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Such a big deal is being made of this initial pricing strategy for the 5C when it's really such a transient situation. Apple is going in with a high price on t

by crusso 13y ago

Such a big deal is being made of this initial pricing strategy for the 5C when it's really such a transient situation. Apple is going in with a high price on the 5C to keep the brand solid and scoop up profits from early adopters who will just have to have the latest pretty colored iPhone. My guess is that the 5C's price will erode much faster than the 5S. Apple will do its best to balance the mix to ensure that the product is sold and out there.

simonh 13y ago
This is exactly what I came here to say. This is another case of Apple skating to where the puck is going to be in maybe 2 or 3 years time. There is no point in Apple introducing a brand new truly low cost iPhone because such a device would by necessity only be in the market for a short time before it would get obsoleted. The 5C is set to be manufactured for the next 3 years, so they will extract maximum scale effects and maximum sales volume over the lifetime of the device. The 'C' may well stand for 'Cheap', but not now. It stands for where it will be positioned over it's lifetime. Other manufacturers bring out a new device and only care about it for maybe 6 months, after which they're on to the new thing and ready to forget the old one ever existed. Apple thinks really long term about their device's full economic life cycle. For example the iPad Mini was criticism for being too expensive, but that was taking a short term view. I fully expect the current mini to continue to be manufactured at a lower price point for another year, cutting off the air supply to the cut price Android tablet market, but Apple is in no hurry to get to that point.
- Touche 13y ago
  > This is another case of Apple skating to where the puck is going to be in maybe 2 or 3 years time. That phrase doesn't mean what you think it means. It has nothing to do with planning for a long product life. "Where the puck is going" is towards affordable off-contract phones and cheaper carrier monthly costs. The 5C is Apple doubling down on the carrier subsidy model. It's the model that makes the 5C seem competitively priced. It's ironic because Apple is often credited as standing against carrier power, when in reality the status quo is exactly what will allow Apple to keep making those legendary profit margins on iPhones. Once unsubsidized becomes the norm (as started by T-Mobile and now being adopted by others) they're going to be forced to compete on price at the expense of margins. They can stay exclusively on the high end if they want, but the high is going to be ~300-400 at most. That's where the puck is going. Selling a 2012-grade 5C for competitive price in 2015 is not "where the puck is going".
  - simonh 13y ago
    >That phrase doesn't mean what you think it means. It has nothing to do with planning for a long product life. It means acting now to best position yourself for the future. I absolutely agree with you that affordable off-contract phones are going to be a big part of the future. Previous iPhones were premium products that were too expensive to manufacture for that to be viable, but the 5C is designed to be much cheaper to make. While it's selling at premium prices now it's far, far better positioned to become a strong medium end product in future.
potatolicious 13y ago
I disagree. Apple traditionally doesn't budge very far from the price points they establish. When the MacBook is getting long in the tooth, they would rather replace it with a model refresh than let the price sink. IMO what we're seeing is only relevant in the developed world. The 5C is being priced as the slightly-cheaper-but-not-by-much alternative to the 5S. But this isn't why the 5C exists - IMO the 5C exists largely because of the developing world, where Apple has the freedom to separate the price points by a much wider gap than in the US/EU. I'd expect that the 5C-5S price difference to be much more dramatic in China than in the US.
- Juliwnfren 13y ago
  The prices for the developing world are already out and they aren't as dramatic as you imagine (unless you were expecting sticker-shock[1]). It's 4,488 yuan (US$733) for the 5c and 5,288 yuan (US$864) for the 5s in China [1]h ttp://www.zdnet.com/cn/new-iphones-a-price-disappointment-in-china-7000020527/

by crusso 13y ago

simonh 13y ago

This is exactly what I came here to say. This is another case of Apple skating to where the puck is going to be in maybe 2 or 3 years time. There is no point in Apple introducing a brand new truly low cost iPhone because such a device would by necessity only be in the market for a short time before it would get obsoleted. The 5C is set to be manufactured for the next 3 years, so they will extract maximum scale effects and maximum sales volume over the lifetime of the device. The 'C' may well stand for 'Cheap', but not now. It stands for where it will be positioned over it's lifetime. Other manufacturers bring out a new device and only care about it for maybe 6 months, after which they're on to the new thing and ready to forget the old one ever existed. Apple thinks really long term about their device's full economic life cycle. For example the iPad Mini was criticism for being too expensive, but that was taking a short term view. I fully expect the current mini to continue to be manufactured at a lower price point for another year, cutting off the air supply to the cut price Android tablet market, but Apple is in no hurry to get to that point.

Touche 13y ago
> This is another case of Apple skating to where the puck is going to be in maybe 2 or 3 years time. That phrase doesn't mean what you think it means. It has nothing to do with planning for a long product life. "Where the puck is going" is towards affordable off-contract phones and cheaper carrier monthly costs. The 5C is Apple doubling down on the carrier subsidy model. It's the model that makes the 5C seem competitively priced. It's ironic because Apple is often credited as standing against carrier power, when in reality the status quo is exactly what will allow Apple to keep making those legendary profit margins on iPhones. Once unsubsidized becomes the norm (as started by T-Mobile and now being adopted by others) they're going to be forced to compete on price at the expense of margins. They can stay exclusively on the high end if they want, but the high is going to be ~300-400 at most. That's where the puck is going. Selling a 2012-grade 5C for competitive price in 2015 is not "where the puck is going".
- simonh 13y ago
  >That phrase doesn't mean what you think it means. It has nothing to do with planning for a long product life. It means acting now to best position yourself for the future. I absolutely agree with you that affordable off-contract phones are going to be a big part of the future. Previous iPhones were premium products that were too expensive to manufacture for that to be viable, but the 5C is designed to be much cheaper to make. While it's selling at premium prices now it's far, far better positioned to become a strong medium end product in future.

potatolicious 13y ago

I disagree. Apple traditionally doesn't budge very far from the price points they establish. When the MacBook is getting long in the tooth, they would rather replace it with a model refresh than let the price sink. IMO what we're seeing is only relevant in the developed world. The 5C is being priced as the slightly-cheaper-but-not-by-much alternative to the 5S. But this isn't why the 5C exists - IMO the 5C exists largely because of the developing world, where Apple has the freedom to separate the price points by a much wider gap than in the US/EU. I'd expect that the 5C-5S price difference to be much more dramatic in China than in the US.

Juliwnfren 13y ago
The prices for the developing world are already out and they aren't as dramatic as you imagine (unless you were expecting sticker-shock[1]). It's 4,488 yuan (US$733) for the 5c and 5,288 yuan (US$864) for the 5s in China [1]h ttp://www.zdnet.com/cn/new-iphones-a-price-disappointment-in-china-7000020527/