“Apple is credited with revolutionizing the cellphone market with the iPhone but competitors have succeeding by selling devices that cost less and boast features, such as larger screens, missing from Apple’s best-selling product,” The Associated Press reports.
“Analysts said they were disappointed in Apple’s failure to debut a lower-priced product. The 5C will start at $99 for a 16-gigabyte model with a two-year wireless contract. Without a contract, the 5C will start at $549, which is not as low as analysts thought Apple might go to make a bigger splash in the lower end of the market,” AP reports. “The 5C is Apple’s least-expensive iPhone ever and is an effort to boost sales in China and other areas where people don’t have as much money to spend on new gadgets as they do in the U.S. and Europe.”
“Credit Suisse analysts downgraded their rating on Apple to ‘Neutral’ from ‘Outperform,” AP reports. “They said that the pricing was a disappointment. They said that Apple’s strategy of focusing on the $400 and over smartphone segment is a poor one, as this niche is not likely to grow meaningfully in the long term… Shares fell $28.23, almost 6 percent, to $466.41 by Wednesday afternoon. Apple’s stock has fallen nearly 30 percent since peaking at $705.07 when the last iPhone came out.”
Read more in the full article here.
MacDailyNews Take: We heard the same bullshit from “analysts” after iPad mini pricing was unveiled. How’d that turn out?
Related articles:
Smash hit: Apple ups iPad mini orders by 2 million units for Christmas quarter – December 20, 2012
Demand for Apple’s new iPad mini is huge – November 5, 2012
Apple opts for profit over market share with not-so-cheap iPhone 5c – September 11, 2013
The true objective of Apple’s new iPhone 5c – September 10, 2013
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – September 10, 2013Apple 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
The numbers and fanfare will speak for themselves.
So will the lines.
As it has been for a decade or more. Apple release of major change that another r will soon copy and Apple takes a hit while the copier is rewarded. Apple makes money which is dismissed and another lose money hand over fist, then praised! So what’s new? Truth is the new Lie and the Lie is the new truth.
“Credit Suisse analysts downgraded their rating on Apple to ‘Neutral’ from ‘Outperform,”
“They said that the pricing was a disappointment”
Hum. I thought more about Credit Suisse than that….
Had higher thoughts*
The pricing would be a disingenuous “disappointment” to analysts whether Apple had dropped their prices substantially or not. Because the lower end market where people don’t have money to spend is always the one to go after…
Apple was sort of in a no-win situation. If they priced the 5C lower there would have been a concern about margins. If they priced the 5C high there would be a concern about sales. There may have been a better sweet spot for investors concerns. It does seem that the price points are extremely high. Obviously only time will tell who is right. As I have said before, loving Apple products and investing in AAPL are two entirely different matters. As one who loves Apple products and uses them daily to earn a living I know how difficult it is to keep them separate. But keeping them separate and approaching investing without emotion is absolutely paramount. And that holds true for all investing, not just investing in AAPL. But the 5C prices are set so we’ll all have to deal with that. Complaining and excuse making serve no purpose. It is obvious why analysts and investors have concerns over the high price of the 5C. That is done without emotion. As it should be. Hopefully Apple has things figured out so there is a happy ending. I’ll have to admit that it does look a little dicey today. A China Mobile announcement today would have helped a lot. Yes, they have been issued a license but there’s no telling when that may come to fruition. Or when it does if the 5C pricing will indeed have a negative impact on sales? They simply need to get on China Mobile as soon as possible. It has been a long, long time coming. There is no time to waste. I was also hoping that the fingerprint sensor would be tied into retail sales during the presentation yesterday. To me, that was a huge disappointment. However I do expect something to come of that eventually. That could be big. Really big. And AAPL could use some help right now. But for all of those who are complaining and making excuses, take a deep breath.
Excellent post, GM. Good analysis and advice. In addition, I would add that individual investors cannot rely on free advice and ratings. The free, public information generally lags too much to be useful. As for ratings, they are either woefully dated such that they are actually contrarian indicators (e.g., many of the buy ratings on Apple occurred well after AAPL had climbed north of $600), or actually cause the event (e.g., the Credit Suisse downgrade of AAPL to neutral resulting in a 6% drop). Individual investors have to be self-reliant and resistant to FUD, misinformation, and churn advice from the investment vultures who make their money from your money.
There is still a lot of potential upside to Apple and AAPL. Even a relatively small percentage of China Mobile’s client base translates to many millions of units (1% = 6M). And I believe that Apple’s Authentec advanced fingerprint sensor is going to be a huge advantage. Mobile payment systems based on NFC may encounter security issues that will scare consumers and businesses away. Authorizing payment on an iOS device with a robust and secure fingerprint sensor and then displaying a resulting graphic to the store register scanner to complete the transaction sounds a lot better to me, if not quite as “gee whiz” as a wireless NFC transaction. And Apple, in its usual fashion, has pursued a real fingerprint solution rather than a simple and easily spoofed swiping surface scanner.
So here is the thing. Price aside the 5C is in COLORS.
MDN asked why anyone would buy the 5C over the 5S. Colors is the answer. Every teen from her to the moon is freaking out about wanting one. Suddenly it’s an accessory again. People will pay for it, or get their parents to.
It may seem stupid. but you have a more durable phone, in colors. My thought is that this is the under 25 iPhone, and I bet they will sell a crap load.
Exactly. Colors for kids.
Want a cheap phone? That’s what a iPhone 4S is for. Before that the iPhone 4, iPhone 3s, iPhone 3 …..
Want an giant iPad size phone? Get a Samsung – adults don’t want one or need one.
Maybe someday the press will figure it out.
Again, as SteveJack wrote yesterday, Slap a plastic case on iPhone 5s and it’ll be durable in the way you consider durable to be, it’ll be whatever color you want, not just limited to Apple’s five colors, and it will still likely weigh less than the 5c!
And it still costs $100 more. I’m glad you all are so loaded you just drop $200-$300 on a phone for your kids. I’ll pay the $99 for her to have a 5 with the pretty colors on it. I’m not paying $200 plus case for a teenager’s phone. I’m not going to give her a 4S when she can have a 5. SteveJack’s editorial was stupid and clueless.
Wives like them as well.
Wow,
Like Fantasy Football, analysts are playing fantasy Apple. And their software is going crazy with big cheap phones.
Bring out the Dolomite!
Look, Apple is entitled to its profit margins but you know what’s ridiculous? Gouging customers. I mean come on, you introduce a 64-bit A7 SOC but start the storage options off at 16GB? That’s totally brainless. In the first place if you want more immersive games, you’re going to have to face up to the reality of bigger file sizes. So right there and then you’re discouraging your users from downloading large games. Beyond brainless management decisions.
And what’s up with the unchanged battery life? Again, you want your users to consume apps and play immersive games on the phone, but your phone runs out of juice after 20 minutes of gameplay?
Too many brain dead decisions going on right now at 1 Infinite Loop.
16GB not enough eh? Hmm, it’s a stretch but if I am sooo concerned about storage capacity I could whine or buy a 32 or a 64GB model.
Also, battery life has been increased.
Dead brains are where?
I’ll have to admit, both my wife and I were disappointed by the relatively unchanged battery life. Then again, if it’s the same with all this increased functionality, then it’s more of an increase than meets the eye.
You’ve got it all over Apple, BLN. I like your analysis of the situation. Very astute. /s
Wall Street has never really understood Apple. I thought they did for a while in the last few years, but they are back to their old ways again.
Wall Street excels at manipulation to milk the markets for profits that were generated by others’ work. They also receive special tax treatment since they’re “working with money” instead of actually creating/delivering a tangible product. I can’t really decide if it’s lopsided symbiosis or merely parasitic.
it’s perfectly clear why some people are upset about the price: because Apple chose not to make a device that meets the needs of a significant part of the market.
Many people don’t need all the cutting edge features of the 5. Rather than limiting those features to produce a cheaper phone, Apple chose to keep the 5 and change the case while keeping the price constant for a 1 year old device.
That’s the complaint — Apple didn’t give people a proper alternative to their high end offerings. Put differently, the 5c is not really a mid-tier device. It’s just another premium device with a premium price.
Apple is an aspirational brand.
In the early 1980s, General Motors* once made a really cheap Cadillac. Instead of making an actual Cadillac though, they stuck the Cadillac crest to what was basically a Chevy Cavalier. Needless to say, it sucked.
It took Cadillac the better part of two decades to recover the lost value of their brand. For some people, Cadillac never will get back to where they once were.
*Before GM was taken over and made into Government Motors to pay back the unions for their support of The Empty Suit with taxpayer money that the U.S. taxpayer will never recoup.
Now Crapillac sticks Crapillac badges on Crapolet Trucks and calls them Escalades. They are ugly, overpriced and suck like a Dyson.
From Government Motors
Mark of Excrement
So I assume you’ll be picking up an iPhone 4S?
if i can find a 32 or 64 gig one, then definitely. I wish Apple sold them in that size still.
If anyone has one they want to sell, let me know.
Apple has just introduced a new improved iPhone model that further consolidates the company’s technical advance on its rivals. For the consumer, the new 5S offers numerous new and enhanced functionalities with no increase in price. With a widely successful evolved product like the iPhone, it is foolish to think that its maker would change it’s basic winning formula. Except in new markets, Apple’s objective is to offer an enticing replacement product for current owners of previous generations of the iPhone. The new 5S brilliantly achieves this objective and will contribute to increase future revenues of Apple from it’s line of iPhones. This should support a small increase of the stock’s P/E ratio.
Concurrently with this updated product, Apple introduced a new cheaper version of the iPhone, the 5C (Candy?) which caters to a different market. Being essentially a variant of the base iPhone, this product has been developed by Apple at a relatively small cost and will enable Apple to fill a previously uncovered segment of the youth market. Sales of this product will generate additional profits irrespective of their volume. If the product is a success, Apple will benefit significantly while making it hard on it’s competitors. Alternately, if the product fails to gain a market, Apple will not suffer a financial loss; it will only gain a deeper knowledge of the market.
As I write this, Apple’s stock is down 5.5% for the day, a testimonial to the professional competence and vison of investment analysts.
I have to agree with the article. When an iPad mini sells for $329 Why could apple not make an iPhone in the same price range even $399? After iOS7 is installed on an iPad mini the only thing missing is the phone functionality. It would seem given the smaller screen size of the 5C compared to a mini it could have been a nice $399 iPhone to complement the $329 Mini… at $549 the 5C seems over priced even against a full iPad Retina!
It would also then seem that the iWorks apps are not free.. looks like they just include the cost into the phone.
You have a point, but are you are drastically underestimating how much cellular networking hardware costs. For a better comparison, price of the iPad Mini with cellular is $459, and the iPad retina with cellular is $629. Assuming a 4″ retina and 8″ non-retina touchscreen cost about the same, this suggests the iPhone 5C could be about $90 cheaper.
$99 with a contract is not a premium price. Without a contract they are all expensive. Don’t want an expensive phone use the one in your house and stop whining. The ANAL-ISTS are stupid and always get it wrong every time. Same old thing when Apple releases new products they are always negative and Apple always rakes it in but that’s never good enough. Stupid!
The dissapointments are Apple did not announce China Mobile distribution deal and 5C off contract pricing (~$750 equivalent in China) is too costly for emerging markets, where 80% of the phones are sold off contract (not subsidized). China Mobile has 700 million subscribers = 2xUSA population…. All the other stuff is noise and rationalizing why Apple isn’t what it used to be.
They are missing two key points:
1) new 5S and 5C both can operate under TD-LTE (i.e., China Mobile) and the Chinese government just granted Apple licensing for selling TD-LTE phones in China (first step to China Mobile deal). Build it and they will come…
2) The entire 5S/5C is catered towards wealthy asian consumers in terms of colors and appeal. Just think about it. Who buys the vast majority of gold in the world – Chinese. What new color is 5S – Gold. If any of you’ve been to any part of Asia, you’ll know that 99.99% of women/girls are carrying very colorful and personalized phones as their primary accessory item (fashion). Apple will drop the pricing after the initial wave of sales have exhausted in China and India to more competitive $400~$500 range off contract.
Meanwhile just expect the volitility in AAPL and not worry about day-to-day fluxuation of stock price or these analysts.
Btw, you guys are not surprised to find that these analysts are graded by how well they do on the short term basis, and not for their strategic insight or investment results but only to be out on the front and creat publicity for their banks to attract attention from the public….
I guess they didn’t get the memo that Apple’s gonna be sold in the orient now. I mean, they can only sell a few billion over there, that’s nothing compared to the market in Minnesota.
‘The Orient’… wow… what year is it.
Also, Apple is concurrently sell 4 iPhones in China. If you want a cheap iPhone you can get the 4 for about $300. End of Story.
Okay, I could have said the ‘Asian’ market (China/Japan), I didn’t mean to offend anyone but you knew what I meant. As far as the dealings, we’re talking about a newly released iPhone not the older ones. http://techcrunch.com/2013/09/10/apples-new-iphones-will-support-lte-in-china-putting-a-china-mobile-deal-into-sharper-focus/ (as an example)
Yeah, but the point is, you can get an iPhone with a very good camera, OS, etc for $300. That is aggressive. This is exactly what Investors (supposedly) were clamoring for. They’ve lowered the entry price without sacrificing margins for new products.
Yes interesting. The first thing both my daughters said when they saw the 5 c is they want one to replace the iPhone 4 they have. One wants the pink and the other the blue or green. I think they will fly off the shelves.
Plunge is an understatement. More like plunger when your toilet get’s clogged with poop. Wall Street is plunging Apple, trying to send it out to the nearest waste disposal plant.
“Analysts said they were disappointed”: There isn’t a butt plug in existence that I know of that would make any analyst feel “satisfied”.
Not only a lovely comment, but a luverly true to life image as well.
All the experts here have perfect crystal balls, but I agree with Credit Suisse on this one. The 5S will be a hit at the top end of the market, but Apple accomplished little or nothing defending the lower-priced end of the smartphone market.
This is playing out just like Windows vs Mac all over again.
I am not interested in a larger screen that the other competitors offer. I love a phone that I can still text on with one hand. Perfect screen size. I know I’ll be upgrading as soon as possible. Anyone else?
No surprise! A complete yawner! Cook has fumbled again as stocks continue to tank!
It’s no bullshit but reality….