Some pundits are predicting, and others are advocating, that Apple launch an iPhone that’s much cheaper than the current iPhone in order to keep up with Android phone sales.
This is crazy talk.
Apple doesn’t need a cheaper iPhone. They need a more expensive one — much more expensive. Here’s why.
Android Gets Big Market Share with Small Profits
Android phones are selling in vastly higher numbers than iPhones. So high, in fact, that Google Chairman Eric Schmidt says the market share numbers are comparable to Microsoft vs Apple in desktop operating systems in the past 20 years.
The difference Schmidt didn’t mention is that Microsoft always made money from Windows.
The main reason Android is selling so well is that most Android phones are very cheap.
Sure, a tiny number of handset models like the Samsung Galaxy S3 are both very good and profitable. But the high-end, best-of-breed Android phones aren’t the ones driving massive market share numbers for the Android platform.