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    This Guy Thinks Apple is Underpricing its Products. He is Kind-of Right!

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    Varun Bhatia
    Varun Bhatia Mar 26, 2017

    Scanning through Apple news all day is a perk of my job. Most of the articles I read talk about rumoured Apple products or some happening at the company. But at times, something comes up that makes me rethink my understanding of Apple. I came across one such post on the blog called Above Avalon.

    The Smart Observation

    The writer, Neil Cybart, makes a case that Apple is lowering the pricing of its products to beat the competition. Sounds outlandish, doesn’t it? But the guy has a point. Let me explain.

    Neil takes the example of two products – Apple Watch and AirPods. He notes that both these devices are priced below competing products. For example, Apple Watch Series 1 is available at a starting price of $269, while Samsung Gear begins at $349. Similarly, the $159 market price of AirPods is among the lowest in the market.

    One can’t argue with numbers!

    Is It For Real?

    Does that mean Apple is flipping its marketing strategy? Is Tim Cook sacrificing Apple’s premium brand tag to make a dash for price war zone? No, not at all. While the numbers prove the changing price points, it’s important to see the larger picture.

    iPhone prices are still very much in the high-end bracket, and MacBook Pro with Touchbar falls in the ridiculously expensive range. So the ‘Apple Tax’ is very much there.

    What’s changed is that Apple has broadened its horizons.

    From Pro To Public

    The old Apple (or Steve Job’s Apple if you will) was largely focused at pro customers. It started foraying in the consumer segment with the launch of iPods and continued the expansion over time with iPhones, iPad and Apple Watch.

    Today, Apple has well and truly transitioned into a consumer products company that also has a pro product range. As a result, it has to put out products in multiple price brackets to keep everyone happy.

    Feeding The Monster

    In a way, Apple is the victim of its own success. The astronomical growth that the company has experienced since the launch of iPhone has set unrealistically high expectations for investors and the general public. They have got themselves into a vicious circle and have to keep expanding. There is just no other way.

    Yes, it’s a good problem to have, but it’s a problem nonetheless. The solution is to reach more people and the tool is a larger product range at multiple price ranges. The new $329 iPad is a case in point. The $170 drop in iPad price doesn’t denote that Apple is gearing for a price fight, it simply makes the iPad more accessible for people. And there’s the iPad Pro with its bells & whistles (Apple Pencil and Smart Keyboard) to keep the high end spectrum happy.

    Staying True To The Core

    It’s a big ask to maintain the positioning of a company and simultaneously reaching out to a larger audience set. I believe that Tim Cook and the team must be congratulated for carrying out the balancing act with perfection. The fact that an article which pointed out the obviously lower pricing of Apple products came across as a surprise speaks volumes of how well Apple has guarded its premium profile while making their products affordable by masses.

    I am not debating Neil’s observation about the new Apple pricing strategy, but I am more amazed by the manner in which Apple has slipped it in without anybody noticing. Hats off!

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