The real reason Apple is now selling 7 different iPhones at once
When most companies launch new products, they usually need to convince people they can't live without them. But Apple has a slightly different problem: How does the most successful company of all time keep on selling iPhones? After all, much of the market is saturated with iPhones already. The challenge now becomes getting iPhones into the hands of those who don't yet have them. And at Apple's Cupertino iPhone event this week, we learned how the company plans to do that: by including more iPhones in its lineup than ever before.
For the first time, Apple is releasing three new phones at once: the iPhone XS, the successor to the iPhone X; the iPhone XS Max, a larger screen version of the XS; and the iPhone XR, a cheaper model that has a lower quality screen and is missing features, like a second camera and 3D Touch. In addition, the company will continue to sell the iPhone 7 and 8, each in two sizes. In other words, Apple will soon be offering seven different iPhones at the same time.
For a company that once prided itself on simplicity, this is a stark turn of events. But behind Apple's ever-expanding lineup and its ever-rising prices is a relentless focus on growth. Ironically, all these new iPhones are preparation for a time when Apple becomes more than just the iPhone company.
The new phones are, like most smartphones these days, sort of boring. They represent minor upgrades that will have only a tiny impact on most users — a little bit of extra speed here, some marginally better photos there. But most interesting is what is happening at both the low and high end of the iPhone line.
At the top end, Apple is doing something remarkable: It is yet again increasing the price of its flagship phone, starting the iPhone XS Max at $1,099. This comes at a time when rivals like Samsung are struggling to increase sales of high-end handsets. It is a testament to Apple's brand power that it can do this, but also signifies the company's need to continually push up the average selling price of its device. By also pricing the Max only $100 more than the XS at $999, Apple is providing a strong incentive for people to jump up to the higher model, pushing up Apple's revenue and profit margins even further.
In contrast, Apple has also introduced a more affordable XR model — though "affordable" is relative here, since the phone costs $749. Still, it is an intriguing gambit because it features the same speed and power and basic camera quality as the higher models at a reduced entry price. But further, Apple is continuing to sell older models, including the iPhone 7 for $449.
Apple's goal — beyond selling more stuff — is to broaden its customer base, shifting away from a focus on more affluent users in the Americas, Europe, and China to those with less disposable income, and people in places like India and South East Asia who have thus far found the premium on Apple products too much to pay. The cheaper phones are an attempt to gain a toehold in the Indian market where Apple has put in significant effort but found little success due to cost and competition. The addition of dual SIM models — popular in Asia where people frequently jump between carriers — only adds to this focus on the continent, and the company is going so far as to include a specific model for China.
The new lineup will likely be wildly successful because it will cater to so many different segments of the market. And as the company sells more phones, it buys more time to figure out how it moves beyond the iPhone. That's key, because right now, the iPhone accounts for two-thirds of the company's revenue, an alarming statistic despite the device's runaway success. By expanding the iPhone lineup, Apple extends its reach and its earning potential so that large, long-term projects have time to gestate. For example, this year alone, Apple has hired a number of former Tesla executives, suggesting an Apple car may still be in the works.
Are the new iPhones a bit plain and ordinary? Sure. But they're a sign that Apple knows it cannot rest on its laurels forever. The phones will likely sell better than ever before, simply by reaching more and more people. And in the meantime, Apple can use its enormous revenue to dream up the next big thing, and it will almost certainly be anything but boring.