Apple’s iPhone 5C isn’t for the U.S. It’s the iPhone for the rest of the world

“Reports suggest that Apple will introduce a cheaper plastic-bodied iPhone 5C on September 10,” Romain Dillet writes for TechCrunch.

“The 4-inch phone will supposedly replace the iPhone 4 and the iPhone 4S in the product lineup,” Dillet writes. “While the company will certainly gain market share in the lower-end spectrum of the smartphone market in the U.S., it’s just a side effect.”

Dillet writes, “The new model is the perfect iPhone for the rest of the world. In many countries, carriers are switching to unsubsidized, SIM-only plans and the iPhone is too expensive for regular people. U.S. carriers are the exception, not the rule.”

Read more in the full article here.

Related articles:
Morgan Stanley: iPhone 5C would hurt Samsung, propel Apple to top of China’s vast smartphone market – August 20, 2013
China’s ‘sweet spot’ for Apple’s iPhone 5C is $486, survey says – August 20, 2013
The case for a lower-cost iPhone 5C – plus what Apple’s iPhone lineup and prices may look like this autumn – August 14, 2013

42 Comments

    1. Yeah but the article regards those sales as a mere side effect, as if Apple’s motive is to simply sell cheap phones to the Chinese while they don’t really care about 5C performance in America. I believe it’s the opposite; the 5C was designed for Americans while global sales will be the welcome side effect.

      1. I think you’re completely wrong. Apple already has a free iPhone 4, a $100 iPhone 4S, or a $200 iPhone 5 in the U.S. It doesn’t need a “cheap” iPhone in the U.S.

        Most of the world does not have a subsidized phone model, and thus an iPhone 5 costs $900. It’s competing with Android devices costing $300-$400. That’s a lot of money for many people in many countries.

        A cheaper iPhone puts Apple into direct competition with Android phones around the world. That is huge for Apple. Now people can get into the iOS ecosystem, buy apps, get settled, and eventually move up to the luxury iPhone 5 (or 6 or 7 or whatever).

          1. I didn’t even consider going to a smartphone until better prepaid options became available this year. I’d done the math, and did not want to get saddled down with a contract and high monthly charges.

            Americans have become conditioned to only looking at the upfront cost, and since we’ve been paying high cell plan rates for years, not too many people care about paying more up front in order to save more in the long run. The telcos market to this, with all the TV ads only showing the $199 or “free” or “buy-one-get-one free” charge. Even on their websites, you have to dig through a lot of cruft before the sites will even show the full retail purchase option.

            T-Mobile now offers a $30 prepaid plan with unlimited text and data, and 120 voice minutes. Considering that I currently use a prepaid plan ($25 for 90 days @ $0.10 per minute) and hardly ever use up my voice minutes, the T-Mobile plan is all I’d need, and that’s all I want to pay for. Now, I’m just waiting for the unlocked iPhone 5S to come out.

            1. Do you think the average american is even aware that the price of the 32GB iPhone 5 is well over USD 900 (DKK 6.100) unsubsidized? (I find that _extremely_ expensive.) Yet they are selling like hot cakes over here. And I guess that what people actually wants to pay for is the iOS experience, and they would not mind having that packed in a much cheaper (price-, build, and style-wise) piece of hardware. (I still stick to the 3GS, despite it’s killing slowness.)

            2. The price that the average American sees is “$199” for an on-contract subsidized phone. That was my point. On the carriers’ websites, and even on Apple’s site, you have to drill down to find the retail purchase option.

              A factory unlocked 32 GB iPhone 5 costs $749 in the U.S. Some carriers will sell that phone for less, but the phone is locked into their network even if you pay the full price up front. If you want to unlock the phone and use a different carrier, you still have to go through a bunch of red tape.

              With an iPhone 5C, Apple can make huge inroads with the majority of consumers around the world who choose to pay for the phone up front and see the actual unsubsidized price. The 5C would not have much of an impact on the U.S. market, unless it becomes Apple’s default “free” on-contract phone.

              The system in the U.S. orients around hiding the actual cost of the phone, while locking consumers into long and costly contracts. Domestic carriers typically don’t advertise the monthly plan charges because they’re not cheap. They would rather focus on the low initial cost for the phone itself. Unfortunately, American consumers have become conditioned to the higher plan costs, and the carriers take advantage of this. Unless T-Mobile’s more transparent cost setup (in which consumers pay for the phone up front and choose a lower cost plan) catches on, the U.S. market will continue to be dominated by variations of the same contract tie-ins and subsidized phones.

          2. I prefer to pay as I go. I dislike being locked into a contract, and I especially dislike the fact that the payment for the phone subsidy continues indefinitely, even if you don’t upgrade your handset (and lock yourself into another two-year contract). The contract/phone subsidy model works well for cell providers and handset makers. But it takes advantage of consumers, especially those who are mathematically challenged.

  1. Very true. The world works in a different way, unfortunately.

    For Apple to retain leadership worldwide, a low cost version is required.

    Otherwise, iOS might go the way the Mac went back in the 90s for not getting traction because of pricing.

    Apple doesn’t build crap, but let’s face it: And old iPhone is better than a new Android cheap phone. Why not building a cheaper phone? Makes perfect sense to me.

        1. When I think the article is interesting enough that a comment would add to the thought.

          Comments can require a response: Some to agree, some to disagree. Others, to call out their asininity.

          A jester unemployed is nobody’s fool! &mdahs; Hubert Hawkins

            1. How did you know my goal was to become unemployed eventually? 😆 Where I’ve worked for the past 25 years, we call that “retirement.” On the other hand, I may still do the odd consulting job; my standard rates right now are $1,000/hr, minimum 10 hours. (Although I’ve had to cut back a bit so as to not interfere with my ‘day job.’)

    1. Newsflash, pal, the world rotates around its axis, not America.
      There are markets out there with millions of potential customers eager to own an iPhone, who don’t have a sense of entitlement like you.

      1. w/ Rorschach

        the 50 billion dollar China market is a perfect example.
        We might very well see the less expensive – so called iPhone 5c first available only in China, then followed by India; eventually coming to America.

        Well said Rorschach.

    2. Baloney. Apple now releases iPhones in dozens of countries at the same time. The fact is Apple is an American company, and to roll out many products or services in multiple countries at once is phenomenally difficult in dealing with government regulatory approvals.

      Samsung does the same thing — it releases in Korea first, then usually Europe, followed by the U.S. Pretty common industry practice.

      1. But it’s been 44 Presidential administrations, back to back! Nonstop rule by Masonic white male executive plutocrats. Surely a marathon like that takes its toll, even on the most resilient of peoples.

    1. Right, BLN…the current administration is responsible for everything bad. Everything was just peachy heading into January 2009 and an inept, divided Congress hamstrung by a GOP coalition hellbent on obstructing anything and everything supported by Obama regardless of merit had absolutely no impact on the past five years.

      You live in a strange fantasy world.

  2. Very much so. And even in the US, T-Mobile seems to be leading the way with contract-free, subsidy-free plans.

    And perhaps the rest are finally figuring it out.

    Fundamentally, it isn’t a major difference; the good phones will still cost above $600, and you’ll still have to put up some $200 when you get that new phone. The difference is that at any point in time, you have a very clear idea how much you still owe on that phone. When you pay it off, it is paid off, and the monthly rate goes down. More importantly, you aren’t wasting some $100 (over the course of the two-year contract) on unnecessary taxes. Under a two-year subsidy plan, the monthly payment is taxed as wireless service (in some states well above 20%). Under T-Mobile’s model, you DON’T pay tax on the interest-free loan for the phone; only the actual mobile service is taxed at the high rate. The phone is taxed as it should be (retail tax, in some states below 3%), and the difference in this tax is quite hefty for a $650 phone.

    Perhaps Verizon, AT&T and Sprint will figure this out too, one day.

    1. I read through many of the comments to this article. While some people were not from the U.S., most who were steadfastly refused to ever pay $900 for a phone — yet many already stated they had an iPhone 5, Galaxy S4, etc. They’re too stupid to know they are paying for the phone, just doing so on a monthly payment plan AND they never stop making those payments even if the phone is paid off (they just are eligible for a “free” upgrade).

      I think such a change is on its way to the U.S., because the carriers have to be tired of people freaking out when they have to pay full price for a replacement phone when they lose/destroy their current one. A friend’s son just had his month-old Galaxy S4 stolen from his pocket, and the replacement cost was $869. I think that if he had to pay for the phone and his son knew how much it cost up front, he would have been more careful with it and the replacement cost wouldn’t have been such a shock.

      1. I stopped buying my iPhones on contract some years ago. It’s much cheaper to buy an unlocked iPhone outright and then take out a SIM only contract. Here in the UK, I pay a lot less that $15 per month for the SIM only contract and get 500 mins of calls, a thousand texts and 1GB of data per month.

        As iPhones are solidly constructed and receive OS upgrades for many years, it’s practical to keep an iPhone for more than four years if I choose to, so the cost of buying it spread over that period is very low and being an iPhone, it’s still worth a reasonable amount of money when I decide to sell it and buy another – which I do at a time of my choosing, not when a contract expires.

      2. w/ Bizlaw

        Excellent analysis. For a lot of people buying the iPhone or Galaxy out right is seen as far too expensive. Yet, do the math and you will find under a contract you pay about twice as much for your phone.

        Next, for all those who bought into a Samsung, consider that 2 or three year contract to a phone with NO UPGRADEABLE system… iPhone is the better choice as the upgrades will out live your carriers contract.

  3. Perhaps the “C” is for China… This could be the phone for the rumoured deal with China Mobile, supporting their unique wireless standard and built to a price, and with functionality approved by the Chinese government…

    1. While possible, it makes no sense for Apple not to make small changes to the radio in the 5C and make it available worldwide, particularly in India, Brazil, etc.

  4. The new cheap iPhone will not cost significantly less than the current cheap iPhones – not here or overseas. Switching from metal to polycarbonate casing wouldn’t knock the price down more than $150. Battery life, display quality, and speediness are all critical to the user experience – and lead to the bulk of hardware costs. Anything that would lower the cost significantly would lead to a lower quality product than Apple is willing to release (If you think Apple will tarnish their reputation for quality products to win over cheapskates, you haven’t been paying attention.)

    Apple already sells iPhones $200 cheaper than their flagship model. The article does nothing to try to explain the thing Apple is actually changing – using a new type of iPhone as the discount option instead of previous models (which has been the very successful strategy up until now). The only good reason I can think of is Apple wants to accelerate the adoption of 4″ screens, and they are so intent to reduce screen size fragmentation, they will absorb the upfront costs to develop and manufacture a new type of cheap iPhone.

  5. One thing I CAN understand is Apple pulling the 4 series of everything off the market. Apple wants to be able to integrate iOS 7 into ALL its currently sold devices.

    This means that it makes sense for an iPod Touch 5 release.

    I also suspect Apple will take this strategy into the future where the ‘cheap’ model for sale will no longer be the old model. We shall see!

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