VodkaPundit

Moving on Up

PENETRATION

Horace Dediu:

The latest comScore data places penetration at about 61%, up over 10 percentage points from the same time last year. The 50% last year is itself up nearly 14 percentage points from the same time in 2011.

Now that is why I felt so certain a few weeks ago that Apple would price the iPhone 5C more aggressively downmarket. At nearly two-thirds market saturation, the easy pickings in smartphone sales are nearly gone. While it’s true that Android users are slightly more likely to upgrade to an iPhone rather than buy a new Android, that’s hardly a model for robust growth. Selling a crapload of $350 iPhones to cash-on-the-counter Chinese buyers is.

If Apple continues with their current pricing/marketing strategy of selling last year’s iPhone as this year’s discount model, then next year the iPhone 5C will still sell for a whopping $450. It will still be a damn sight better than the 4S it will replace at the bottom of the iPhone product matrix, but it will still be one of the most expensive phones available to overseas buyers.

I know Apple doesn’t mind leaving money on the table, if it means maintaining brand image and avoiding tons of product in the bargain bins — but that does seem like an awful lot of money.