22 July 2017 . Comment
There’s been a lot of speculation about the next generation of iPhone widely expected this fall. The most compelling analysis for me has been John Gruber’s dive into iPhone pricing strategy. Gruber suggests that Apple will add a new tier of iPhone, a “pro” phone that is priced much higher than the iPhones we know today and allows Apple to make use of technologies that they cannot put into a phone that has to be produced in the massive quantities they usually sell. This makes a lot of sense to me. To see why, lets just look at one technology: OLED.
All iPhones to date use LED screens. Apple’s LED screens are great, super high resolution, bright, lovely. But there is a new technology available, OLED, that looks like it may be even better. In addition to better colors, OLED requires a whole lot less “bezel” (the space around a screen). In fact, Apple already uses OLED screens on the Apple Watch. But Apple cannot add an OLED screen to the iPhone 7S this fall because Apple simply sells too many phones. The world cannot currently produce enough OLED phones to satisfy the demand Apple would create. If Apple tried to do this, it would end up with a huge backlog of iPhone orders.
One possible solution: create a phone with an OLED screen but sell many fewer of them. This is what Samsung does. Since so few people buy a Samsung Galaxy phone (as compared to an iPhone), Samsung can actually get their hands on enough screens to meet their demand. Their lower sales allow Samsung to sneak out closer to the future. How can Apple sell fewer phones? By making their price higher. If Apple rolls out an updated iPhone 7S with an LED screen, but also creates a new “pro” line with an OLED screen (and many other innovations), they could charge way more for the “pro” phone (Gruber guesses around $1,200) and sell correspondingly fewer of them.
So far so good. But how will you feel buying a new iPhone 7S if you also know that Apple has an even better phone that you just can’t afford? What does this do to the Apple brand, which is balanced on the tightrope of excellence (best phones you can buy) and egalitarianism (best phone anyone can buy). You feel great buying an Apple product partly because you feel great treating yourself to the best technology available. Will the “pro” phone tarnish the regular phones? Would you, maybe, wait until you can afford the “pro” phone or wait for some feature of that phone to trickle down to the regular line?
I wonder if part of the problem with this approach for the phone may be thinking of it as a “pro” model. Everybody likes to think they are a pro, especially when something like a phone is the item in question. Maybe I don’t need a “pro” iPad because I don’t think of myself as an artist, or a “pro” Mac because I don’t think of myself as a gamer or nerd, but don’t we all think of ourselves as pretty “pro” phone users? We all text. We all take pictures. We all love to hold the most beautiful object in our hands. Maybe instead of positioning this as “pro” Apple can position this new, more expensive phone as something else: risky.
There is already a precedent for this in software: beta software. We all know beta software has the cool new features, but even though it is often free, we don’t all rush to install beta software because we also know it is risky. Most of us are willing to live on the bleeding edge in some domain of our life, whether that is trying new foods, traveling to new places, reading new books, wearing new styles of clothes, driving luxury cars, or maybe buying the latest tech. But nobody lives on that edge all the time, and I believe many of us would avoid that cuts and bruises of that bleeding edge in our pocket.
So what if the new high end iPhone were marketed as a kind of cool but risky product, a kind of step into the future, like a software beta, but with Apple’s full support behind it. In this case, you pay for the privilege of living on the edge, your phone will cost more than any other. To both emphasize the riskiness and cushion you from those risks, AppleCare would always be included with this phone. In fact, instead of calling this a “pro” model, let’s call it the iPhone Edge. It points to where Apple is going, but it is intended only for those who are willing to pioneer that trail. Join Apple a little closer to the future and help refine the experience before Apple repackages it to sell to the rest of us.
This kind of high end marketing of the future is what we see in cars. Many luxury brands are well known as proving grounds for technologies that eventually end up widely deployed in mass market cars. And savvy customers realize that owning a luxury car is a riskier proposition, one that will likely result in significantly higher costs of ownership and maintenance than owning a mass market car.
The rest of us can feel good buying the stable, solid, performance model of the phone. If those with the resources want to help pioneer our future on the bleeding edge, more power to them. Just like luxury car owners, we can feel like we have been savvier consumers and leave them to their toys. We will stick to what has been proven to work.
I am convinced of the wisdom of Apple striking out into the high end market so that it can explore new technologies in a more timely way. I will be very interested to see how they market the device that opens this new ground for them.