Why Apple Continues to Produce Expensive Smartphones Despite the Cost
In recent years, Apple's smartphones like the iPhone XS Max have been subject to much criticism for their high price tags. But the question of why they continue to do so goes beyond simple economics. There are deeper factors at play, including branding, market positioning, and the desire to maintain a premium status among consumers.
Understanding the Premium Pricing Strategy
Many individuals argue that today's smartphones, including Apple's, are unaffordable. However, it's important to note that such devices are not strictly #8220;unaffordable,#8221; but rather expensive. This is a matter of perception, as opposed to a true lack of affordability.
Today's smartphones, such as the iPhone XS Max, and computers are often seen as symbols of status and prestige. They serve a dual purpose: to fulfill the primary functions of communication and productivity, but also to serve as a social status symbol and a fashion statement. Owning an Apple device is more than just acquiring a tool; it's an experience. It's about the beauty, craftsmanship, and overall use of the product, which all contribute to the premium nature of the brand.
Apple's Market Positioning and Brand Identity
Apple's devices are often at the top of the price range, and this is by design. Many consumers, particularly tech enthusiasts and business professionals, perceive these devices as synonymous with luxury and high quality. The company aims to maintain a certain status symbol in the market, which, as we see with competitors like Samsung and others, are often criticized for being less expensive yet lacking in performance features comparable to Apple#8217;s offerings.
For instance, a Samsung device like the 512GB Note 9, priced at $1250, often draws less criticism regarding its cost, despite the fact that the last year's iPhone X offers superior performance. Similarly, high-end luxury brands like Prada and Louis Vuitton, while expensive, maintain their prestige precisely because of their luxury and exclusivity.
Expanding the Market and Maintaining Profit Margins
Apple's strategy is not just about maintaining a status symbol; it also involves expanding its market reach. To sustain growth, Apple needs to balance premium pricing with continued innovation and reliability. Maintaining a profit margin of around 30-40% on every iPhone, along with similar margins for other premium brands, ensures financial health while keeping customers satisfied with the value they receive.
The company's strategy is clear: focus on the premium brand and maintain a position where high-end devices are seen as investments in both function and luxury. This approach has been successful, as Apple consistently earns a significant portion of the global smartphone profits. According to a report, 80% of the profit generated by all smartphones around the world goes directly into Apple#8217;s coffers, primarily in Ireland.
Conclusion
To answer the question simply: Apple continues to produce expensive smartphones because they sell. The premium pricing strategy effectively targets a segment of the market willing to pay more for quality, security, and luxury. As long as customers are willing to buy these devices, Apple will continue to set and maintain high prices.