iPhone 5C: Why A Cheaper iPhone Is Bad For Apple In The Long Run

September 12, 2013, By Sameer Kumar

The big iPhone launch is done and dusted and the world saw the unveiling of a brand new iPhone 5C, 5S and of course a look at the iOS7 that will be available for download in a week’s time. While the big talk so far surrounds the brand new smartphones, one assumes it will be the OS that will make the most impact in the long.

iPhone 5S and 5C Launch

If there is one thing about Apple that simply does not disappoint its millions of users, it is that sleek OS which seems to deliver every single time. But the launch of the iPhone 5S and the much-anticipated 5C seems a bit weak at this point of time. Why? It is pricing of the new iPhones that has many wondering what Apple is trying to do.

Cheaper iPhone?

This is what was widely talked about before the big unveiling. Sure, we all knew that Apple was planning on a cheaper iPhone, but how cheap would it really be? Turns out, not that much! The so called ‘cheap iPhone’ coming in a multitude of candy colors costsa  good 4,488 yuan ($733) in China. Now that is anything but cheap! With the 5S priced at 5,288 yuan ($864), it seems unlikely that many new consumers in the emerging markets will move towards Apple, just because of the new launch.

Price of iPhone 5C and 5S in China

Both the 5C and the 5S models set to be launched in other foreign markets like India and Australia seem to have similarly unreasonable price points. While that is something we traditionally have come to expect from Apple, it is a bit strange considering that the 5C was supposedly a handset for the emerging Chinese market.

Apple is a Premium Brand

That is a statement you would have heard enough from both from the company and its legion of loyal supporters. But here is the conundrum. If Apple is a premium brand where quality and brand image are placed above mere pricing, why launch the iPhone 5C at all? The question becomes even more perplexing when you think a 16GB iPhone 5S in the Chinese market has the same price as a 53GB iPhone 5C.

Steve Wozniak Apple Wow Factor

Apple is all about the ‘prestige and the cool factor’. It is this carefully built aura by Steve Jobs that sells majority of Apple phones and tablets. Wouldn’t a Chinese consumer capable of spending 5,288 yuan just take home the more high-end iPhone 5S? Or does Apple feel an additional 16GB of storage is all it takes to compensate for the lack of a flashier camera, fingerprint reader, a better processor and a better case?

Perception is Reality

We are not here to discuss whether a certain Samsung mobile or an Android-running smartphone is indeed better than the Apple iPhone or not. Those debates can go on forever without either side budging an inch. But in the business world perception is often reality. Wednesday saw Apple stocks take a dip of 5.4% as they lost $26.93. While that does not mean they will shut shop anytime soon or even get close to it, the dip shows how the markets interpret the 5C as a business decision.

Apple stocks dip after 5C Launch

Image courtesy CNNMoney

The iPhone and the iPad have always been exclusive products for the select few. There is no necessity for anyone to be apologetic about it. But with the iPhone 5C Apple has just diluted its own brand. And ironically, it has done so without actually putting out price points that give it the best returns. With media touting the ‘cheaper iPhone’ tagline, it seems the cool factor is compromised without actually the prospect substantial gain in new market share.

Apple = USA?

While people would like to believe that the 5C is for the emerging markets, it seems more like a strategy that will get more domestic users to shift to Apple. At the end of the day, they will still have t pay for a full 2-year contract. The $100 that the 5C saves up seems just cosmetic as it is no more than 5-10% of the total cash spent on an iPhone purchase and a two-year deal.

Apple USA colors

 

Image

This time around, instead of an old iPhone, consumers in the US can get a brand new one (iPhone 5C) for that $99 price tag. In essence, this still seems like a perfect launch planned for the US holiday season!

Think Different, Remember?

This is the biggest gripe many have with the 5C. Apple has never been about cheaper products. Their strength is innovation and revolutionary devices that offer high quality and great aesthetics. Why not leave the cheaper bit to others and work on your strength? Apple needs to realize that those who ‘aspire’ to buy the iPhone or iPad (even in the emerging markets) simply have enough resolve to save up and buy one.

Apple iphone 5C iPhone 5S Spec Sheet

This branching out might give Apple short term gains. But in the long run it could do more harm than good. Somebody at the Cupertino Headquarters needs to flip over the Steve Jobs manual that says get new products into market first. The launch of 5C for now looks more like a frenzied reaction to growing Android and Samsung market share than a real strategy.

Apple Think Different!

 

The message to Apple is simple – Innovate to stay ahead. And please don’t ask us how. It is not our job as paying consumers!

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