Apple attacks two key markets; price on iPhone 5c, speed on 64-bit iPhone 5s push the envelope

“Apple Chief Executive Tim Cook went after the company’s two most important markets aggressively on Tuesday, providing a cheaper iPhone for developing markets and a more-powerful one for high-end buyers,” John Shinal writes for MarketWatch.

“The pricing of the iPhone 5C, $99 for a 16 Gigabyte-version and $199 for a 32 GB phone, will give Apple the opportunity to compete more effectively on price in places like China, where it’s a niche player lagging No. 1 handset maker Samsung by a wide margin,” Shinal writes. “Simultaneously, the company rolled out another phone, the 5S, with a 64-bit chip that the company said was “twice as fast” as the processor in the existing iPhone 5 — which the company is killing off. Cook’s decision to replace a product that’s just one year old — rather than keep making it at a lower price, as Apple has typically done — suggests he’s focused on improving Apple’s falling gross margin.”

Shinal writes, “The much-faster processing speed of the A7 that Apple is touting, if true, is going to bury sales of the old iPhone 5, whose operating system is suddenly slow. Of course, Apple, by re-configuring its iOS 7 mobile operating system to run on a 64-bit smartphone chip, has also pushed the innovation envelope against its rivals. With a chip this speedy, Apple is going to get a surge in interest from mobile game developers”

Apple's all-new iPhone 5s
Apple’s all-new iPhone 5s

 

Apple's new iPhone 5c
Apple’s new iPhone 5c

 
“Apple has just produced two new products that will likely appeal to both budget-conscious and affluent smartphone consumers throughout the globe,” Shinal writes. “If the Apple marketing machine can be as effective with them as it has with past models, look for Apple’s year-over-year sales growth in the fourth quarter to accelerate.”

Read more in the full article here.

Related articles:
Apple reveals flagship iPhone 5s with Touch ID, the world’s first and only 64-bit smartphone – September 10, 2013
Apple unveils iPhone 5C; pre-order September 13th, on sale September 20th – September 10, 2013
Apple to release iOS 7 with completely redesigned user interface on September 18 – September 10, 2013

66 Comments

    1. Yes and Apple addressed the photo issues. The night time and indoors photos have been very poor. I am buying one for just that reason.

      The stock tanking again prior to the China Mobile in a few hours is stupid. Timmy, I am still “patient” but even I have my limits.

      1. It’s no surprise that iOS 7 wasn’t released yet. Apple did the same thing when iOS 6 was announced. If you can’t wait 1 week, then buy a Samsung and go away.

        The big question is what will the 5C cost unsubsidized.

        1. $550
          Priced in the Apple store (look below the subsidized prices)
          It’s not really a surprise (given that it is basically an iPhone 5 in a plastic case)
          I was thinking they would perhaps do a version of the iPhone 4 with the long screen and updated radio chips, and go for the bottom but no, The 5c is an iPhone 5 through and through. (and when has apple ever gone for the bottom?)

      1. I disagree, I think it is a massive attack on the galaxy 4

        Between the two, the 5c is clearly better hardware for $100 less (unsubsidized) And when you add in the iOS advantage over android (with it’s fragmentation & looming malware issues) it is a slam dunk.
        Only a massive apple hater would pay $100 more for less phone.

  1. Price…not so much. The took an iPhone 5, put a plastic shell on it, and kept 16GB of storage instead of the standard 8GB from past years. Keeps the margins up, but not really any cheaper.

    But maybe it’ll work from a marketing perspective.

    1. I’m with you. At first blush it looks like Apple really dropped the ball here. I think we all expected a lower-priced iPhone 5C. But as usual, Apple is in business to make money so they are concerned about margins. Price structure of the 5C seems awfully high in particular when compared to the 5S. Looks to me like they goofed. But I don’t work there. They didn’t invite me to all the meetings for the last 12 months (although I think they should have). It’s not that far from Burbank. But then I would know the release date for the larger iPhone next year. And I think they wanted to make sure that I moved up to the 5S from my 4S. I think they have been forced by market pressure to do something to compete with the Android phones and make more headway in the emerging markets. This is what they think will work. On the surface it doesn’t look good to me but I think we should give it time. Knowing Apple, you know they have put a lot of thought into this 5C. They are fairly good at marketing. And remember, they can reduce the price in the future. They do have a plan. Of that we can be certain. Just like everything else in life, only time will tell if it is successful or not. They don’t always do everything right but I think they have thought this out and this is the best they can come up with. There will be a larger iPhone next year so the 5C will definitely be the low priced phone going forward. They will be able to crank out 5C’s for a few years. Maximizing the production run monetarily. They do think beyond today. Maybe there is some surprise coming with China Mobile and pricing? Or maybe it is what it is and they simply intend to keep margins at a respectable level? We’ll certainly know how things have worked out by the first of next year.

  2. I thought the the most significant performance increase with 64-bit processors occurred when the processor addresses more than 4 GB of memory. I have seen no indication that there will be more than 4 GB of RAM so what benefit does 64-bit offer other than capturing headlines?

    Please inform.

  3. At $550 the 5c is NOT cheap and will NOT be a success in China. You can forget about it. They’ve dropped the ball (keeping the price high like the Mac and getting only 20% market share). This is going to KILL the stock price…

      1. The market loves when a company loses on every sale ’cause, obviously, it can make up for it in volume.

        Apple clearly doesn’t know what the hell it’s doing! If it wants to be successful, it has to be sure to lose money.

    1. Maybe adding color options is actually more important than reducing the price in winning over consumers in Asia. Are you sure you really understand Chinese consumers, beyond Eurocentrically assuming they are all poor?

      1. The whole point is that they desperately need a MID-tier phone, not just top-tier. They could have lowered their margins and still made money and destroy Android. Instead, they will be like the Mac- 25% market share. Too bad…

  4. But the $99 price is only in USA, for a subsidized model. In China it will not be subsidized, so the price will be dramatically higher—much higher than other smartphones. So if China is as important to Apple as they claim it is, they need to find a way to lower the price!

    1. It’s $100 cheaper than the Moto X, to which it compares feature-wise. I’m glad Apple didn’t make a piece of crap to sell for peanuts or apply Amazon economics to their decision-making process.

    2. There was a study done that showed that a significant fraction of Chinese consumers would be willing to pay as much as 4000RNB (~$480) for an iPhone. I’m sure it was research similar to that which explains why Apple didn’t go cheaper than it has with the 5C.

  5. Was hoping for a surprise and/or a great cost for the c and didn’t get it. Oh well, a solid evolution of the line, and margin maintenance for them. At least we can get iOS 7 in a week. And maybe the fingerprint thing will be a bigger deal than it seems now.

  6. No price change has happened, when a new iPhone comes out the previous version drops 100 dollars, which is the same thing we are looking here, the only thing that does happen is that now there is a difference between iPhone 5 and 5S.

      1. Two years of nothing new. Thats what. Everyone has a phone and most people do not need to upgrade. I don’t see this as any reason to upgrade. Big Whoop is right. If you’re an investor, like I am, and a fan, this is a BIG let down. Wow, they made a dumbed down version of the iphone 5. Like I said, i have had no reason to go to an Apple store in months. Everyone already has a phone. It’s just a phone after all.

        1. “Everyone has a phone…”

          Yea, right. Last time I checked smartphone percentage was nowhere near 90%.
          It’s at 50% . That’s a bunch of new customers for Apple to still sell to.

      2. What would Apple be if it didn’t have its haters. Let them spout. Who cares what they say? Their idiocy didn’t concern us in 1997, or 2003, or 2007, or 2011. Why should we care now?

        1. I agree let the haters scream all they want – When they have screamed the loudest is when the Apple products did the best and it shut them up. These things will fly off the shelf as now your phone will not look like everyone else’s.

      3. I absolutely DO NOT “hate” Tim Cook. I hate that the company has come to a standstill since he took a seat at the head of the table, I hate that he lies about mythical “great new products in the pipeline” then keeps producing nothing but updates, tweaks, color changes, and something faster or whatever, I hate that AAPL has collapsed, and I hate it that his board of directors are all fat and happy with their ubbermillions making them just not care, and I hate that there are legions of lemmings like the ones we see in the MDN world. But, I DO NOT “hate” Tim Cook. I just want a new CEO. Just about anyone would do because I doubt the company would be any less ordinary with anyone else at the helm.

        1. You are a sad sad man.
          When Tim Cook was working under Steve, he was heralded as a great inventory miracle worker. Everything he did, he did better than any other company at maintaining all the gritty stuff behind the scenes that no-one sees.
          The best.
          Inventory way down. Pre-buying supplies form vendors. Negotiating the lowest price for components because Apple bought the most. And on and on.

          Is he Steve Jobs? No.
          Nobody and I mean nobody will fill those shoes. I felt sorry for whoever was going to succeed Jobs because that person was always going to be compared to Steve.

          If you watched from the distance, you would have seen the Wall-street machine start taking pot shots at Apple. They saw fresh blood and they wanted to get revenge for how Steve treated them. Steve knew better and did not listen or give a rat’s ass about Wall-street. He let his products do the talking.

          Well we’ve seen what Wall-street can do to a company that looked untouchable and on top of it’s game. They lie and create FUD everywhere they can. (Took lessons from MS) The whole machine just piled on and drove the stock down. Why? Why is it at this value when you compare it to Amazon or god forbid, Google. It makes no sense.

          There are sub-humans working at Wall-street now. It is not family friendly like the 50s or 60s when you bought a good solid stock and your money grew over the 5 to 20 years you had it invested. The sub-humans want double their money in a day and by god they’ll get it even if they have to lie, cheat, steal or or stab someone in the back.

          No, Tim is doing great considering all that has been thrown at him.

          If you have doubts, just look at the sales numbers, then look at all the other tech companies.

          If you could, what tech company’s CEO would you trade Tim for?

          and why?

          (sorry for the length, wall-street crooks are a sore spot with me)

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