As Apple Inc. (NASDAQ:AAPL) is learning, smartphones are rapidly becoming an everyday household item. Everyone has one. As margins on the iPhone decline, the company is going to have to start trimming the fat. In fact, the iPhone is now such a common household item that it made the front page of the advertisements of a discount grocery store chain in Germany—along with pork.
What a far cry this is from the days when only the elite could have an iPhone.
Ad shows the iPhone 5 on sale
Jefferies analysts Peter Misek, Jason North and Billy Kim included an image of the advertisement from Real, which they describe as “a low-end hypermarket chain in Germany.” At the very top of the page, you have an image of some fresh pork meat as the chain seeks to whet the reader’s appetite. And then at the bottom of the page, we have the iPhone 5 on sale. Yes, we’ve gotten to the point where the iPhone is as common within the household as pork meat and coffee are.
Michael Zimmerman’s Prentice Capital had an excellent year
Prentice Capital's Long/ Short Equity Fund was up 26% net for the fourth quarter, bringing its full-year return to 53.6% for 2020. In his fourth-quarter letter to investors, which was reviewed by ValueWalk, Michael Zimmerman said the development of COVID-19 vaccines, continued easy money and clarity in the election drove a risk-on environment. Q4 2020 Read More
Apple needs a great differentiator
What struck me as particularly interesting about this advertisement is what it really means for Apple Inc. (NASDAQ:AAPL). We’ve reached the point where there just isn’t much separating one smartphone from the next, other than price. Apple wants a hefty premium and charges subsidies so high that some carriers are shunning it. And if you can pick up an iPhone 5 along with your groceries, then it seems pretty clear that what Steve Jobs probably never wanted has happened. Apple’s products have become (gasp!) commonplace. They’re no longer the handset for the elite.
What Apple Inc. (NASDAQ:AAPL) or any great smartphone maker really, needs is some kind of differentiator. Of course we have the various operating systems, which may breed loyalty for some customers, but not for others. These days it isn’t that much of a problem to shift from one platform to another, unless you’ve purchased a lot of expensive apps for your device.
And as Apple fans clamor for the release of the iPhone 6, it’s clear what they really want: something completely different. And probably something that’s not so commonplace it appears next to pork in your local grocer’s ad.