Apple Inc. (NASDAQ:AAPL) fans know they pay a premium for the company’s products, but there’s a chance that a low-cost iPhone could change that. Most analysts see a low-cost iPhone as the next logical step for the company, but self-cannibalization is an important concern to take into consideration for any company looking to expand its offerings.
So how does Apple Inc. (NASDAQ:AAPL) successfully address the masses while keeping its hardcore fans paying high premiums on its products? It’s a fine line the company must walk in order to succeed.
Self-Cannibalization Worries For Apple
When Apple Inc. (NASDAQ:AAPL) released the iPad Mini, it was filling a gap in its products. The iPad Mini was needed in order to address a couple of key demographics: those who wanted a less expensive iPad and those who wanted a smaller iPad. In some cases these groups overlap, but not always.
So the question at this point is just how much of a cannibalization effect Apple sustained from the release of the iPad Mini. This will be a number that’s difficult to gauge because there are so many factors. How many customers who bought the iPad Mini would have bought the more expensive 10-inch iPad if it was the only iPad Apple offered?
This is the real question that must be asked, and it’s worth asking the same question of the iPhone if a low-cost version becomes available. Apple Inc. (NASDAQ:AAPL) has to balance the expansion of its addressable market with the problem of self-cannibalization. Either the company will pull this off exceptionally well and expand its user base significantly, or it will do it in such a way that users opt for the less expensive iPhone because it’s cheaper and also not enough of a downgrade from the high-end version.
Will Apple Follow The Crowd?
And then there’s the question of whether we will see an iPhone phablet. Once again, we have the question of self-cannibalization here. Will users skip the iPad Mini because they can have an iPhone phablet instead? These are all delicate factors that take time to address, which may be one of the reasons why Apple Inc. (NASDAQ:AAPL) has been mum on these subjects.