Market Segmentation in Action (for Apple)

  • December 16, 2013
  • Scott

Looks like our previous discussion of market segmentation might be just about right. An update from Kantar reports that almost half of iPhone 5C owners were switching from Android (or at least “other brands”), whereas nearly 80% of iPhone 5S owners were upgrading from previous versions (which is typical at the beginning of the product cycle).

So, Apple has produced an additional way to differentiate its products that is neither:

  • selling last year’s phone, nor
  • selling an upgraded RAM package ($100 per step up)

Not that Apple isn’t still differentiating on those two fronts as well.  But this time around, the departure is netting “switchers” from other operating systems.  Perhaps the lower cost (with subsidies, iPhone 5C might be $99 in the US) puts the phone in direct competition with Android phones.  Or perhaps the price is low enough to no longer be a deterrent.  Or perhaps they just like the plastic finish better (less hipster?).

A year’s worth of data will make this really interesting.

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