Op-Ed | Next up for disruption, the smartphone market

Customers visit an Apple store in Beijing, China, Thursday, Jan. 3, 2019. Apple Inc.’s $1,000 iPhone is a tough sell to Chinese consumers who are jittery over an economic slump and a trade war with Washington. (AP Photo/Ng Han Guan)

BANGKOK (The Nation/ANN) – If apple slices the price of the iPhone as rumored, its competitors better have strategies ready.

The price of a smartphone is about to drop significantly, though we don’t yet how soon and by how much. It’s being reliably speculated that Apple is considering a price cut for the iPhone so steep that the company would no longer be perceived as catering mainly to high-end consumers.

The chief reason for the cut is that Apple’s once must-have gadgets are fading in popularity amid a sea of cheaper and equally good rivals.

Smartphone makers started out clinging to the curious business phenomenon by which most people shun products if the price seems too cheap because they believe it signals poor quality.

Thus, the higher-than-necessary price tags. This has led to makers of relatively cheap phones upgrading their specs and prices in a bid to draw off some of Apple’s high-end customers. Other brands were content to sell “poor man’s iPhones” for a while, but no longer. Their prices are still lower than Apple’s but they’re almost at parity.

Every business sooner or later faces a tipping point. Railroads once created wealthy clans but then more effective means of transport emerged, gutting the sector.

The print media produced rich and powerful “moguls”, but even prestigious publications have now folded, despite the fact that people are hungrier than ever for news.

Even newer kinds of business-like audiobooks are threatened now that they can be so easily downloaded for free, albeit illegally.

If the speculation is true, Apple has realized that the time to adjust has come. It’s intriguing how its competitors are thinking. In an initial bid to challenge Apple, they offered cheaper alternatives.

Then they wanted to up their game and intensify the challenge, so they boosted their own prices. The result is an unnatural market that’s trying hard not to belong to the consumers.

The phone market is clearly approaching a tipping point too. Overwhelming public demand will feed mass production, and that will dampen the market just as it did with flat-screen TV sets.

You can now buy a gigantic high-definition TV set for less than Bt20,000 and they boast far better quality than the ones that cost hundreds of thousands of baht less than 20 years ago.

The first iPhone cost more than Bt20,000, and that was with no camera and just a few apps. The touchscreen was striking but was quickly copied on other brands’ less-pricey products.

Today there are plenty of iPhone rivals that can take equally good or better pictures, operate apps and play videos just as smoothly – and are cheaper.

We will see how wide the gap in price remains. The rivals have apparently succeeded in forcing Apple to rethink its asking price.

What is still speculative for now will invariably bring the industry to the tipping point, its arrival there accelerated by the technology that all smartphones have helped to improve. If rumors about Apple’s price-cut are true, the firm is responding to market forces. It will be interesting to see how its competitors react.

 


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