“Why are there two distinct models in Apple’s iPhone portfolio? Apple has fallen victim to its own success. While the first iPhone model announced 10 years ago set Apple apart from other mobile phone makers as the pioneer in smartphones, its market leadership quickly diminished as hundreds of other companies introduced their own products.

Apple must respond to the needs of multiple constituents, including financial investors and consumers. Financial investors want to increase profitability. Consumers want to participate in the adoption and use of new technologies. However, iPhone has not been accessible to all world markets.

 Initially, the limitation was carriers being able to offer LTE services, but this has been addressed through upgrades in their infrastructure and the availability of spectrum for LTE use. The remaining limitation has been the price. Two different entry-level iPhones have been announced: the iPhone C and the iPhone SE. Price-sensitive markets, such as India, have remained laggards in iPhone adoption even with these attempts to deliver a more affordable iPhone solution. In short, Apple has been unable to become “everything to everyone.”

How is Apple responding to these challenges? iPhone X (pronounced “ten”) establishes a new value level for Apple customers that want a premium, futuristic device. A new price point is also implemented to reflect the flagship nature of iPhone X. A similar tiered smartphone offering already exists at Samsung, while other leading OEMs are expected to follow. This new class of iPhone affords Apple the opportunity to separate market and investor expectations. Low-cost iPhone solutions, such as the iPhone SE, can be prioritized for markets including India. iPhone X enhances the profitability for Apple smartphones, which will offset the downward price pressure and profitability at the low end of the market.

Supply chain rumors have expressed concern that iPhone X is not yet yielding production volumes at similar levels to previous iPhone introductions. ABI Research expects supplies of the new premium models to be limited through 2017 and into the first half of calendar year 2018.

Wireless Charging: Apple has gone all-in with wireless charging by adopting the Qi specification from WPC. The Watch Series 3, iPhone X, and an optional new charging case for AirPods support Qi charging and 3rd party charging surfaces. Apple intends to launch its own multi-device charging surface, called AirPower, in 2018. The announcement of Qi supports clears the way for accessories makers to focus their efforts on developing for a single wireless charging standard that is supported by the two leading smartphone makers: Samsung and Apple.”

Jeff Orr, Research Director at ABI Research. - Communications Today Bureau

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