HomePod smart speaker, as a rival to Amazon’s Echo and Google’s Home line-up of smart speakers, perhaps will hit the sweet spot with the second generation. Apple also had to face flak for slowing down the performance of the older iPhones with worn out batteries—something that they have sorted since, with a software update.

The big question now is whether Apple can sustain that success. One of the keys to that would be the upcoming iPhones in September. Would Apple push the innovation benchmarks further and try something as revolutionary as the iPhone X? Or would they focus only on subtle improvements across the board? There is expectation that we could see three new iPhones this time around, with the successor to the X getting an even larger screen. We shall see.

Also Read: Apple Races Towards Trillion-Dollar Valuation Mark as iPhone And Services Provide Fuel in Q3 2018
(Get detailed and live results of each and every seat of the state Assemblies in Madhya Pradesh, Rajasthan, Telangana, Chhattisgarh and Mizoram to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you put on the psephologist's hat. Know interesting facts and trivia about the elections. Elections = News18)
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