Apple today announced that the iphone (that previously sold for $199) is now on sale for $99. This price reduction is in response to the Palm Pre that is now available (retail price – $199) as well as the launch of the iphone 3G S – a faster version with more features. The iphone 3GS will also be sold at $199. Read more at Tech Crunch.
Apple’s brand has been built on cutting edge technology catering towards the younger, hipper, computer user. Apple is innovative and design focused. The brand is “cool”, their products are cool, ads are cool, and the Apple suite of products is not for everyone. The reason why its so cool is because your mom doesn’t use an iphone – you do. You are the tech saavy consumer that likes to have the latest, greatest products to show off to your friends and the design is so cool, you just have to have it.
So what does it mean if Apple is slashing its prices to gain greater market share with the iphone? Are they slashing their brand as well?
Only 5% of mobile users in the U.S. currently us an iphone (Ad Age). But with Apple reducing the price to $99, the number of users and thus Apple’s revenue should increase. Great news for the mobile marketing industry and the late bloomers to the smartphone market. Apple is also releasing the iphone 3G S so if you are the hard core tech saavy consumer, you can still get the latest and greatest Apple product. So, Apple has the top of their consumer chain covered with their most loyal users and is appealing to the bottom of the pyramid for those consumers that purchase based on price.
But what effect is this going to have on all the consumers in the middle? The ones that are in between the early adapters and late comers, the consumers that buy Apple because its a good value but still cool. What effect is the price slashing and going mainstream going to have on the overall brand image? Will Apple be able to continually innovate and come up with the newest technology with the “coolest” design to keep people coming back to what attracted them in the first place? I’m not sure – but I think it’s a valuable question for Apple to take a step back and make sure they are not selling out.