Toward the end of the Series 4 Apple Watch and updated iPhone Xs launch event in September, and after the initial fanfare of the introductions, CEO Tim Cook mentioned there was ‘one more thing’ to be revealed.
By Wayne Lam, Principal Analyst, Mobile Devices and Networks, IHS Markit
Typically, the ‘one more thing’ tag line served as a segue to unveiling a show-stopping Apple product, which usually highlights the latest design or technology, but this year it was different. The ‘one more thing’ turned out to be the more modest, and lower cost, iPhone Xr.
So why is that significant, aside from the apparent reversal of product introduction order? What Apple has done with the iPhone Xr design is to implicitly acknowledge that after a decade of launching new iPhone designs, their high-end smartphone models have reached a point where their performance and feature sets have exceeded the market demand for them.
While the iPhone Xs Max is equipped with the best 6.5” OLED display, and the largest memory available on the market (while pushing the limits of consumer price elasticity), the iPhone Xr takes a much more modest approach. The goal of the iPhone Xr is to hit all the right design notes that appeal to the mainstream consumer, such as large displays, fast processors, long battery life and, most importantly, relative affordability.
In his book, ‘The Innovators Dilemma’, Harvard Business School Professor, Clayton Christiansen, laid out his theory of disruptive innovation. Drawing from this business theory, we can see that the iPhone product line has progressed so far in the marketplace that it has over-shot the performance level demanded of it at the high end of the market. In the diagram below, Apple is the ‘sustaining technologist’ and the iPhone Xs and Xs Max represent the progress above the market demand line.
While there is still strong demand for premium smartphone products, the marketers at Apple understand that most consumers will not follow Apple into the high-end pricing territory of the new iPhone Xs. The iPhone Xr design reflects this fact, exposing Apple’s attempt to disrupt itself, before others can disrupt it.
With its design compromises, the iPhone Xr speaks to the stark truth that the global smartphone market has matured and, in some parts of the world, has become quite saturated. For Apple to continue to be a mass producer and marketer of iPhones, it needed to take a different tack than in years past. The result was the six inch LCD iPhone Xr, designed with a decade’s worth of market feedback and insight to hit the ‘sweet spot’ of smartphone consumer market demand.
What is most interesting about iPhone Xr are the features that Apple has left out, as follows: