I don’t particularly enjoy writing in detail about a newly announced phone without getting to see it. And definitely not about writing it off straight away. At least not with Apple. But for the past hour or so, I have been trying to make some sense out of the newly announced iPhone 5c, its pricing and removal of iPhone 5 completely off the shelves. We always knew iPhone 5s and iPhone 5c are coming. We also knew that iPhone 5c will be just like iPhone 5, but in colored plastic. But what we didn’t know was the price and the fate of iPhone 5.
So, this is what just Apple did.
- Announced iPhone 5c, which is mostly iPhone 5, but in unibody polycarbonate plastic, comes in 5 colors and has a slightly bigger battery.
- Took off iPhone 5 completely, while iPhone 4S continues to be on the shelves.
This is completely different than what I had predicted almost a month back. Ouch! Yes, I was expecting Apple to target the new segment (which they still claim they’re doing) with iPhone 5c, through its pricing. For that, I expected them to replace iPhone 4S with iPhone 5c, while keeping iPhone 5 in the middle. Over the last few days, it got extremely clear that it isn’t happening, as iPhone 5c is not meant to be ‘cheap’. But what we didn’t know was Apple will be replacing iPhone 5 with it.
Now why is that a problem?
Every year, when Apple releases a new iPhone, they reduce the price of the existing flagship iPhone by approximately $100. So, on two-year contracts, the old flagship would start from $99, and for SIM-free, it’d start from $549. So, ideally, without iPhone 5c, Apple should’ve dropped the price of iPhone 5 by $100 for both contracted and SIM-free options.
But what did they do this time?
They take out iPhone 5 off the shelves. So we have just the iPhone 5c, which is mostly iPhone 5, but no more that premium aluminum unibody. Yes, it’s a ‘premium’ polycarbonate PLASTIC, with a slightly higher battery. Logically, Apple should be charging it lesser than what they’d have charged for iPhone 5, because, it takes them more money to make an aluminum phone than a plastic phone.
But no. Apple wants you to pay the same price for a plastic iPhone, but now available in 5 different colors, instead of just 2 earlier on. I just can’t figure out why would anyone buy a plastic phone with an year-old hardware for just $100 less than the latest flagship which comes in that premium aluminum unibody (now in champagne gold), powered by world’s only 64-bit processor with crazy graphics and a dedicated chip for motion sensor, a super cool camera sensor for better photos and a fingerprint scanner? Tell me why?
So, iPhone 5c is cheap in terms of build quality, but not
cheap low cost as such. Why should anybody buy this then? Because they can’t afford $100 more and they can’t buy iPhone 5 anymore?
Yes, we still don’t know at what prices Apple will be launching the iPhone 5c in markets without carrier subsidies. They might still surprise us by cutting down the price in those markets. Might. But for now, iPhone 5c looks like a tough sell. By a long shot, that is.
Update: I’ve been having some interesting conversations over twitter. There I was pointed to Apple’s explanation for going Plastic. I’m embedding that below.
It seems to me that Apple is trying to imply that building plastic cases (with steel frames) costs them just the same as building aluminum unibody shell. Well, that’s what their prices indicate at least. We need to wait iSuppli or someone to post BoM (Bill of Materials). But I’ll be shocked if they find out it costs just the same to build plastic cases as it’d cost to build aluminum shells.
Update 2: As I continue my quest to analyze the strategy behind the new iPhone 5c, it has started to look like Apple isn’t saving much by going plastic instead of aluminum. Of course they’re saving something, but not much. But their years of marketing how anodized aluminum is superior to any polycarbonate plastic is hitting them back this time around. The perception of aluminum unibody is miles ahead and better than any plastic (with steel enforcements) is tough to displace.