Friday, September 12, 2014

Apple Is Done Trying To Sell Cheap Phones

The iPhone is back to being expensive.

Last year, Apple debuted a "cheap" iPhone, releasing a less pricey, plastic version to compete in emerging markets like Asia. But the iPhone 5C, as it was called, flopped.

The move was surprising. "Apple is a company that doesn’t do 'cheap,'" Ken Segall, an author and former ad executive who was on the team that developed the name "iMac," wrote last winter after reports that the 5C wasn't selling as well as Apple had hoped.

This year, Apple not only didn't "do cheap" -- it raised prices even further. The 4.7-inch iPhone 6 starts at $199, the same price Apple's premium phone has started at each year (with a two-year contract) since 2008. But the huge, 5.5-inch iPhone 6 Plus starts at $299.

These phones give people more for their money -- including new features and better memory, cameras and processing power. Apple does this with every release. But unlike last year, $199 is the minimum amount customers will need to shell out for the newest toy.

Customers are more than willing to spend $199 (or $650 off a contract) for the iPhone: The iPhone is Apple's most profitable product, and the company sells record numbers of them each year.

Apple is a company that sells premium products, and it rarely discounts products until new ones come out. As Segall wrote, "It makes products for people who care about design, simplicity, quality and a great experience — and are willing to pay more for these things."

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