For years, Apple customers would complain about the "Apple Tax" — the premium over similar products from other companies that you would have to pay for Apple's design and software.
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Apple is abandoning its expensive image (AAPL)
Think Apple products are expensive? The "Apple tax" could be on its way out — here's why.
A very luxury-focused Apple photo
It was an earned reputation. Apple stuff is premium, and increasingly, it's sold as a luxury product as well — think of the $20,000 gold Apple Watch.
But Apple's announcement on Tuesday, in which it revealed a new low-cost iPad and upgraded the least-expensive iPhone, shows that Apple has started to compete on price as well. The tech industry should take note.
If Apple starts using its massive cash pile to undercut its competitors and deflate entire product categories, that's a big deal.
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On Tuesday, Apple dropped the price of a fine, fast, and big iPad to $330 — a price below similar devices from Samsung, Lenovo, and Microsoft. Apple already dominated the high-end tablet market, and just undercut many of its Android competitors.
Apple's iPhone SE got an upgrade, bumping its default storage up from 16GB to 32GB. It's not a full refresh, but it shows that Apple is still giving love and attention to even its cheapest iPhone.
The low prices for these two updated device follow a trend that independent Apple analyst Neil Cybart noted last week: Apple "is making its products more accessible through lower pricing."
His examples include AirPods at $159, which are priced lower than nearly any other wireless earbud. He also argues that Apple Watch is underpriced — at $269, it's cheaper than Android options from Samsung and Fossil.
In his excellent analysis, he offers several theories about this change in Apple's strategy. Accessories like AirPods or the Apple Watch could be loss leaders to get more people to buy iPhones, for example. Or Apple could just be getting better at making millions of units of any given product.
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But my favorite theory for why Apple is pushing downmarket so hard is because CEO Tim Cook wants to push upmarket too. From Cybart:
Consumer Segmentation.
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