Apple iPhone Leaks Suggest Cancellation of Annual Upgrade of 2016 iPhone – Inflicting Wound on Itself to Eliminate Competition

Apple iPhone

Latest rumors suggest that Apple is cancelling its annual upgrade for its most successful smartphone in 2016, the iPhone SE.

Apple believes in doing things to increase its profit margins at the cost of its market share, and this has always been its principal marketing strategy.

Apple iPhone

No 2017 Update

According to Ming Chi Kuo, one of the best analysts at KGI Securities, Apple will be cancelling its annual upgrade for the new iPhones. Kuo reports in MacRumors that the company will not be releasing the 2017 update of iPhone SE. The 4 inches iPhone is a big it commercially and is in fact considered to be even better than the iPhone 7.

The Reasoning 

Why is Apple inflicting such a wound on itself is a question many are asking. Kuo states that there are two reasons behind the cancellation of the upgrade. One is in order to get an increase in the margins of the iPhone SE of 2016, as the older parts come down in price. Another reason is to eliminate or rather bring down the risks of cannibalization by the iPhone SE of 2017 on the sales of the iPhone 7, which is more profitable.

Business Reasons

The two reasons given above seem to make a lot of business sense, as Apple is well known to be more interested in getting a profit share rather than a market share. The company seems to be concerned over the sales of the iPhone 7. In addition, it is not acceptable for the company to admit that the iPhone 7 sales were impacted due to the customers preferring the budget model to the new iPhone 7 model.

Negative Impact

However, there is a flip side to the cancellation of the upgrade, as Kuo notes that if a new iPhone SE is ditched by the company, it will affect the sales figures. According to him, the shipments of the phone will come down by around 10% at the least during the second quarter of next year. The sales will be around 35 million compared with the sales of 40.4 million during the second quarter of this year. In fact, the saving grace of the second quarter this year was the demand for the budget model.

iPhone

Preference for Budget phones

If users are given the choice of selecting an Apple phone and offered the iPhone SE or the iPhone 7 as options, most will go for the latest iPhone 7 to be sure. However, if you want to have an iPhone within a certain budget, undoubtedly most would go for the budget friendly iPhone SE. This is what Apple seems to be concerned about. If most users are concerned about the budget, they will move towards the SE model and this will hurt the new iPhone 7 market. Apple seems more focused on the iPhone 7 at the moment, so it will not allow its own product to compete with the new iPhone 7 models.

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