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That's a dangerous strategy considering that an iPhone is the "window" to their ecosystem: App store, Apple Pay, the iOS UX experience, etc.

I know many people who love Apple's ecosystem but who won't pay through the nose for a "premium" phone that's way overpowered for their needs.

The iPhone is the gateway drug these days, but I didn't start out with one: I started out with an iPod Touch. The iPod Touch is a great companion device for a non-iPhone that supports tethering -- it lets you dip a toe in the iOS ecosystem for a fraction of the cost of buying an iPhone. Also, with the TV app and an Apple TV is works as a controller for their TV ecosystem -- an evolved iPod Touch could be positioned as a luxury controller/media store device for the Apple TV, at any rate.

However, the iPod Touch has been neglected for several years: it's all but an orphan product at this stage.

(One ray of hope: Apple just refreshed the iPad Mini with a two-generations jump in CPU and a few nice-but-overdue tweaks -- double the storage, 1st generation Pencil support, and a TrueTone display. I hope they're planning on doing the same for the iPod Touch.)

Arguably the iPad 6th Gen is the gateway drug now. List price of $329 but many stores have it on a semi-permanent discount of $250. Very cheap entry into the iOS ecosystem, and really an amazing value compared to the other ~$250 tablets or laptops out there.

The only gateway I needed was a work-provided iphone 6. Soon after, I switched my personal phone to an iphone 6s, and I was all in after that...macbook, watch, icloud, etc...

Honestly, before I was 'forced' (for work purposes) to use an iphone, I wasn't a fan of Apple - although I admittedly never tried using one. Since then, the three guys that sit near me at work have bought into the apple ecosystem as well.

To backup the point of the iPhone is the gateway to their ecosystem. They increased the size of the iPhone and I stopped buying new iPhones, since then I've switched from an iPhone to Android, Macbook to Dell XPS, and iPad to a bog standard Windows 2-in-1 tablet/mini-laptop.

Then frankly they're not in the Apple target demographic. I know that sucks, but the iPhone is a gateway for customers who are willing to pay a premium for Apple products.

The real danger for Apple would be compromising with a budget model at the entry level. It would kill their value proposition on the whole rest of their line. The closest they get is previous-year models and refurbs.

> Then frankly they're not in the Apple target demographic.

I think you’re forgetting about the significant market for used Apple products. There are many people, myself included, who live on used MacBooks, iPhones, iPads, AppleTV, Airport Express, etc., and are perfectly content. I’m typing this out on an iPhone SE that I bought used, and that was the most I’ve ever paid for a phone. My wife is still content with a 5S, and I frankly never notice the difference when I borrow her phone.

Apple (perhaps begrudgingly) cares about us because the used market helps keep the demand high for their new and shiny products.

I think they run a real risk of diminishing returns. To use a car analogy; first they were the BMW of phones, then the Ferrari and maybe soon the Bugatti.

Along the way consumers will start to tap out and leave Apple's ecosystem altogether.

Maybe that's already set in motion, people are keeping their phones for much longer so it will take a while for the effects to be noticeable.

Selling 200m+ phones a year and owning 44% of the US domestic market is hardly 'Bugatti of Phones'.

What's tapping out is the pool of first time iPhone buyers, but fortunately for Apple, iPhones are very 'sticky'. Existing users are very highly likely to replace an iPhone with a new iPhone, and in fact the bulk of sales have been to previous iPhone owners for several years.

When people talk about iPhone sales slowing, they're taking about growth slowing. Actual sales are just levelling off. From here on out we'll see some ups and downs, sure. It looks like we're in for a period of economic risk and uncertainty too which isn't good for anyone, but I don't see any good reason to expect a sustained decline compared to the rest of the market.

The Bugatti of phones is Samsung's upcoming fold-out model, which will cost over $2000 -- more than a high-end tricked out PC you could run a decent sized neural network on.

O, definitely. Anecdote, but count me among these people. I had 4 or 5 iPhones, and 1 Android phone sometime in the middle (before my 6s). I am currently on the Xs, but if Apple keeps this pricing strategy I will not buy another iPhone again. Outside the US it is really hard to justify with the added tax and "export fee" on top. I just hope it will be ok for 3 years.

This is true. I bought the X in India but with assumption that I’ll use it for at least 3 years. Maybe more. This doesn’t sound hard to achieve given how long Apple continues to provide upgrades.

I'm still on a 6s and it's absolutely fine. I can't see myself upgrading in the foreseeable future, but when I do it will almost certainly be another iPhone. They've been really good to me and lasted many years as hand-me-downs, sometimes with a battery refurb just before they go out of support. The value proposition is just excellent.

That doesn't account for the people who like the SE for it's size/weight primarily. The fact that it's much cheaper than the new giant phones is a nice bonus.

It also doesn't take into account people who may be budget conscious now but will have spending power in a few years. Why would apple turn up its nose at that market share?

This could also be the reason that there is no small phone, as this would make the "window" to their ecosystem literally smaller.

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