Apple should be aware of this obvious logic. However, they may be considering it as leftover and not fresh lunch.
Conceiving innovative product in consumer market is challenging and the way Apple does it, needs lots of money, energy and time. Designing and testing of new processor, custom ICs and revoluionary UI is daunting task. Soon Apple will have more of product for others to follow.
Dylan, My guess is that most people who buy iPhones would start buying cheaper iPhones. There is a group that opts for the most-expensive models, but most won't go that way. And if Apple starts competing on margin, it's basically an admission that its phone is comparable to others to the degree that price is a main differentiator.
Company cultures that are successful at one business model tend to suffer and striuggle when they are wrenched in a different direction, although sometimes that wrench is necessary as the previous business model may be coming to the end of its natural arc.
So Apple might suddenly embrace narrower margins ...but that could undercut its premium-price culture (and spending habits) and make the brand less cool. The result could be a loss of sales at the high-end without the guarantee of any sales at the lower end.
People might then turn around and say that company had shot itself in the foot but it would not necessarily be true.
Maybe the thing Apple should do is invent something based on smooth user experience and premium price but in a completely different field...such as ....i don't know...personal health and wellbeing.
I think you make a good point eewiz. Despite all the growth in smartphones, only Apple and Samsung make any money at it. The rest of the companies can knock themselves out trying to take market share from Apple, but that's not necessarily going to equate to profit.
WielTukhut: Profit margin is important, but so is the size of your market. And I didn't see Apple fans writing off the equity markets as being totally corrupt last year when the stock crossed $700 a share. Apple may do very nicely with a smaller piece of a bigger pie given their fat margin, but the move towards lower-cost phones suggests there is serious concern about this inside Apple.
Apple is highly respected for its past innovation, and I hope it can regain its edge there -- I truly do. Because once it starts playing the margin game, it will find itself on a slippery slope with narrower margins.
EE Wiz, You said "In short Apple will always have the volume for the tipping point."
I truly admire Apple's past innovation and Tim Cook's masterful hand in managing the supply chain. That said, "always" is a word I've learned not to use in the tech world. Better, faster, cheaper is what keeps the industry moving forward. Companies in the past that depended on fat margins a big name to keep them ahead learned that the hard way. Apple has legions of fans and a boatload of cash, so right now it's their game to lose.