Apple CEO Tim Cook said during today’s earnings call that the aging iPhone 4 is playing a vital role in luring first-time iPhone buyers, as my colleague Erica Ogg noted tonight. The nearly three-year-old gadget is finding an audience in emerging markets such as China, where the latest version of the iPhone is simply too expensive to gain mass-market traction. And as Ogg writes, “relying on the status and cachet attached to the iPhone name” to sell older versions at significant discounts enables the company to target budget-constrained users without tarnishing its status as a manufacturer of premium devices and services.
Cook also said the company won’t trot out any new products until this fall, which also is consistent with its history. But I think the company is missing a great opportunity to capitalize on the explosive growth of emerging markets like China and India. A cheaper new iPhone could be made with a plastic instead of glass and metal, and could be compelling even without the costly Retina display. Most importantly, it could be available only in those emerging markets, protecting the iPhone’s premium brand in areas like Western Europe and North America. An affordable new iPhone obviously wouldn’t produce the fantastic margins Apple enjoys, but it would be a great way to get the company’s hardware — and the apps that run on them — into the hands of many more users in those explosive markets.