Apple’s new iPhone lineup pricing and positioning

“What, exactly, has Apple just done?” Benedict Evans writes for Seeking Alpha. “We know perfectly well what it has not done: it has not released a dramatically cheaper phone that could sell to the prepay market or even to mass-market contract customers outside the USA. This was widely rumoured and I myself thought Apple would go significantly cheaper, but it didn’t. But what did it do?

“The obvious answer is that Apple continued the existing strategy,” Evans writes. “A new high-end iPhone, with new cool tech (camera, 64 bit, fingerprint) that makes it the phone to beat for the next 6-9 months until Android catches up and overtakes it in the annual game of leapfrog.”

MacDailyNews Take: Bzzt. Android is simply not going to go 64-bit and have a working biometric security system that the world of commerce will trust within the next 6-9 months. Ain’t gonna happen.

Evans writes, “When you only make a handful of products, all of your moves are carefully considered. All of them have an agenda, and all of them are intended to achieve something. In other words, I’m cautious of applying the word ‘just’ to anything Apple does. There’s generally a plan.”

“Apple did not spend the last 12 months running advertising for the iPhone 4S. That was an “old phone”, and it was a phone you bought if you wanted an iPhone 5 but couldn’t afford it. The 5C is different. It’s a new iPhone, and indeed I think it’s the main iPhone. The iPhone 5S is the high-end one for people who want the latest tech – the 5C is the one for normal people. The same money now buys you a cool new phone, not a discounted old one,” Evan writes. “If you spend all of your time looking at this space you can miss this point. You know that the iPhone 5c is mostly the same as the 5 – ‘just’ the 5 in a new case, more or less. But consumers neither know nor care. They don’t go into the shop and ask how new the chipset is – they look at the phone itself as a buying proposition.”

Read more in the full article here.

MacDailyNews Take: Despite the fumble with the leapfrog reference, there is a good deal of sense in the full article.

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]

16 Comments

    1. I believe that the iPhone 5C was redesigned to avoid the existing patent issues with Samsung. If Apple kept using the old design the patent import blocks would still be in play.

  1. So, when all the higher end iPhone 5S are sold out and only the 16GB models were left, we all should understand, in China, it isn’t about the cost.

    Anyone see the fact that the talking heads that talked down Apple’s stock got this wrong!

  2. Apple has covered the $99, $199, $299, $399 bases of price ranges 🙂

    Is there a $0.00 upgrade from one of the carriers?

    The iPhone 5s will be selling out for months then again at Christmas time world wide 🙂

    Technically good job Apple on da new crop of iPhones!!!

    1. You’re too myopic in looking at this from a U.S. perspective. Sure, the 5C will be sold here and will sell a lot. But the real value of the 5C is China, India, Russia, Brazil, etc. where carriers do not subsidize phones.

      The 5C is $300 less expensive than the 5 was or the 5S will be. That’s a huge difference in international markets. That puts an iPhone 5 in reach of millions of people who otherwise would have bought a Galaxy SIII, HTC One, etc.

      1. @Bizlaw,
        OK, how do you calculate the 5C to be $300 less expensive than the 5s? That is exactly what Apple needed to do to turn around its collapsing market share outside the US (and a couple of other countries). But, according to Apple’s site, the entry 5c is only $100 less than the entry 5s–the same differential as existed this past year between the 5 and the 4c, which was a failed strategy. I would appreciate any facts to back up what you said, because I hope you’re right!

  3. I wonder where Samsung will position its next “flagship” phone? It will probably not match the iPhone 5s in several areas, but it will have to be clearly ahead of the 5c, and probably at the 5c price. If this turns out to be the case, then Apple will be left with the “hero” device and Samsung will be squeezed on margins: the 5c is built to a price and Samsung may struggle to match it and remain profitable.

    Steve Jobs’ war against Samsung and Google is being executed ruthlessly but quietly and strategically. Apple has always taken a long view, disdaining the 90-day Wall Street mentality. By the time Samsung understand the consequences of their theft of Apple’s IP they will be so far behind the 8-ball that a recovery of market presence will be impossible.

    The underlying trend favours Apple: they make their own processors; they own their operating system; they have built the best ecosystem; they inspire loyalty in their users.

    Short term responses might make Wall Street types happier today, but Apple is continuing the construction of a juggernaut. It is the design of Apple which demonstrates the true genious of Jobs. And it is the Apple machine which propels Apple to great heights. Samsung cannot hope to match this – a company of capable copiers might enjoy a day in the sun, but they cannot win this war.

  4. He is a moron. The 5C is aimed at international markets. It’s $300 less expensive than the 5S when bought unsubsidized. That is a huge difference for international markets.

    1. Trouble is, it’s NOT a huge difference for the international markets. That’s because while subsidized phone purchases are the norm in the United States, they’re much less common overseas.

      In China, the 5s costs $864. The 5c costs $733. The 5c is only 15% less than the 5s. That’s why the 5s is sold out in China right now, while the 5c is readily available.

  5. The Street didn’t get it about iPhone 5c, which is just a machine to convert iPhone 4s buyers to consider to add 100$ more. Definitively a strategy for mature markets with carriers subsidies. The previous lineup failed in terms of products mix, iPhone 4 and iPhone 5 were best sellers, and iPhone 4s didn’t sell well due to its similar design with iPhone 4, and lack of differences perception for normal consumers.
    This new lineup definitively confirms Apple is not going to blindly chase marketshare, but will continue to perform on the high-end market, in line with its premium brand DNA and image, focus on the segment with significant margins, and leave the non profitable high volume market to it’s competitors. This new lineup, iOS 7 and A7-64bits/M7 perspectives will start to reverse the misunderstood perception on Apple not able to innovate anymore, a successful new product category could confirm innovation is not simply launching a bulk of products with multiple form factors, OS, features and then let the market decide, but is about having convictions and sense of what a good experience is for users.

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