Apple’s press event Monday had a back-to-the-future feel to it.
The iPhone maker held the event in the Town Hall auditorium at its Cupertino headquarters, the same site where it launched the iPod in 2001 and what was then called the iPhone App Store in 2008. CEO Tim Cook opened the event by mentioning in passing the company’s 40th anniversary.
But much of the throwback feel had to do with the announcements Apple made. The two new devices Apple showcased – a smaller, less-expensive phone called the iPhone SE and a smaller, cheaper version of the iPad Pro device it introduced last fall – look much like earlier Apple products. More importantly for Apple and its investors, the company indicated that it’s returning to some tried-and-true strategies to boost sales.
For Apple fans hoping for something new and different, the announcements were likely underwhelming. But the new devices could allow the company to reach out to whole new groups of consumers.
Just like it did with its iPod and Mac products, Apple is plugging the holes in its iPhone and iPad lineups, finding ways to diversify those lines relatively easily. It’s also focusing on pricing, cutting them in some cases or, in other cases, offering new products at lower price levels.
This renewed effort to broaden the appeal of its products comes as Apple is in something of a transition. The company’s sales growth, which took off with the launch of the large iPhone 6 models two years ago, is starting to slow down. Apple’s iPhone sales barely budged in its most recent quarter from the year before, and its iPad sales have fallen on an annual basis for eight straight quarters.
That’s what makes the new effort seem so familiar; we’ve seen this strategy before. Apple went from offering just one iPod model to eventually four, with different sizes, prices and capabilities. Apple realized that consumers who couldn’t afford the full-sized iPod might be attracted to a midsized iPod nano or the postage-stamp-sized iPod shuffle. Consumers got a chance to buy into the iPod lineup for less.
The event was “about filling in different niches,” said Bob O’Donnell, president and chief analyst at Technalysis Research.
Apple’s done similar things with its Mac lineup. And even before Monday, the company has tried to diversify its lineup of handheld devices.
But some of its more recent efforts to broaden its appeal have been uninspired, particularly on the iPhone side. They amounted to simply selling older models at discounted prices or with a new name.
The company finally got serious about diversifying its iPhone lineup two years ago when it launched the iPhone 6 and, for the first time, offered a new iPhone in two sizes. But while that effort gave the company a product to target at the growing number of consumers who wanted a jumbo-sized phone, it left out two potentially much bigger niches: folks who actually liked having a smaller-sized phone but didn’t want an older model, and those who wanted a brand-new iPhone but couldn’t afford one.
That’s what makes the iPhone SE so interesting; it’s designed to target those markets.
The new phone has many of the same specs as the iPhone 6s, which Apple introduced last fall, including the same chip and the same camera. There are some differences, but the iPhone SE is really a new model rather than another example of Apple trying to sell a 1- or 2-year-old phone.
And what’s really significant is the price. At $400 for an unsubsidized, no-contract phone, the iPhone SE has the lowest price ever for a brand-new iPhone model. That’s still going to be too pricey for many consumers – including those in developing countries – but it’s a whole lot more accessible than the $650 they’d have to pay for a comparable iPhone 6s.
Apple did something similar with the new iPad Pro. Like the iPhone SE, it looks a lot like an earlier model. It’s the same shape, dimensions and weight as the iPad Air 2, which debuted in 2014. And it has the same 9.7-inch screen that was in the original iPad.
But the new tablet has the same basic innards as the jumbo-sized iPad Pro that hit store shelves in November. And in some ways, it’s actually a better device. It has both a higher-resolution camera and an improved screen, which can display a wider range of colors.
Here again, Apple is playing with diversification and price. For consumers who don’t want to lug around the full-sized iPad Pro, it now can offer a more compact and portable model. Those who can’t afford to spend $800 for the original iPad Pro can now get one for $600.
And that wasn’t all, in terms of Apple’s attempts to broaden its appeal. The company also cut the price of the iPad Air 2, which it still offers, by $100 to $400, and that of the Apple Watch by $50 to $300.
Even taken together, such moves aren’t as exciting as Apple launching an all-new product like Apple Watch or a completely revamped model, like the iPhone 6. But in the near term, the throwback approach could be just as important, helping the company reach new consumers and new markets.