Let’s talk about the battle ahead.
It Comes Down To Status
What the iPhone does better than anyone else is convey status. It is kind of the Rolex of Smartphones in that the iPhone, more than any other branded phone, conveys this sense of success. And no one in this space does it as well. It would be like having only one premium car vendor like Lincoln or Cadillac. But a few years back GM went cheap on Cadillac’s and folks, for a time, started to abandon that brand. As a result, many later stayed with the Asian alternatives like Lexus and never looked back. Part of what makes for an elite product is that it is relatively rare and the iPhone is far from rare these days. Your kid or the guy pumping your gas likely has an iPhone just as good as yours and that is a huge problem for a phone selling at a huge premium. It really isn’t elite, it is just expensive. And folks really don’t like “expensive” if there is no related status being conveyed.
This is the risk for Apple this round. If people feel that Apple is charging them a premium for a phone that is only worth half as much, one that has cheap components with unreliable underperforming connections they could flee the brand. They probably all won’t flee to Essential but as a small phone maker Rubin’s new firm doesn’t need to take a bunch of share, but they could change Smartphone buyer perceptions. This would result in a critical number of iPhone considering switching that otherwise would have bought the iPhone 8.
Making Apple Vulnerable
IBM was invulnerable until the late 1980s and then folks went from believing the firm was invulnerable to believing it couldn’t compete in a matter of months. Microsoft in the 1990s was believed to be invulnerable until the US Department of Justice changed that image and everyone and their brother jumped into their business.
