The case for a lower-cost iPhone 5C – plus what Apple’s iPhone lineup and prices may look like this autumn

“If Apple does unveil an iPhone 5C, I expect them to concurrently abandon the iPhones 4 and 4S,” John Gruber writes for Daring Fireball. “Their three pricing tiers for the next year would be a new iPhone 5S at the high end, today’s iPhone 5 in the mid-range, and the new 5C at the low end. This way, all new iPhones would sport 16:9 aspect ratio displays, and all would have Lightning adapter ports. Adios both to 3:2 displays and the grody old 30-pin port.”

“The other factor is that I think Apple needs to push the low end of the iPhone lineup even lower. Today they’re primarily selling the low end models as free-with-contract devices. Apple has no iPhone that competes well in non-subsidized markets. In the U.S. and other subsidized markets, I expect the 5C to be sold just like the iPhone 4 is today: ‘free’ with a contract,” Gruber writes. “But in non-subsidized markets, I expect the 5C to sell at lower prices than an unsubsidized iPhone 4 does today.”

Gruber writes, “I think Apple could build and sell an iPod Touch-caliber iPhone 5C for $399, possibly as low as $349… If Apple is functioning properly, this shouldn’t be a concern. I expect the 5S to offer performance and camera upgrades that should clearly set it apart from a 5C model with iPod Touch-caliber specs. The camera alone might be worth the difference. The long-rumored fingerprint-scanner-built-into-the-home-button would be another. What I’d consider a red flag, a sign that perhaps we should start being worried about post-Jobs Apple, would be if Apple crippled the software on the 5C to diminish it against the 5 and 5S.”

Much more in the full article – recommendedhere.

MacDailyNews Take: If so – educated guessing now – Apple’s iPhone family this autumn would look something like this (prices are with a 2-year plan, followed by the unlocked and contract-free price in parenthesis):

High-end (black or white – or “smoke” or “silver,” see explanation below):
• iPhone 5S (32GB) – $299 ($699)
• iPhone 5S (64GB) – $399 ($799)
• iPhone 5S (128GB) – $499 ($899)

Mid-tier (black or white):
• iPhone 5 (16GB) – $99 ($499)
• iPhone 5 (32GB) – $199 ($599)

Low-cost/Pre-paid (choice of six colors):
• iPhone 5C (8GB) – $0 ($349 or $399)

That gives iPhone customers a gamut of $0-$499 (with 2-year plan) and $349/$399-$899 (unlocked and contract-free).

One other thing we’d like to see is delineation in color for iPhone 5S vs. iPhone 5.

iPhone 5S should be set apart from the previous model. Where iPhone 5 is black or white, if Apple made iPhone 5S, say, “smoke” or “silver,” or whatever floats Jony’s boat (hold the pastels, please), it would help sway the types of customers who stuck with iPhone 4 instead of upgrading to iPhone 4S – or even purchased the less expensive 4 instead of the more capable 4S – because they were indistinguishable on the outside.

We’ve always believed that not making a distinguishable exterior change on the “S” models was a mistake that left iPhone sales on the table.

35 Comments

  1. As already discussed, if the new iPhone 5C is going to cost as much as iPhone 4 costs now — $399 — then there will be no difference from how Apple sells iPhones usually: because price is the key, not the fact that Apple will, for the first time, release new “inexpensive” model rather than to downgrage iPhone 4S to be in that price range instead of iPhone 4 that is going to be phased out.

    So to make real difference in sales quantity, Apple has to price iPhone 5C no higher than $299.

    1. Apple iPod touch 16 GB (5th generation) has the basically same innards (minus cellular controller) as iPhone 4S and the upcoming iPhone 5C and it sells for about $299.

      This means that if Apple will release iPhone 5C 8GB and will sell it for $299, it will still have great margin: even though cellular controller adds to the cost, less flash memory and cheaper plastic case compensate for that.

      But lets see; we will know for sure in three weeks.

    2. iPhone C would work well with discount mobile operators: Virgin Mobile, Mobi, etc… those who dont need the very top of the line but want quality hardware.

      I think once the 5S ramps up enough… the 5 is done… just my opinion…

  2. “We’ve always believed that not making a distinguishable exterior change on the “S” models was a mistake that left iPhone sales on the table.”
    Yet iphone 4s had record breaking sales!

    1. Of course, that doesn’t mean sales weren’t left on the table. I know at least three people who stuck with their iPhone 4 units because “the 4S looks exactly the same.” All three upgraded to iPhone 5. If 5S looks the same as the 5, they’ll skip this upgrade, too.

      (Brought to you by Carl’s Jr.)

      1. You can’t infer that they skipped the upgrade to the 4s just because of physical appearance. I skipped it because the only FUNCTIONAL difference was siri, which I could live without, and so I wasn’t willing to blow my free upgrade for. I upgraded to the 5 because of the better screen, camera, and processor, not because it looked “new’.

        I think that the 5s will do great even if the looks stay unchanged, as long as there is something significantly different functionally such as the fingerprint scanner and mobile payments.

        1. I don’t need to infer it, all three told me they were skipping iPhone 4S because ““the 4S looks exactly the same” as their iPhone 4 units.

          (Brought to you by Carl’s Jr.)

          1. Those three individuals sound shallow if looks are the reason for skipping the upgrade. Do they buy other products based on looks and visible branding rather than quality and suitability?

  3. “Gruber writes, “I think Apple could build and sell an iPod Touch-caliber iPhone 5C for $399, possibly as low as $349…”

    Price by itself means nothing is you’re not getting much for your dollar with the “5C”. Depending, it may make the 5 or 5S a better deal or even a competitors.

    Tim may surprise all. He may be better at keeping secrets than Steve; just look at the new Mac Pro.

  4. I happen to agree with the presented iPhone family, I think they might still include an iPhone 5S 16gb model. Othman that I think you are probably right on +-$50 on pricing. If there isn’t a 16gb iPhone 5S then I will have to opt for a 32gb model if it comes out with all the features we are wishing for. But it really doesn’t matter because I will always own a mobile device manufactured by Apple! And I do hope that they come out with unique iPhone 5S colors because that will most definitely fuel sales (mine included). And if the home button rumors are true that will set the 5S apart as it is rumored to be sapphire!

  5. The 5C MUST sell for no more than $350. Above that, Android will continue to dominate market share. Below that and Android is DOA. If I were running Apple I’d take a hit on margins to destroy my competition (5C for $330 and they simply won’t be able to make enough of them)…

  6. I tend to believe that we’ll only have 2 distinct iPhone models this time around. The high end 5S available in 32, 64 & 128GB capacities, and the 5C available in 16GB only. I think the 4, 4S & the 5 will all be phased out in September. We shall see in 4 weeks…

      1. Music and games for starters. I have over 40GB worth of music, plus some of the iOS game apps these days are easily over 1GB each, especially the ones that are iOS universal binaries. That doesn’t even count if you’d like to take a few videos and podcasts along too. I know I’ve already eaten up most all of the space on my 64GB iPhone already.

  7. That last sentence in MDN’s take = truth. I have always thought that Apple needs to make just a minor exterior change in there “S” models. My sprint contract happens to fall on the years with “S” models so they will probably be all I ever buy. So far, I’ve been very disappointed when the phones look exactly alike. The public wants something new and exciting to look at during those classic keynote presentations.

  8. You heard it here first: Apple will drop the 4, 4S and 5. The new lineup will be only the 5S and 5C. Both will have fingerprint readers; sharing money between devices and merchants will be a big deal on these phones and Apple doesn’t want a single person to be without that capability going forward.

    1. It does make sense that Apple would want payments to be on every phone they sell, just like every phone has access to iCloud/iTunes. The potential revenue stream is simply too big.

      I guess the big question is: is this payment system ready? If it is, it makes sense to have the sensor on both phones. If it’s not ready, they could keep it on the higher end phone for the easy access functionality. In that case both phones would get the sensor next year, when liquid metal is the differentiating factor.

  9. Another possible scenario – Apple discontinues the iPhone 5 and releases an iPhone 6 and iPhone 5C (which will be the iPhone 5 but with a cheaper plastic back). They then move to this pattern in future – the iPhone 6 gets repackaged in plastic and becomes the iPhone 6C at the same time as releasing the iPhone 7.

  10. The lineup will be more like:

    • iPhone 5C (8GB) – $0 ($399)
    • iPhone 5C (16GB) –$99 ($499)

    The iPhone 5C will be technical a iPhone 5 in a new plastic casing.

    • iPhone 5S (16GB) – $199 ($599)
    • iPhone 5S (32GB) – $299 ($699)
    • iPhone 5S (64GB) – $399 ($799)

    The iPhone 5S will contain new, faster and more power efficient components in the metal casing of the iPhone 5.

    1. Quite possible. Apple can have an 8GB version of the 5C that is $0 with contract (maybe in white only), and a 16GB version that is $99 (in all the colors). And the fancy 5S is $199 (and up).

      So, there would be still be the same three tiers for pricing, but only two iPhone models.

  11. The current iPhone 4 goes for $450 without contract. $399 (or even $349) is NOT enough of a change to make this the so-called “cheap” iPhone. But as a lower-cost iPhone, for markets that do not use the subsidy system, the iPhone 5C will be more effective, because it presents a much better value (at a somewhat lower cost) compared to the current practice of offering a two-year-old design as the lower cost option.

    I expect Apple to eventually release a TRUE low-cost phone, that retails for $199 without contract (and to be used subsidized for “free” with low-cost wireless plans). At that price, it needs to be a phone is distinctly NOT an iPhone, but is still a highly desirable product, like an iPod nano is clearly not an iPod touch, but is still highly desirable for its target customers. The low-cost Apple phone cannot cannibalize potential iPhone customers; it must target customer who currently do not consider getting an iPhone due to high total cost.

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