4 Reasons Why Apple Shouldn’t Launch iPhone Mini

Rita is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Every now and then new rumors start circulating related to a new product that the Cupertino, California-based tech giant Apple (NASDAQ: AAPL) might launch. The rumor mill gets excited and starts talking about loads of possible inventions. But, that doesn’t mean Apple will actually make that, and even if it makes that, it doesn’t mean the product will be good for the company.

When rumors about the iPad Mini started circulating, I was seriously excited about the thing. Even I wanted to own a mini iPad. However, though I was totally in support of the iPad Mini and believed it had potential, I personally didn’t find the price that attractive and thus am still using my Android tablet. But, the present rumors about Apple working on an iPhone Mini doesn’t look feasible to me.

Per the rumor mill, Apple is working on a smaller version of the iPhone 5, just like the company did with the iPad and the iPad Mini, and the device might be priced at $250. Several industry experts and analysts are looking forward to this. As pointed out by The Inquisitr, even analyst Peter Misek thinks the iPhone Mini could launch early this summer at a price of $200 to $250.

If Apple decides to start with such a venture, it will not be difficult to understand the reason. First of all, like its peers Nokia (NYSE: NOK), Samsung, Sony, HTC and Research in Motion among several others, Apple doesn’t have smartphones that can cater to all segments of society. Nokia’s latest Lumia smartphones powered by Windows Phone 8 comes in multiple variants catering to the high-end device buyers, medium-spec device buyers as well as the low-end buyers. Though one may say, people who can’t afford the latest iPhone can always buy an older version for a lower price, the point they are missing out on is that those buyers will actually end up paying relatively lower but still a huge sum and get a back-dated device. Thus, a new but smaller iPhone will address the issue.

Secondly, the ever increasing dominance of Google’s (NASDAQ: GOOG) Android powered smartphones, especially those from Samsung, are killing Apple’s market share. By launching a lower prices iPhone, Apple will be in a better position to snatch back market share from the South Korean phone giant. According to a November report by Gartner, Samsung accounted for 22.9% of all mobile phones sold (and not shipped) worldwide in Q3 2012, while Apple accounted for only 5.5%.Coming to smartphones only, Samsung sold as many as 55 million devices against Apple’s almost 23.7 million iPhones. Thus, in order to bridge the increasing gap between these top two players, Apple needs to have a new weapon.

So, why Apple may consider working on a smaller iPhone is clear. Now, the question is, will this plan succeed? I believe it will not succeed. Having the intention to solve a problem doesn’t necessarily result in a strategy that will actually solve the problem. So, now let me tell you why I think the strategy is set to fail.

Firstly, smartphones have been around for a few years now and the preferences for such devices have evolved rapidly in the past 2 years particularly. People are shifting to better devices with more powerful processors, better displays, better camera and not to mention a bigger screen. Among the top selling devices today are Samsung’s Galaxy S II, Galaxy S III, Galaxy Note and Galaxy Note II. Few devices from players such as HTC and Sony are also among the preferred ones. What’s common among these devices? Well, a bigger screen among many others. Consumers are increasingly looking forward to having a device which they can use for more than one purpose. They want to surf the web and thus a bigger screen is essential. They want to watch movies and thus a bigger screen is needed. What’s the point of having a smartphone if it can’t be used for smart purposes?

Secondly, Apple decided to give the iPhone 5 a 4-inch screen instead of the 3.5-inch screen like in the previous iPhone models so that it can combat with the changing dynamics of the market place. Users were flocking towards the big-screen offerings from Samsung, Google and others. So, moving to the 4-inch screen was a step forward. Now, launching a smaller iPhone will automatically result in a device with a smaller screen (say 3-inch) and I feel this will be a step backward. Launching an iPad Mini was sensible. Even though it was a smaller version, still it has a 7-inch screen which is sufficient for web browsing and multimedia. But an even smaller iPhone makes no sense.

Thirdly, what about the Apple experience that Apple officials so proudly talk about? Won’t a 3-inch screen sized phone ruin the “experience”? Samsung’s low-end smartphones also have 3-inch screens and are pretty cheap. Then, why aren’t those so popular and why do users already using them aspiring to move to better devices? The answer is, those devices may be called “smartphones” but they can’t deliver the required performance to satisfy a user. Does Apple want the same to happen to its iPhone Mini? I am sure that can’t be good for the company especially when the company puts so much stress on “experience.”

Fourthly, even if Apple launches the device for $250, the device will still be costlier than the other small-screen Android smartphones and also costlier than Android phones with 3.5-inch screens. Like, Verizon offers Samsung Illusion Android smartphone with a 3.5-inch screen and a 1 GHz processor for just $79.99 and Samsung Stratosphere with a 4-inch screen, 1 GHz processor and 4G LTE also for $99.99 only. People who are looking for budget smartphones only buy smaller devices and I’m sure those buyers won’t consider spending $250 on a small device as a wise decision. This segment of the market is not bothered about owning an Apple branded device. And people who are bothered about that will definitely like to own a device which others will call as a compromise for not being able to own a “normal” iPhone.

I genuinely feel launching an iPhone Mini will be disastrous for Apple. There are plenty of other rumors I am looking forward to, such as the iWatch and the iPhone 5S or iPhone 6 with projected keyboards and integration with Mac OS X, but not this one. Apple should preserve the basic value outline while launching the first iPhone. The company needs to keep an eye on user experience. After all, that is what has made the iPhone the iPhone.

analyse360degree has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus