Cheaper iPhone – Use of Plastic is Not About the Cost

Apple rumor mill believes Apple may be working on a cheaper iPhone. The definition of cheaper prices is different for Apple – as you can see from their pricing for iPad mini. They most likely won’t price it lower than their previous gen iPod Touch.

The news report states Apple is considering using plastic over aluminum (or is it aluminium?)

The new model  could resemble the regular iPhone, but come with a less-expensive body. Apple could employ a shell made of polycarbonate plastic, with many of the other parts remaining the same or being recycled from older iPhone models.

It is instinctive to think that cheaper components are necessitated by lower prices. After all, as Henry Ford wrote,

You first find the price and do everything to drive down costs

With Apple it is not the case given their success with high margin iPhone. If they indeed use cheaper components, especially cheaper body using plastic, it is definitely not about reducing cost to price it lower but about making it as unattractive as possible to the current segment that is happy to pay $550* price.

In fact they have no reason to change any of the internal components – after all these are not externally visible nor are they judged easily. They only need to change the one factor that can be seen, sets it apart from its higher priced brethren, affects buying decision and affects how the owner believes she is seen by others. It is like removing roof from third class train cars.

Even if they can only eke out a smaller profit, if they can create significant price barriers preventing people from trading down they will do it.


2 thoughts on “Cheaper iPhone – Use of Plastic is Not About the Cost

  1. I think that announcing the use of plastic is a signal to those that would otherwise pay for the “regular” iPhone, that this is a cheaper product which should normally help with price discrimination in markets such as the US. But because the latest version -1, or -2 is sold for near throwaway prices in the US by carriers, I am not even sure this is designed for the 1st world. The lower price point should attract those in developing countries that like the Apple catchet but can’t afford the unsubsidized price (as is typically the case in those countries).

    Mohan |


  2. If this were another manufacturer, I’d tend to agree, but I don’t think Apple will release a dud that prompts people to choose the higher priced product. It would do too much damage to their brand mystique. If they had more phone SKUs, then they might be able to hide it.

    Also, this theoretically should be a defensive move against cheap android. Consumers in those markets will still be aspirational Apple, so again, Apple won’t risk their first experience with a subpar image.


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