The launch of iPhone X back in 2017 marked the first time Apple crossed the $1000 mark in its smartphone category. The iPhone XS Max didn't help matters for customers when it came to pricing and don’t be surprised if the more expensive 2020 iPhone models blow a hole through a wallet too. However, one model that garnered the attention of many, particularly those that wanted a cheaper iPhone without sacrificing too many features belonging to the more premium models, was the iPhone XR.
A cheaper iPhone with a 5G-ready status was always going to help prepare Apple for the 5G revolution. Evidence of this can be found in the numbers for the 2018 iPhone XR, and it is a significantly popular model in the U.S. for the month of March and makes up around 39 percent of all iPhone sales in the region. This shows that a $749 price tag makes a massive difference in making or breaking a purchasing decision for a customer, and this very metric could very well be the driving force of the cheaper iPhone that’s expected to feature 5G connectivity.
In a previous report, famed Apple analyst Ming-Chi Kuo stated that all 2020 iPhone models will support 5G connectivity, and that’s the kind of strategy necessary to help Apple maintain a high shipment volume next year. What’s more important about the cheaper iPhone with 5G connectivity is that the company’s competitors will aim to bring cheaper 5G-ready Android smartphones to the market, forcing a conflict of purchasing decisions based on pricing structures.
5G Support Will Be a Required Feature in a Cheaper iPhone for a Market That Could One Day Be Littered by Sub-$500 Devices Sporting the Same Modem
A report from Canalys indicates that by 2023, shipments of 5G-ready smartphones will exceed those that come with 4G modems. While this is just an estimation and figures can change depending on various factors, Apple could use this information as a benchmark and see the potential of 5G for its future iPhone sales. As of right now, the company is already 12+ months late and its competitors are busy presenting wave after wave of 5G-ready handsets. Though these devices are ridiculously pricey, they offer customers a small gateway to experience a new plateau of upload and download speeds that the 4G standard would never have been able to obtain.
Also, since a lot of customers might have already purchased a 5G-ready flagship in countries like the U.S. and Korea, they won’t be expected to upgrade to a new device after just 12 months of owning their first one. Whether it’s because they don’t see any purpose of upgrading now that they have a 5G-ready smartphone, or simply because they’ve already splurged a lot of cash on the existing one and their budget cannot accommodate another purchase, it does highlight that Apple has already lost out on a small market. Experts have claimed that purchasing a device with a 5G-ready status is pointless in 2019, but perhaps some of these customers simply wanted to futureproof themselves for a few years.
Regardless, Apple can be forgiven for failing to adopt the latest standards in its devices simply because it wants the technology to mature and the components to become cheaper. Whether you believe this approach is worth it or not, the iPhone maker will have another struggle on its hands in 2020. How might you ask? The adoption of newer technological standards will indeed drop manufacturing costs for smartphone vendors, so we wouldn’t be surprised if OEMs start churning out sub-$500 smartphones featuring a 5G radio.
Huawei will definitely be one of those companies to watch out for that can potentially deliver on that competitive pricing while offering features such as 5G support. The Chinese giant earlier stated that foldable smartphones are expected to get cheaper as this technology matures in the future. Similarly, what’s stopping 5G handsets from getting more affordable? Apple’s reportedly sourcing 5G modems from Qualcomm and Samsung for next year, giving the tech giant more leverage when it comes to pricing negotiations for the component.
This can mean the cheapest 2020 iPhone might not be stamped with a ludicrously high price tag, but we should still keep our ear to the ground related to this. Also, an earlier survey revealed that customers are quite hyped about Apple’s first crop of 5G-ready iPhones, with a lot of them willing to splurge $1200 on a single unit. Of course, this doesn’t represent the vast majority of iOS device users but it still shows that customers are waiting anxiously for these models to arrive. Whether or not they are willing to invest the same money during that period is something we’ll have to see.
However, the game-changer that year will definitely be the iPhone 11R successor, meaning that Apple should focus a lot on achieving a balance where the device offers the least number of compromises as well as a competitive price. The more expensive models will increase the iPhone’s average selling price (ASP) but a fewer number of units sold won’t translate into wider adoption of 5G-enabled iPhones across the U.S. and other markets.
So what do you think? Is launching all three models with the latest and greatest modem the right strategy for Apple to maintain its growth? Let us know down in the comments.