Going into 2016, I think it is prudent to remind ourselves of a couple of new additions to the iPhone product line that Apple made in Fall 2015, and which could significantly affect their ability to target the mid-range market. These are, the outdated iPhone 6 and 6 plus.
As they have been doing for quite a few years now, Apple has reduced the prices for their year-old models, and is selling them in parallel to their current ones. In the United States, the iPhone 5s starts at $450, the iPhone 6 at $549 and the current iPhone 6s is at $649. The iPhone 6 plus is $649 and the iPhone 6s plus is $749. While not yet in the budget phone range, these models significantly expand the iPhone product range for the more budget conscious customers.
Second hand iPhones are also quite popular in some developing countries. With the new iPhone 6s/6s plus models, we can expect a large number of iPhone 6/6 plus models to enter the used phone market.
This is significant because a) the larger size iPhones sold extremely well in 2015 and they should also sell well to budget conscious customers, b) developing markets tend to favour larger screens. As a result, we can expect the demand for the price-reduced or used iPhones to significantly exceed that of previous years. Although the effect on Apple’s short-term financial results is likely to be small, it could strongly impact Apple’s future prospects in developing countries.
This is something that was completely foreseeable, and I discussed this in Fall 2014 when the iPhone 6/6 plus was first announced. The year 2016 is when we will see the actual effects. I think we should remind ourselves that this year, we might see Apple making significant inroads into budget conscious countries (namely some European ones) and developing countries.