Apple’s Bad Strategy

March 2016 and Apple did the unconventional, yet again. It launched the iPhone SE, which for beginners is a 4-inch iPhone with the latest OS. In other words it was the iPhone 5S relaunched with the latest software and a few other improvement at a much higher price point.

Barely 9 months ahead, tech news is abuzz with a well-regarded analysts claim that Apple won’t release an update to the iPhone SE in 2017, which spells the product’s failure and even led few to arrive at the conclusion that the model might be discontinued in the time to come.

What was surprising was that when the whole industry was launching phones with larger screens, Apple took a detour and launched a 4-inch phone. Don’t be mistaken, this was, rather still is, a period when the sales of 4.5-inch and above phones are spiraling. Everyone with a small-screen phone is looking to upgrade to a phone with a larger screen. The ones already in possession of a large screen phone are clearly not showing any interest in going small.

So this begs the big question — What was Apple thinking when it decided to launch a 4-inch phone in a, if I could call it so, a 4.5+ inch market?

Analysts suggest a couple of reasons, one, Apple might have seen opportunity in this segment given the large number of users still using the iPhone 5 and iPhone 5S at the time of iPhone SEs launch. It possibly indicated that some of these customers were unwilling or rather reluctant to adopt phones with larger screens, namely the iPhone 6 and iPhone 6 Plus.

Another positioning statement analysts make is that Apple wanted to target the first time smartphone adopters in emerging markets like India. This is where I believe it went wrong. In a budding market like India, with price conscious buyers, not many would prefer buying a phone launched at Rs.39,000, notwithstanding the other major setback of a smaller screen. It failed buyers on two fronts, the pricing and the smaller screen.

Apple soon learnt that this strategy had gone wrong and decided to adopt the corporate financing model that had been successful in reviving iPad sales in the Indian market.

It might be noteworthy, that the iPhone SE has done remarkably well in the US and UK market, perhaps better than what Apple had expected. However, if you look at it from another perspective, iPhone SE sales might have come at the expense of iPhone 6 in these mainstream markets where buyers are not very averse to small screen phones and would have opted for iPhone SE since it comes cheaper.

All said, if there’s one management lesson I drew from this, it would be to know your customers and market well before positioning your product.

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