My favorite pieces on this were by John Gruber:
The iPhone 5C has nothing to do with price. It probably does have something to do with manufacturing costs (which are lower for Apple), but not price. Apple’s years-long strategy hasn’t really changed.
As I wrote last week, strategy is about making choices, and Apple has decided to not even pretend to pursue market share, but instead embrace their up-market status.
…and MG Siegler:
But how is any of that going to help Apple sell more iPhones in China or India or in the developing world? It’s probably not. It appears now that this was always misdirection triggered by clueless reporting. Oh, Apple is working on a new, plastic iPhone? It must be a cheap one to sell in the rest of the world. Nope, it mustn’t.
Instead, what we get is a replacement for the iPhone 5. …
As a result, Apple can now offer customers something substantially sexier than “last year’s model” when they walk into a store looking for a $99 (subsidized) phone. At the same time, it eliminates the confusion that would have been caused by the iPhone 5s and the iPhone 5 looking nearly identical to one another (subtle gold, notwithstanding). And it likely keeps their high margins on the device intact. It seems like a win-win-win for Apple.
It’s hard for Apple to surprise us with iPhones anymore. The supply chain has grown so large that parts start to leak months in advance, and by the time Apple holds an event to reveal them, we’ve already seen fully-assembled models on rumor sites.
Before yesterday’s event, we thought we had the 5C all figured out: a brightly colored, plastic, cheap iPhone 5 revision to push for marketshare in lower-priced markets. And while we were correct on the hardware (which wasn’t hard), we were all proven wrong on the purpose of this device.
The iPhone 5C1 isn’t the new low-end model: it’s the new mainstream iPhone. It’s the one Apple’s promoting more, marketing more, and making available for preorder. This is the new iPhone, and as customers and the press have repeatedly shown, a new external design is all that really matters when defining “new”.
The 5S is the Retina MacBook Pro of the iPhone lineup. Many of us will buy them, but they won’t be the best-selling model, and Apple doesn’t want them to be.
Apple’s intentionally pushing their flagship product downmarket. They’ve lost a lot of sales over the years because the iPhone was too good: people who didn’t want to spend $200 and up for a contract phone, people who thought they didn’t need a high-end phone, people who thought the iPhone was too fragile for their lifestyle.
The new 5C, and iOS 7, looks more casual and costs $100 less. The message is clear: this is a phone for everyone. Whether that holds up remains to be seen.
While the 5C looks solid and they’re going to sell an assload of them, I’m skeptical of some parts of this strategy: in particular, I think not making a larger-screened iPhone yet is a mistake. Not addressing the lower-cost market might also prove to be a poor investment in future marketshare. And the 5C doesn’t seem cheap enough to take a smaller subsidy and develop strong carrier-retail incentives, a strong growth strategy employed by manufacturers and carriers for Android phones for years.2
The biggest surprise at yesterday’s iPhone event was how unsurprising it was, even relative to my own low surprise-expectations having seen the leaked parts.
(Of course, the 5S looks awesome and I can’t wait to get one. But that doesn’t matter as much as it used to.)
I’m going to stick with “5C” and “5S” instead of “5c” and “5s” for a week or two to see if Apple relents, like they did after a few days with “3G S”. ↩
Anyone walking into a Verizon store in the U.S. asking about the iPhone since 2010 has probably had a salesperson try to talk them out of it. This is why: salespeople make more from the higher commissions on most Android phones.
This has been one of the biggest drivers of U.S. Android marketshare. (It’s also why Windows Phone never took off — it had neither Android’s carrier retail incentives nor the iPhone’s strong customer demand to overcome their absence.) ↩