Thanks to countless leaked photos and videos it was no surprise when Apple unveiled its colorful iPhone 5c. What did catch a lot of industry speculators and gurus off guard was the pricing.
Many expected the 5c to be an affordable option aimed at the lower ends of the market and China. The now-confirmed price difference of just USD$100 between the new iPhone 5S flagship and the cheaper 5c shows the true colors of how Apple will position it in the market.
iPhone 5c compared to the 5S: pricing
In the US the price difference between the 5c and 5S on contract and outright is $100 for both the 16GB and 32GB models. The most important difference between the US and Australian models is that Aussies tend to pay their handsets off monthly with no up-front cost. This can make the savings seem smaller once they're cut up in to 24 monthly payments.
This places the iPhone 5c as a mid-range device, meaning it will occupy the space to which last year’s iPhone 5 would otherwise have dropped. As far as hardware goes this is fair enough; the 5c sports very similar specs to the now-deposed iPhone 5, with a couple of improvements like the HD FaceTime camera and slightly larger battery.
| US | 16GB on plan/outright | 32GB on plan/outright | 64 GB on plan/outright |
|---|---|---|---|
| iPhone 5c | USD$99/USD$549 | USD$199/USD$649 | - |
| iPhone 5S | USD$199/$USD$649 | USD$299/USD$749 | USD$399/USD$849 |
| Difference | USD$100 | USD$100 | - |
The iPhone 4S will now only be available with 8GB of on-board storage and drop down to the lowest pricing tier, replacing the iPhone 4. The 4S will be $0 on a standard 2-year US contract or USD$450 for an unlocked version.
Technilogically it won’t be left behind either, with the 4S to receive the free iOS 7 update from September 18th.
No love for the 4S
The iPhone 5c’s mid-tier pricing suggests that Apple isn’t feeling pressed to compete in the ultra-low-ends of the market where Android is currently dominating. Instead, it looks as if Apple is trying to convince its customers to go mid-tier instead of opting for the now quite boring iPhone 4S. Not only is the 4S two years out of date, it’s far more visually distinct from its more-modern and younger siblings. Its age will show.
Once it was a small step down from the flagship, to last year’s model, to the one before that. Each time you stepped just one year back in time for a saving of roughly USD$100.
Now there exists a two-year jump from the mid-tier to the low. It’s very possible the 5c’s vibrant color schemes + the 4S’ diminished appeal will combined to boost mid-tier sales in wealthier countries, raising Apple’s average selling price (ASP). This is great in countries like the USA where the price difference on contract is just USD$99. In Australia things are a bit different, with the 5c costing AUD$210 more outright or $8.75 more per month on a 2 year plan.
What about China?
Currently Android is dominating in China, thanks to its wide range of ultra-affordable handsets. The iPhone 5c may simply not be cheap enough to succeed in this kind of market. With China Mobile alone boasting over 700 million subscribers, it would seem an obvious avenue of expansion for Apple.
It’s possible that we’ll see a cheaper 8GB version of the iPhone 5c specifically for the Chinese market in the coming months, but there’s no evidence to suggest its likelihood. More plausible is that Apple will push its more affordable 8GB iPhone 4S to the masses and its new shiny Gold iPhone 5S to the China’s burgeoning upper-echelon of the super-rich as a status symbol.
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