You sorta gotta have some pity for the poor product managers over at Apple. I mean yes, they are responsible for one of the most popular products out there: the iPhone. However, we are living in an age in which just about everyone who wants to have a smartphone already has one and so the ability to generate more sales is becoming harder and harder. Couple this with the great Apple / Android divide, and you can see how challenging it must be to try to change their product development definition in order to grow sales when you are an Apple iPhone product manager. What are these folks to do?
A New Way To Make Money From The iPhone
It’s getting harder and harder to make money from the sales of iPhones. It turns out that customers have started to hold on to their older model iPhones for longer periods of time. This is in part because the newer models don’t seem to have any “must have” features that people feel that they can’t live without. At the same time the difference between the iPhone and its cheaper alternatives (especially in China) is becoming smaller and smaller every day. Just too really make things complicated, the 10th anniversary of the iPhone is coming up soon and everyone is expecting Apple to roll out a special version of the phone then and so this is causing people to delay their purchases.
With the introduction of the latest version of the Apple iPhone, version 7, the Apple product managers decided to do something different. This time around the more expensive version of the iPhone 7, the iPhone 7 plus, was loaded with a larger screen as well as extra hardware that was not available on the more basic iPhone 7 model. The US$769 iPhone 7 plus comes with a dual camera system, it has a longer battery life, and more computer memory than the US$649 iPhone 7 model.
The result of this differentiation between products has been a boost in sales for Apple. Sales of the iPhone plus has made up roughly 40% of the over 58.5M iPhone 7s that have been sold. This is an increase of 17% over the number of people who purchased Apple’s iPhone 6 plus over the iPhone 6. Now that would be something to put on your product manager resume! This should help out Apple who is starting to experience a softer than expected demand for their latest iPhones.
Next Steps For The iPhone
The iPhone has always been a popular product ever since its introduction. However, as the market for smartphones has become saturated, sales of the iPhone have started to become stagnated. For the first time, Apple is not going to be able to deliver double digit growth numbers. It turns out that the iPhone is responsible for roughly 75% of Apple’s gross profit.
It appears as though the people who want iPhones are really looking for an iPhone with cool new features. The base iPhone 7 does not provide them with this. However, the iPhone 7 plus has revealed that consumers have an appetite for new features. The iPhone 7 plus has turned into the most successful higher-priced phone that Apple has ever sold.
One of the most important things for Apple is that consumers in China have shown a preference for the iPhone 7 plus. For the first time ever, more Chinese consumers opted to buy the iPhone 7 plus than its smaller sibling. What’s even more impressive is that 40% more people purchased the iPhone 7 plus than purchased the iPhone 6 plus. Clearly what people are saying is that despite the availability of lower cost phones, they still value what Apple is doing with their phones and they are willing to pay more money to have it.
What All Of This Means For You
The Apple iPhone product managers have a bit of a challenge on their hands. Their product has been so successful for so long that the market for smartphones is starting to become saturated. What this means is that it is becoming harder and harder for the product managers to find ways to grow profits like their product manager job description tells them that they should be doing. Whatever should they be doing?
One tactic that they have adopted is to create two different versions of their most recent product, the iPhone 7. There is the regular version and then there is the iPhone 7 plus. The plus model has a larger screen, a better camera, more memory, and is waterproof. Despite costing more than the base model, the iPhone 7 plus has become a big seller. What the Apple product managers have discovered is that customers have a desire for phones with cool new features. This is important to know as Apple shortly prepares to bring out the 10th anniversary version of the iPhone.
Instead of trying to create one product to meet every customer’s unique needs, the Apple product managers have decided to create multiple products with multiple price points in order to better match customer needs. Their creation of the iPhone 7 plus appears to have been successful. Now we will just have to see if they can do it again when they bring out the iPhone 8!
Question For You: Do you think that Apple should have also made a cheaper version of the iPhone in order to capture the low end of the market?
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What We’ll Be Talking About Next Time
I’m pretty sure that we all know about Gatorade – the brightly colored sports drink that we always see pro athletes drinking during matches and pouring on their coaches when they win a game. However, times change. The product managers at Gatorade realize that they need to change their product development definition with the times if they want to keep selling their sports drink. It appears as though they plan on doing this by going high tech…