Tech, Autos, & Gear in Layman's Terms Since 2006

318

September 11, 2013 • Editorials

Reading the Tea Leaves on the 5c Launch

Why did Apple release the iPhone 5c? Was it to create a cheaper iPhone? Attract a different audience? Offer some diversity to the product line? And whatever combination of reasons might have been behind the move, why does it seem like there's a high expectation of failure? The specter of Apple's stumbles in the PC market and the rise of Android weigh heavily on the 5C/5S release.

It's not a secret that many people were disappointed with the launch. Analysts and journalists who predicted a cheaper iPhone are pulling their hair out, and Apple-focused blogs are running in circles trying to parse out where the 5c fits in the Apple lineup. There are a few ways a 5c could fit, but there are also many, many potential risks along the way.

Cheaper iPhone

The ongoing theory was that the 5c would be a cheaper iPhone designed for the emerging markets. Obviously, unless Apple has a very odd sense of “cheaper”, the $550 unsubsidized cost of a 5c is hardly cheap. It looks cheaper against a $650+ 5s, but that's a bit like saying a BMW looks cheap compared to a Bentley … for many people both cars are so far out of reach that the difference between them is irrelevant. A smartphone buyer that is price-sensitive isn't going to look at phones in the $500+ range, when a decent mid-range phone can be found unlocked for $300-$400 without much effort. And if you are going to shop for a phone in the $500 range, and you're a price-sensitive consumer, you can snag a phablet like the Note II, knocking out your tablet and phone needs at once. Now, it seems likely based on Apple's presentation and pricing that the 5c was never intended to be cheaper — that was a rumor that developed into a full-fledged theory/expectation. So we can rule out cheaper as the market for the 5c.

New Audiences

A bright, colorful, new phone at $99 subsidized is pretty attractive, especially for first time smartphone buyers. I've had many people over the years tell me they bought, or plan to buy, the older generation iPhone when the new one is released, because they aren't power users and would rather spend less and get slightly older tech. There's also the argument that colors are more attractive to a younger crowd that might otherwise be lured to the Android side. But why not just offer the 5s in multiple colors as well? Is the 5s intended to be the more mature, high-end phone, and therefore it doesn't get flashy colors?

What's old is new

By discontinuing the 5 and releasing the 5c/5s, Apple creates “choices”. I put that in quotation marks because the 5c still fulfills the same space the 5 would have-it's the cheaper phone on contract, but the 5s has specifications that are superior for only $100 more, a tiny sum across the typical two years (and longer) that a user may own a phone. So when you walk into a store and have several combinations, instead of two colors and three storage capacities, it's still a case of older tech vs newer tech. Unless you have a burning desire to own a pink phone, and you can't or won't use a pink case, you're better off buying the 5s. At the same time, if consumers are driven to the lower phone cost on contract, now Apple can put up sales of new iPhones across the board, instead of sales of existing models and new models…everything old is new again with the 5 to 5c transformation!

Deja Vu

Then there's theories like the one Boy Genius Report advanced-that Apple's move with the 5c was too cautious, and by favoring margin over marketshare they're risking a repeat of their past, with Google and Android taking the Microsoft/Windows role. In some ways, on-contract buying mitigates this, because it puts the 5s on the same pricing level as a Galaxy S4. And with the 5c at $99, they cover the lower-end Android market pressure as well. But when you get into the developing markets and off-contract purchases, where Android can hold significantly lower prices, there's risk. What makes this strategy really risky is how dependent smartphones are on software and cloud services. For basic smartphone functions, the bottleneck is in the cloud, not whether the phone can competently run email, Facebook, and a basic camera app. Right now, it's more profitable for a developer to focus on iOS, but if that tips (and I believe it will at some point), the app advantage disappears. And when you can capture something close to app parity with iOS, but with a phone that costs several hundred dollars less, how much of a bite does that take out of Apple's marketshare?

So those are my concerns and thoughts on the iPhone 5c and 5s launch…what's your take?

10 Responses to " Reading the Tea Leaves on the 5c Launch "

  1. gorkon says:

    The colors of these shoot right for the teen and preteen markets. I just need to get a moment with my son to show him! 🙂

    He has an iPhone 4s and loves it. He’s just as obsessed with it as most adults. I am not sure he’d like these colors though. They are too girly he said.

    • At which point I’m sure you reminded him that calling something ‘girly’ in a derogatory way, just like calling someone ‘gay’ as an insult, is inappropriate and unacceptable. 🙂

      • Bryan Eley says:

        Guess he should have said “Based on Western marketing and societal color conditioning I have been exposed to, I deem these colors to be more aligned with those of the stereotypic XX chromosomal phenotypes.” 🙂

    • Carly Z says:

      I think its hard to assign a gender to bright colors. Especially neutrals like white and yellow, and more traditionally “boy” colors like blue and green.

      Sent from my thumbs

      • Bryan Eley says:

        I would agree. There’s a lot of context in color assignment to various things, and gender assignment by color seems more entrenched in recent years. I like green, in more of the yellowish shades or lime greens. I don’t know if it’s “masculine” or not, it’s just the color I like.

        I do remember going to a local toy store with my kids when they were younger, and one section was for girls, with EVERYTHING boxed in bubble gum pink or bright purple. The difference between the earthy colors for boys was startling.

        • Carly Z says:

          Luckily there’s a ton of pressure on toys r us and other retailers to be more gender neutral.
          As a kid I hated pink…it was hard being a little girl who cried at the color pink!
          Sent from my thumbs

  2. loopyduck says:

    >But when you get into the developing markets and off-contract purchases, where Android can hold significantly lower prices, there’s risk.

    In the case of China, we also have pure insanity. Apple will be selling the base model 5C for the rough equivalent of $750! Yes, you read that correctly: the 5C will cost more in China than the 5S in the States!

  3. Doug Miller says:

    Plenty of people predicted that the 4s, and then the 5, would sell terribly. They were wrong.

    Both the 5c and the 5s will sell tons, plenty enough to rake in tons of profit for Apple. The 5c is brilliant – rathe than try to sell “last year’s” phone as the mid-tier, now they have a new, never been sold model to sell at that level. Simply brilliant.

    I do wonder if apple will start thinking about a more aggressive, annual refresh of their top of the line rather than keep the same style through a major and then “s” upgrade ove two years. Still, I think the 5s is better-enough than last year’s 5 to be a good flagship going forward.

Leave a Reply