iPhone 5c was never "as in cheap" - so what?

iPhone 5c was never "as in cheap" - so what?

Going into yesterday's Apple event in Cupertino, many in the industry were expecting Apple to price the iPhone 5c considerably less than the $549 they've announced. We were wrong - all of us. That isn't Apple's fault - it's ours. Predictably, I've already seen a few opinion pieces saying that the iPhone 5c is too expensive. To which I ask, "So what?"

I should say at the outset that I'm among those who predicted a lower cost than $549. I fully expected the iPhone 5c would cost considerably less money. I've been reading a lot about Apple's challenges in China and the growing demand for smartphones worldwide, and a cheaper iPhone made sense to me.

iPhone 5s and 5c: A new approach

Typically when Apple releases a new iPhone they'll kick last year's model down to second place. Apple's doing something different this year by offering two new models instead of one.

The premiere spot is occupied by the iPhone 5s. Despite its similarity in case design to the iPhone 5 (iPhone 5s's fit in iPhone 5 cases, for example), it's entirely different under the hood - much faster, with better camera optics, Touch ID fingerprint scanner built in to the Home button and more.

In the past, we'd have expected the iPhone 5 to be knocked down a rung, available for purchase still for $99 on contract. But Apple shook it up this year by discontinuing the iPhone 5 all together, and replacing it on that second run with a less expensive iPhone 5c. The iPhone 4s, with its smaller screen and lack of LTE service, among other things, remains in the mix as Apple's zero-cost (on contract) phone.

The iPhone 5c is pretty much the same under the hood as the iPhone 5, and I'm assuming it costs less for Apple to make than the iPhone 5 - the aluminum unibody design is gone, replaced with a polycarbonate back shell and steel frame inside. That should help improve Apple's profit margin on the phone, so I'm a bit surprised that Wall Street investors haven't responded more positively to the announcement.

iPhone 5c: Doomed to fail?

If you think the iPhone 5c is going to fail straight out of the gate, think again. There are a lot of people who want to upgrade their older iPhone - plenty of iPhone 4 users are still out there, plenty of iPhone 3GS users too. And there are quite a few Android phone users who are fed up with their devices and want to give the iPhone a try instead.

To them, the iPhone 5c is a new phone. It comes in colors, and plenty of consumers love to have the option of different colors for their devices. It's simple customization and adds a personal touch.

The 800 pound gorilla

Apple is engaged in fierce competition in foreign markets, especially China, going toe to toe with Samsung and local smartphone manufacturers. The presumption that Apple was ready to roll out a cheaper phone was based at least partly on the belief that China Mobile - the biggest mobile phone company in China - has been negotiating with Apple over subsidization and other costs associated with the iPhone.

To date, Apple hasn't struck a deal with China Mobile. From that perspective, it made sense that Apple might be trying to craft something more palatable for China Mobile. It has more than 60 percent marketshare in a population of almost 1.2 billion mobile phone accounts. To put that in perspective, China Mobile's customer base alone is more than twice the size of the entire U.S. market.

There's been an interesting twist: Unwiredview.com reports that the iPhone 5s, specifically, has received approval from China's Ministry of Industry and Information Technology (MIIT) as a TD-LTE-capable device. TD-LTE is the high-speed mobile networking band that China Mobile uses (it's also used by Airtel in parts of India and Dialog in Sri Lanka).

What's holding up the show now, according to the Unwiredview report, is that China Mobile is waiting on a license from the MIIT to operate on the TD-LTE spectrum, which they should get in November.

That may provide some insight that the iPhone 5s, at the very least, is headed for China Mobile. But it says nothing about the iPhone 5c. It's possible that the iPhone 5c just hasn't made it through the MIIT's approval process yet.

The c doesn't stand for crap, either

Apple doesn't seem interested in competing with other phone manufacturers on price any more than they do in the computer market, where they've been criticized for years at having laptops and desktop machines that are way more expensive than the competition. That hasn't stopped the Macintosh from being amazingly successful. Even though there's been a recent dropoff in Mac sales, Apple continues to sell more Macs every quarter than they did in entire years just a few years ago.

For Apple, there's little sense in growing marketshare at the expense of profitability. That is, perversely, a message that's not well received by many Wall Street analysts, and they seem intent on punishing Apple for its hubris at wanting to, you know, actually make money.

But the rest of us should rest assured that Apple's not interested in cheating us by offering us crap. The iPhone 5c, by any measure, is going to be a great phone available at a modestly more affordable price than the top-of-the-line phone.

Ultimately, getting an iPhone needs to be a good deal both for you and for Apple. Apple's set the price of the 5c and it falls on us to decide if it's worth it. You may decide that the iPhone 5c isn't worth it, but by reading this article, you're part of a pretty select group of technical sophisticates that follows this stuff online. The vast majority of customers who Apple already caters to - and who Apple wants to cater to - isn't part of that group. They're "regular" people for whom a smartphone is a smartphone. And to them, the iPhone 5c is new. That's why I bet Apple will sell them by the boatload.

OK, I'm done pontificating about the iPhone 5c. What do you think? Is this the phone you want, you were you expecting something different? Is the $100 difference not a big enough factor to make you consider it compared to the 5s? Sound off in the comments!

Update: An earlier version of this editorial incorrectly stated that the iPhone 5c has more limited LTE compatibility compared to the 5s.

Peter Cohen

Managing Editor of iMore, Mac and gaming specialist and all-around technologist. Follow him on Twitter @flargh

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iPhone 5c was never "as in cheap" - so what?

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Think of it this way:

MacBook Air / MacBook Pro.
iMac / Mac Pro.
iPhone 5C / iPhone 5S.
And, to some extent, iPad mini / iPad.

It's a lower-cost alternative to the high-end model.
Still not "cheap" in the spectrum of devices on the market.

The interesting thing about the MacBook Air is that it initially debuted as a more expensive niche product. But by 2011 Apple had reworked manufacturing processes and parts costs enough that the MacBook Air replaced the plain vanilla MacBook as the "budget" model.

Precisely. And they shipped the Air when everyone was screaming at them that they NEEDED to create a cheap netbook. Instead, they created a great ultraportable and then created the iPad, both of which have sold quite well. Netbook sales... have cratered.

Apple was never going to do a cheap iPhone. Anyone who knows anything about them knew this. They will absolutely do a less expensive, less feature full iPhone if they can at some point since I'm sure they'd love to capture more of the market that can't buy the current models. But cheap isn't Apple.

Oh and we have a tendency in the US to equate China with poor/low income. It's a country of a billion people and while the average income is fairly low the Chinese middle class is almost as large as the entire population of the US. Apple will be able to sell quite a few phones there just fine. It's other countries (Indonesia, etc) where the income issue comes into play.

I think what people wanted was a good entry price on a non-subsidized iphone not a contract price. I for one would've loved a $300 price but its not going to happen with apple. Also this is not going to help with ridiculous carrier prices, this is where i hope the google nexus catches on, with a $300+ tag.

Google is selling the nexus nearly at cost, and they are doing that for their own unique goals. That is not a sustainable strategy for Apple or anyone else, and I don think it would be sustainable for Google if they were actually selling large quantities.

I agree, I think it's one of the reasons the Nexus 4 had so many supply issues. LG wouldn't commit to large volumes because Google told them how much they wanted. I wouldn't blame them.. I wouldn't either. If the latest 'pure' Google devices from HTC / Samsung are any indication, I think the next Nexus phone will sell for more in line of $400-$500. They wont want to loose their hats.

Plus, they would be pissing off their other Android partners if they kept that up; shooting themselves in the foot. Who knows, maybe Google wont care and create a wildly popular phone and cut into Samsung's business.. Will be interesting to see.

Personally imo the 5c is priced right, considering its pretty much replacing the 5. The 5s has taken over the 5 price, so the C is actually cheaper. Apple never said how much cheaper or how cheap it would actually be. People just hung on the word cheaper and ran with their opinions and expectations.

You Apple fanboys dont make sense sometimes. You guys knock Samsung for using plastic and all of a sudden it's ok for Apple to do the same especially since they replaced the higher quality one with a cheaper one but priced it the same as the high quality one. People were expecting it to be cheaper because it's plastic and not aluminum and they'll no longer sell the high end one so technically they're making a higher profit since they're using plastic instead. But I guess it's ok since it's Apple going this and you guys wonder why you're called sheeps. Just taking it like it's no big deal.

Fan boy I am not. And Samsung is something you can have. I'd rather have a huawei

Btw Android Central is over there----------->

^This. Every galaxy they have made, has been cheaply made and a piece of crap. They just keep getting bigger. Generally making them bigger pieces of crap. S3 was one of the biggest waste of money they made.

Cheaply made, yes. I'm not a fan of Samsung phones. But I'd bet on the durability of those over the glass-backed 4 and 4s. I'm glad Apple finally pulled their heads out of their butts on that idea.

The real issue with phone durability is water resistance. Water damage is the number 1 cause of iPhone insurance claims. All phones should offer at least some water resistance in my opinion.

My 2 year old threw my old 4s in the bath tub. Still worked fine. Samsung phones are junk. Imo. And god forbid there is ever a software issue, Samsung will get right on that in about 3 months. I had the s3 traded for the 4s. If I had to do it again I would gladly.

It did! To date, the 3G + 3GS are the cheapest feeling of the iPhones family, the plastic back was too flimsy.

The new 5C doesn't look like it has the same 'cheap' issue as the 3G & 3GS.

I own both iPhone 5 and several Samsung devices. The reason why Samsung uses plastic is simple, removable backs so you can replace battery and also plastic is radio friendly. Radios are complicated when you are dealing with anything metal. As far as the sides cracking, any phone made with plastic will crack, iPhone 5c is no different. It's plastic. Samsung is also made steel reinforced inside, most devices are. Quit the shit slinging, it's real dumb. Samsung makes a great phone and IMO the Note 3 might be the best in 2013-2014. won't sell as many as the iPhone 5s but it is quite a beast. Saying all that I am also in line to buy the new 5s. Sold my iPhone 5 last week just to buy the 5S. Just have to have the latest and greatest as they come out. Just dig the hell out of electronics.

I like electronics to but shit slinging I am not. Samsung radios are horrible. Signal strength is sub par. My 5 pulls full signal at my place. Wife has a s3 and barely get 2 bars. Same provider side by side. Signal strength belongs to motorola. They have some of the best if not the best out there. My opinion is my opinion and experience with samsung. And they are trash. gs trash. s2 trash, s3 trash, s4 trash and so on. In fact the only one that was ever worth having if I had to have one would be the s2. At least it was the least problematic out of the rest. Iphones are solid compared to samsungs design.

It is not sure if the iPhone 5C's plastic will crack. Normally the holes in a plastic part are made during the molding process. Apple chooses with the production of the plastic casing to mill the holes into the plastic part. Since the flow of the plastic is in this way much better in this way, the areas around the holes are much stronger.

I do not say there will not be any cracks, but the way they are producing the plastic backplate, seems a methodology that should prevent at least most of the cracks.

I'm not trying to troll, I apologize if I sounded that way but I'm just trying to make a valid point which it is. Some people cannot handle it when their beloved brand of choice gets knocked on and others don't take it so personally and just take it as a form of debate which is all it is. And yes I may sound like an Android fanboy but I'm not. I've used all 3 platforms for a good period of time but I just prefer Android better but that's besides the point. All I was trying to figure out was why Apple fans find it OK for Apple to use plastic and replace it with the 5 and price it the same and not OK for Samsung to use it. I don't care how high quality the plastic is because plastic is still plastic. I just want to understand the logic behind that.

Why would you think that people think it is 'not okay' for plastic body except when it is 'Apple'. The first iPhones were made of plastic. There is really nothing bad about plastic as a product and in fact, for Samsung to stick solidly to their design with plastic back and reduce their production costs which they pass on to the buyers, maybe they don't never thought about it but I am sure they would.

Plastic is ideal for the iPhone 5C because it makes it easy to produce multiple color body's. It is an efficient manufacturing process and I am sure that it allows them to mold in the metal framing that increases the strength of the body somewhat.

There are many different types of plastic. The ones used by Samsung are cheap cheap cheap. As are the other junk components used on Samsung phones - cheap cameras, cheap over-saturated displays, cheap flash RAM. The irony is that Samsung can make quality parts, but the droid fanboys only want big bright supersaturated displays. They know nothing about quality, and so Samsung doesn't have to worry about making quality phones - as long as they're big.

I agree Samsung phones are made with junk components. If I had to have a android phone I would always pick Motorola. And honestly the main factor in that is, because of signal. But the other factor is, I have never had a issue with any motorola device I have ever had.

I don't dig the huge screen at all. It's just not practical. Not everyone has a giants hand. And the note 2 is way to big for a phone. 4-4.5 inches is plenty big. Moto hit it right by sticking with the 4.3 on many devices. Good size and it just feels right in the hands. I don't want to carry around a mini tablet

I'm not a fan boy of anything. I can easily go straight back to a basic flip phone and have no issues in doing it, if I had to. I don't use my phone like I use to, I simply call, text, a bit of browsing when I'm not at home. I have a pc for all the other stuff. And it's much easier on the eyes to browse the net on a pc than on a phone. I choose apple because I like the OS, and the os itself is highly stable compared to android.

Yo LUQHEAD - you are sooooo dumb.

First off, have you ever seen Apple market anything cheap?
Sheep? I love that. You don't see those that appreciate Apple Products at other site for other maker, bashing them. NEVER.

What WALL STREET was calling a CHEAP PHONE, was their own stupidity.
APPLE DOESN'T MAKE CRAP OR MARKET TO POOR PEOPLE!

Wall Street thought the 5c was going to be for gaining market share from the Chinese. APPLE DOESN'T CARE ABOUT THE POOR CHINESE and the bottom line doesn't make that APPLE NEEDS the Chinese. Sure their in business, with them, but APPLE MARCHES TO IT'S OWN DRUMB and not to the MORONIC thoughts of WALLSTREET or MORONS ANDROID SHEEPLE FANBOYS THAT ARE TO STUPID TO SEE THAT THE "C" MEAN ...,

"COLOR!"

Now, that I have spelled it out for you.
Here is the big picture.

EVer seen how many little kids have phones now? Probably not. YOU LIVE IN YOUR PARENT BASEMENT.

More and more kids are carrying phones. YOUNG KIDS!.

Get it!!!

GIRLS, MOMS, WOMEN LOVE FASHION AND COLOr

GET IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Probably not. YOU'RE TOOOOOOO STUPID.

Frankly, no one talks about SAMSUNG AT A APPLE SITE JUST THE JEALOUS, MALCONTENTS LIKE YOURSELF wishing they had a iPHONE!

The irony that in your post, filled with amazing spelling and grammatical errors (wtf is a "drumb"?) and ignorant elitist attitude ("Apple doesn't market to poor people", "Apple doesn't care about the poor Chinese"), you have the gall to call another poster dumb is absolutely amazing. You are the poster child for an Apple fanboy, and are proof of the sterotype.

I got on his level...
Now for you.
Who the hell are you?
Just another moron. I won't call you troll because moron is more fitting.
Fanboy?
Call me what you want. I know what I like.
And frankly jack asses like you that come in to discussion and start shit over what?
You project and your anger, discontent, impotence, and pure ignorance for the purpose of trying to bring others down.

Spelling. If I didn't have to spell out common sense and FACTUAL data, and not some knee jerk response like that of you and your ilk of malcontent Android bot, M$bot fangirls, and then I would probably give a shit about my spelling,

But considering the source and the education level I don't really care about your pettiness.

So really?

Now, what were you pointing out.

Uh huh, nothing I haven't read before.

Look kid. Take a chill pill and relax a bit. First of all, I never said I dislike the iPhone or any Apple product for that matter. I was knocking on them for pricing it as they would the iPhone 5 once the 5S came out. What they did was discontinue the high end iPhone 5 and replace it with a lower end version yet price it the same price as the iPhone 5 if they were to still sell it. The 5C was supposed to be a Cheap not "Color" than the iPhone 5 or 5S for the emerging markets but $99 on contract and $549 outright says otherwise. What they could've done was continue selling the iPhone 5 for $99 and $549 and the sell the 5S for $29 and $449 but we all know that will hurt their profit margin because they will be producing a 3rd phone instead of 2. But that also means they'll be making a higher profit because they stopped making the 5 and are now producing a lower end instead. Understand where I'm coming from first before making judgments. I was not knocking on the product but on Apple.

"APPLE DOESN'T MAKE CRAP OR MARKET TO POOR PEOPLE!"

"Frankly, no one talks about SAMSUNG AT A APPLE SITE JUST THE JEALOUS, MALCONTENTS LIKE YOURSELF wishing they had a iPHONE!"

Umm Wtf are you trying to say? That just because you don't want the iPhone you're all of a sudden cheap? That's pretty stupid but we've already established that by reading your comment and how you wrote it but that's besides the point.

Also I'm sure if I can afford a Note 2, I can afford the iPhone and it's just that I prefer Android due to the ability to customize more than iOS. And no I do not hate it, I've used BBos iOS and Android for a long period of time and decided to go with Android. It's just my preference and I have the right to choose what platform I prefer and that does not make me a fanboy. Fanboy would mean that I bash another companies products and praise the platform or product you like which is exactly what you are doing...

Hardly surprising when you actually look at what they have done.

The 5C is basically identical to the 5, except for the exterior. So instead of having two identical looking phones at several different price points, they dumped the 5 (design) altogether.

They will sell lots of them, just as they sold lots and lots of 4S when the 5 was released, and lots and lots of 4's after the 4S was released.

You are really just still getting a 5 (with the standard lower price), just with a new/different exterior.

I'll upgrade to a 5C.
I couldn't care less about the plastic because it'll be put in an Otterbox.
So, it'll effectively be getting an iPhone 5 for what Telus currently contracts the 4S.

During some Independence Day shenanigans this winter, my iPhone 4 went into the drink, and I've been holding out for either a 5S or free 4S. I wrote off the 5C, considering that it's price and appeal might only work abroad. But after the announcement, I'm all-in on the 5C at $99. So, at least for this potential buyer, Apple made a sale it might not have otherwise if just the 5 was the $99 model. I imagine that's true for millions of people.

I can't understand the stock dive either. I think it's a brilliant to offer a lower cost model. I'm sure many people are disappointed that the 5C wasn't a "budget" model, and while that's understandable, the people must come to terms with that disappointment. From a company perspective, I like that the 5C is priced lower than the 5S, but not so low that it becomes cheap. It's just slightly less expensive but still a great product.

From watching all of the investment talking heads today, the Apple crash has nothing to do with the 5c or 5s or the feature set (iOS7). It's all caused by the lack of announcement of the specifics of the China deal. Everyone knows that China is "the" big deal for this release, but the official word did not come out during the role out.

The 5c is a disappointment because Nokia has recently shown everybody that it is possible to make decent low-cost phones. The 5c is only marginally (if at all) better than the Nexus 4 which has been out for almost a year and which costs less than half as much off-contract as the 5c. Some analysts have pegged the gross profit margin of the 5c at 50%. That's excessive, even for Apple, and simply not competitive.

The 5c may be successful on US carriers which heavily subsidize the true cost of the phone. But as you mention the China market is a lot larger, and the 5c is going to cost $733 there. Profit is important but as RIM/Blackberry has shown us market share does matter.

But is Nokia making any money? People forget that Apple is expected to make huge margins and profits every quarter. Also I take everything analysts say with a grain of salt. These are the same analysts that thought Apple would ship a $300 off contract phone. How would they know what Apple's gross margins are on the 5C?

Analyst generally = 'investor' (a.k.a. day-trader).... looking for Apple to make some move that they think might benefit them, not Apple. Of course, they also typically know next to nothing about the industry, so whether or not their advice would even benefit them is questionable. In simple terms, a BLOCK of salt might be recommended.

"Two new models" Technically, I guess they did, but the 5c is pretty close to the 5 with a new shell. I don't think there's much beyond plastic and colors to differentiate the two. It's a good move though. Rather than just dropping the previous year's model down a price tier as has been done before, they've spruced it up and made it more attractive, especially to the younger demographic that doesn't necessarily want to have their "Dad's phone". For many I think it will feel like getting a new phone rather than getting "last year's" new phone.

For all that, I am still not convinced that "low cost" has to equal "crap." I am not surprised at the general reaction to the lack of a cheaper iPhone. Apple seems to be saying "We aren't interested in all those growth markets; we are happy selling to our existing customer base." Time will tell whether this was the right move, and Apple as a company has certainly succeeded by going a different direction than people thought they would. Hopefully this will be looked back on as a wise move and not a missed opportunity...

Low cost doesn't have to equal crap, but how many OEM's are profitable making low cost phones (with out a sugar daddy like Google or Microsoft) to help subsidize the cost? Sure Apple could have made the 5C cheaper but then when quarterly earnings came around and margins and profits are down QOQ and YOY Wall Street will punish the stock for it. I think Apple has baked in flexibility in off contract pricing and if they need to go a bit cheaper in certain markets they'll do so. But Apple really wants to avoid a race to the bottom if at all possible.

I'm just sad that you can no longer purchase a one year old Apple flagship phone at $549 off contract. Now you can only get a phone that is somewhat less than a flagship for that price point.

I just checked out some prices at Amazon UK. The Samsung Galaxy S4, the Nokia Lumia 925, the HTC One, the Sony Xperia Z and the BlackBerry Z10 were all available for less than the price of a "cheap" 16GB iPhone 5C. All come with bigger screens, some even in HD.
Apple is already richer than many medium sized nations, so as a potential customer, I simply don't care about their margins.
Also, Steve Jobs once called the iPod Touch, "the iPhone without a contract". The current iPod Touch now looks classier than the iPhone 5C. A 32GB iPod Touch costs $299, whilst the 32GB iPhone 5C costs $649. The iPod does not quite have the specs of the iPhone, but it can do almost everything the same, except for making calls. Could someone please tell me exactly what it is that you get for that extra $350 for the "cheap" iPhone and why it is worth it?

Well, and all those other phones ARE cheaper... at least on the OS front, if not the hardware. Pardon the pun, but it's not apples and apples, IMO.

I kind of agree on the iPod touch. That's the route I've taken so far, as phone contracts are just such rip-offs. Since I'm not on my cell phone tons, I've found it much more cost effective to just have a 'pay-as-I-go' cheapo phone in my bag or backpack, and then an iPod touch. If it weren't for the lack of competition among phone carriers, this might not be the case. But, what you basically get for the extra money of an iPhone, is the 'privilege' of subsidizing way over-paid cellular providers' pockets.

Well, the cellular radio is "worth" $130 according to Apple iPad pricing. And it supports more bandwidths/frequencies than before.

Then there's the better rear camera (8 MP vs 5 MP), processor (A6 vs A5), at least double the RAM (1GB in iPhone 5 vs 512 MB in iPod Touch 5th gen), better battery life, (10 hours of Wi-Fi usage vs 8 hours), and apparently, the 5th gen iPod Touch doesn't have an ambient light sensor or proximity sensor. iPhone 5C also has triple microphone for improved noise cancellation, (for calls), and voice recognition (for Siri), (don't know if iPod Touch has that).

You can also take pictures while video recording on the 5C, and geotag your pictures. Whereas on the iPod Touch, it's geotagging over Wi-Fi.

Overall, it's the cellphone part that makes it worthwhile, especially if you're going to pay the non-subsidized price, cause you can pretty much use it with any carrier, (caveat being you need a nanoSIM card).

Having cellular data is a big deal. Speaking from personal experience, comparing my old cellular iPad 1 to my Wi-Fi iPad Mini, I believe I used my iPad 1 a whole lot more outside the home. Even though free Wi-Fi is prevalent here in Toronto, it's a pain cause they sometimes redirect you to a page where you have to "agree to terms and conditions". A lot easier to just have your own personal 3G data connection and use your device on-the-go.

I couldn't agree with the article anymore if I had written it myself! Thanks for articulating it so well, Peter. I was just arguing this very point in a "comment discussion" (I guess you could call it that) over on engadget. If I need to reply, yet again, I may just post a link to this article.

Seems like any negative reaction and assumption that the 5c would be a low-budget phone is on the individual for not treating months of rumors as, well, rumors.

I just got done reading this particular editorial from Media Bistro (https://www.mediabistro.com/prnewser/has-the-apple-brand-lost-its-edge-y...) that, whether you agree with the message or not, seems to stem from either un-checked expectation or a vague perception of analysts, the enthusiasts, and the general public. Sometimes I feel caught in between worlds: I enjoy reading enthusiasts sites like iMore, and I read plenty of blogs and sites regarding the videogame industry (which makes watching reactions to Apple reveals amusing, because people reacted this same way recently to the Nintendo 2DS), but in the end I'm personally looking for practicality over "innovation," which sounds like a watered-down buzzword at this point.

Honestly, I'm in a position for a new phone with a discount, and my contract is ending very soon, which means I'm pretty much prime for the 5s, but I can't help but want the 5c, as well.

I sort of wanted to see the iPhone 5C come in at around $400. I knew Apple weren't gonna sell the phone at $300....but it is what it is....just have to deal with it.

I'm not interested in what the 5C costs in China. That's a problem for Apple and China mobile to sort out. I think a lot of consumers in the USA who are ready to upgrade from the 3GS, 4, and 4S, will opt for the 5C. I'm one of them. I'm going for the 32GB 5C on Sprint for $199. Save the money and trade in my 4S to subsidize the purchase. Will get Applecare + and be able to get some accessories. Way to go, Apple. Sticking with the platform!!

I love this statement:
"That is, perversely, a message that's not well received by many Wall Street analysts, and they seem intent on punishing Apple for its hubris at wanting to, you know, actually make money."

Wall Street just doesn't get it... they haven't for a long time. Of course, Wall Street isn't much about investing anymore either. They are looking for 'news' which will push the stock one way or another to keep the day-traders happy. Bottom line for Wall Street... Apple is just too darn stable and expensive a stock. The swings aren't big enough and the point of entry is expensive. Apple stock would be a prize for investors, if there were any of that rare breed any longer.

Regarding the 5C, I'm not sure what to think. It certainly doesn't seem like a very good deal. IMIO, it's more about the color. People who want a cool color will buy them. People concerned about the tech are going to get the 5S. For $100 more, it's a no-brainer.

While I had HOPED the rumors about a cheap phone weren't true... I'm actually not surprised. It consoles me that there is still good business sense left at Apple.

See my comment @ LUQ above.
Every body in the market wants to bash Apple.
They don't do what everyone want them to do and it makes everyone angreee..

Apple has more money than the US gov.
They are flush and have money in the bank.
They pretty much, design, manufacture, produce and market all on their own.
They DON"T take cue from anyone, and they produce what they want, not what is demanded of them.

They have turned profits every quarter year after year while others are failing miserably.

The 5c will and is genius.
Like another said, it is the same phone, it just has a plastic shell.

How many moms are going to buy a phone for the little kiddies? One that is colorful, and won't break as easily as their expensive counterpart, aswellas whimsical, colorful and fun.

THINK DIFFERENT! Genius.

"Ultimately, getting an iPhone needs to be a good deal both for you and for Apple. Apple's set the price of the 5c and it falls on us to decide if it's worth it. You may decide that the iPhone 5c isn't worth it,"

Rueters quoted a poll i China saying "Only 2.6 percent of 35,000 Chinese consumers surveyed by Web portal Sina.com said they would consider buying the 5C." So i think the danger is that consumers in these markets will simply not think it's worth it. And apparently it seems a very real problem is that the high in market Apple's targeting simply isn't growing and all the growth is in the low end they won't address. On the flip side there are analysts that say they can keep the status quo for two quarters because they'll have higher margins. After that though who knows. Also Apple is apparently 7th in china behind Samsung, ZTE, Huewei, Lenova, etc. And it only has 5% market share. It's fine to say they don't want to sacrifice margins but some market share is better than declining. And if all their phones are too expensive, only 2% interested, they may not be growing market share or profits from china.

Good article, Peter. I think Apple caught us all on the hop by placing the 5c as the mid-tier product instead of replacing the lowest-tier model.

Just regarding China:

"China Mobile. It has more than 60 percent marketshare in a population of almost 1.2 billion mobile phone accounts. To put that in perspective, China Mobile's customer base alone is more than twice the size of the entire U.S. market."

I would say that the reason that there hasn't been a "cheap" iPhone released for China (or elsewhere, for that matter) is that Apple isn't interested in China's 1.2 billion mobile customers. They only interested in the (currently) 200 million who are able to pay a premium for quality: ie. the middle class.

This segment of the market is expected to double it's current income by 2022 and they will number 3x the US's baby boomer generation by that time. Looking wider, Asia's middle class is expected to grow to 1.7 billion by 2022. It's these people that Apple is aiming for, with similar margins on products to which is has been garnering in Western markets all along.

There's no reason at all for Apple to do "cheap" when dealing with these kinds of numbers, not for several years at least.

"They only interested in the (currently) 200 million who are able to pay a premium for quality: ie. the middle class."

That's a great point, and that is still a huge number.

absolutely!

not too mention is it a very poor nation, the majority live in rural farming area probably don't get cell reception....

and frankly, how many really know what a cell phone is? Think about it.

It's a mistake to discount the Chinese market as a bunch of ignorant dirt farmers who don't know from cell phones.

Actually, China is the largest single mobile phone market in the world, with 1.15 billion cell phones in use (in a country of 1.35 billion people). You're right - many of them live in rural areas, with limited cell phone reception. But the country's overall cell phone use absolutely dwarfs the US. It's a huge market, and growing.

didn't say dirt farmers.
china also has been a upstart in the cell industry.
They don't have as of yet, the infrastructure in place to service all the said numbers.
Look how long it has taken us to get where we are this day.

That being said, my point is merely pointing out that the 5c was being pitched by most WALLSTREET anal- y -sts as a cheap phone, then they tied it in with a phone for the poor in china. Rush even spoke about this in detail.

But Apples intention with the 5c hasn't nothing to do with China or the poor.

This is purely being marketed just like the first retro iMac.
Fun
Whimsical
Youthful
For people (kids, teens, mothers) let's be real. I have kids and even 4 years ago when I would pick them up in middle school, the majority of kids ages 9-12 walk out of the school with cell phones. And what did the majority of the have?
You got it. $500 iPhones.
This isn't rocket science.
Talk to me when I see a commercial from Apple with two men in a rice paddy watching youtube on a 5c then we'll talk.

Well said, Peter!

I feel the iPhone 5C is positioned much like the iPod nano: less expensive than the flagship iPod classics but by no means considered a cheap iPod. In fact, over time, I would not be surprised if the iPhone 5C becomes the de facto iPhone for John Q Public, and the iPhone 5S becomes the phone for those that need the bleeding edge. I last replaced my phone in 2011, so the iPhone 5C looks like a serious step up.

Agree'd.
Funny to see all the carriers with their new every year upgrade contracts...
What a failure on their part.
MOST DON'T WANT OR NEED TO UPGRADE A PHONE EVERY YEAr.

Their marketing to youth and it is going to bite them in the butts big time.

I think in this economy disposable income to break contracts and get new phone annually is a big mistake on the phone carriers part.

Yep. Looks like they are setting the stage to slit their own throats.

Wasn't it within the last year that all the carriers were extending the time frame between upgrade eligibility? Now, since T-Mobile started the ball with their Hail Mary pass to stay afloat, it seems like they are all racing the other way to not be outdone.

You got it.
And Apple just sits and laughs to the bank.
All these new contracts have super fine print.
And,
and if you purchase your phone early through the APPLE store you are REQUIRED a 2 year contract.

How is that working with the upgrade when every year plans?

They, (cell service) companies, rape everyone when you change phone mid plan and MAKE BANK!

Sing it, brother.

And let us not forget that, for all the money we spend monthly, cell carrier service is laughable. My cellphone company lent me a gizmo to piggyback off MY high-speed cable Internet connection for voice calls because reception suddenly began to stink where I live ('burbs of a major metropolitan area). They said it was temporary. It is now going on two years!!!

No matter how one feels about Apple, it has to make everyone feel good Apple is sticking it to the cell carriers by telling them to keep their crapware and branding off their phones. Until the iPhone, Verizon was going so far as to dictate the color scheme for the UI on phones they carry!

The unfortunately thing that happens with all these rumours like the "5C" Cheap iPhone one is that people expect that and are disappointed, certainly the market seemed to be more disappointed judging my the drop in share price but then they are a fickle bunch who only see dollars signs when they open their eyes in the morning!

If my iPhone 5 was stolen I would go out and purchase the 5C as a replacement and wouldn't lose sleep over it being a little heavier or the plastic body.

I wouldn't race out and purchase a 5S though but that's just a personal choice. I will wait until my contract renews and see what iPhone model is launched and be happy with whatever is produced at that time!

Yep you are right, but if Apple makes money quarter after quarter, the shareholders are happy.
Yesterday I updated my 4s at verizon, got $210 trade value, upgrade to a iPhone 5. Yes just a 5. I will wait for the 6. I just needed faster network, plus the trade in value of my 5 will superceed the 4s. I got more for my 4s then I bought it for.

Win, Win for me. I am patience and will wait for the 6.

The only problem I see in that logic is that the 5c is only marginally cheaper than the 5s. In fact, a 32GB 5c costs exactly the same as a 16GB 5s, making those 32GB 5c's a really tough sell. I think there should be no overlap in model/price for the new iPhone line.

"I think there should be no overlap in model/price for the new iPhone line."

There's is price overlap in the iPad/iPad mini and Mac product lines, too, and it hasn't seemed to hurt Apple there.

Yes, but there you have products with different characteristics of size and weight that can be a determining factor on the purchase. That is just not the case with phones.

I think I see what Carioca32 is saying. It won't hurt the company, but may hurt the product. For example, studies earlier showed that most iPads sold were WiFi-only options, and of the Cellular ones sold, only a small percentage were activated. So having price overlap does give customers a bit more to mull over, I can see that. Same thing with a computer, though - do I get the Macbook Pro with the lower speed CPU, and throw on more RAM, bigger SSD? Or do I get the faster CPU, but less extras, because that's my budget? My problem is, I usually end up opting for more more more. Darned Apple! Quit coming out with such great products every year, my bank account needs a break!

I have read quiet a few articles today justifying Apple's use of plastic. To be honest, ss a consumer I don't care what they use as long aswhat they are using is reflected in the eventual cost.
My biggest problem with 5C is that Apple basically has made a phone which will cost them less to manufacture as compared to an iPhone 5, but have kept it at the same price point of what iPhone 5 would have been after 5S launch.
That for me is blatantly cheating your customers trust. We all discussing 5C here are minority. For the majority, Apple has just released a colorful phone and that majority doesn't know how or what has changed and how Apple's doing this only to protect its margin.
I have been a long time apple fan, always because apple as a company protected my interest.
With 5C, they have tried to fool me and millions alike.

Aggree, less quality, same price point thatn the 5... I get it (apple just want to make gazillions of money) but why would anyone would buy this instead of the iphone 5? Which you can probably get on ebay even cheaper right now and keep the same specs as the iphone 5c...

Well to begin with majority wouldn't know that the specs are same. Secondly there is a huge difference in buying a new phone vis a vie a used one. Wear and tear, manufacturer warranties, reliable sources, all the time and effort spent to find a seller is just few of the reasons. Even if I were to get a new iPhone 5 right now, the problem with buying it is knowing the fact that it has been discontinued by the manufacturer.

"Which you can probably get on ebay even cheaper right now and keep the same specs as the iphone 5c..."

They're not going to do that because the vast majority of consumers aren't specmonkeys, for one thing. All they know is that Apple has introduced a new phone. Emphasis here on new.

And for another thing, most consumers aren't comfortable buying something like a phone off eBay - they're going to go to a retail store or order from an online source they know and trust, like Apple's web site.

"less quality" - quality is a word that has unfortunately lost its meaning today. Fast Food restaurants have perverted it to mean product consistency. Really, it should mean product performance and reliability. In every way, Apple is first in this definition of quality. The 5C will in no way drop its responsibility there.

Although you may be an eBay shopper for smart phones, the vast overwhelming majority of customers who buy smart phones don't buy them from eBay. At least, in the US, Canada, and probably most major economies. I frankly don't know what China, India, or the rest of the world may be like, but I suspect that many of them may buy refurbished or repurposed phones, which again is not Apple's market on a new device. So let's say "you" are a typical smart phone shopper, where would you go? Probably the store operated by the cell carrier you already have service with, or one of those multi-carrier cell stores. And what will you buy? If you are going to buy an iPhone, you will buy an iPhone, according to your means. A 4S, 5C, 5S. Is the iPhone "story" they are selling compelling? Look at the numbers. They don't lie. Although "Android" may be a majority of smart phones globally, the single largest purveyor of a phone brand, is Apple.

rai_arpit, you suggest that because the material they chose for the case is plastic, that it costs less. Material cost is only one cost in producing a product; manufacturing processes also have a huge portion of the total cost (that is my industry - Engineering). If you noticed in the announcement, the process embeds a steel support frame in the plastic, and coats the plastic for added durability. Those materials are not plastic, and the process adds costs that a simple injection mold process does not have. So, yes, it may cost less to produce than the anodized aluminum, but I don't think it's the kind of cost reduction you are thinking of when you say you expect the cost to be reflected. And, it is special - what other cell phone manufacturer goes through the extra trouble to develop a complex process for an outer plastic shell?

"So, yes, it may cost less to produce than the anodized aluminum, but I don't think it's the kind of cost reduction you are thinking of when you say you expect the cost to be reflected."

Jay Imerman,
Thats not how pricing a device works now does it. Without getting into too much detail of what I do for a living, the approximate BOM for iPhone 5 16 GB was close to $210. The 16 GB NAND costs apple about $10 and 64 GB costs them $40 approx. How much do they charge you and I for it? So as a consumer if I expect apple to price their product $100 (compared to a hypothetical iPhone 5 cost) less because they save about $10 in manufacturing it in plastic instead of Aluminium, is that wrong?
I have an iPhone and iPad both 64 GB. Knowing the actual price of NAND, I still got those as they give me "more". But why in the world should I be paying the same at all for a plastic case?

To the point of any other manufacturer going through the trouble of creating a complex process for plastic outer shell, its just that other manufactures dont typically sell you something which is inferior to one of its previous generation and expect you to pay same or more. Its only Apple which can do something like this and get away with it.

Whether you like it or not, the sole purpose of iPhone 5C is to protect Apple's Margins. From my perspective, its a monumental fraud. They are cheating a whole bunch of their unsuspecting existing customers by branding something old as "new" and selling it at a "new product price"

Apple is hardly the first company to repackage existing technology in a different container and sell it as new. Calling it "monumental fraud" is a stretch.

I'm going to go out on a limb and guess you are not going to buy the 5C then. Just a wild guess! ;-) What I am saying is that as an outsider, it is easy without knowing all the factors to judge it as better or worse. In fact, the 5C is the 5, with a new outer shell. Having configuration choices increases product cost, while changing materials/manufacturing process may reduce cost. In the end, hopefully the 5C will increase profits. Definitely it is not an inferior product - it is the 5. How is that inferior to the 5? If by inferior you mean a less durable case, perhaps, but at least they offer a choice. And, as a customer, you are always welcome to purchase an impact-resistant third-party case (as most iPhone owners do anyhow). So I really don't see a reason to be upset on the plastic/color choice. As far as performance, again, I don't see any reason to be upset about being cheated there either.

Fraud? Ripoff might be a better word to what you are thinking of expressing, but in any product, you charge what the market will bear - on perceived value. Back in the 1980's when I sold computers, a printer cable cost manufacturing perhaps $2 or $3? Maybe $5? But we sold it for $30 or more at the retail store. Perceived value, and demand. Accessories we used to make up margins for discounts on the main product.

Haha, no I won't Jay. Unless they give a 20% discount on it here in India. Also you didn't get my point. I don't have issues with it being plastic. My issue is the price Apple wants me to pay for it.

As for the market and price, you know Apple is fast losing that battle. Otherwise they wouldn't have lost $300 billion in cap in last one year. The Wallstreet doesn't agree with Apple defines the Market. It would be very worrying times if I was a shareholder

Ah, OK, so you have an issue with the price regardless of the material, I understand now. It seemed as I read the post, like you had an issue that the material made it sub-standard. Yeah, I hear that all the time - price for products. Personally, as I am mid-way through a professional career, I don't want to waste my time and money with substandard products. I'd rather pay an up-front, reasonable price for a top-quality product, than have to pay for cheap junk that has to be fixed and replaced constantly. The Mac is a great example - up-front complete-package price, a better value than the PC (google "techgeekjay compare apples to apples" to read my full article on that topic). I think the smart phone market is maturing. Market cap is merely stock price, which may or may not have anything to do with economic success and viability of the company. The past couple of years have been a lot of upheaval for Apple (losing founder & CEO, market maturing, other mfrs catching up, etc.), but in spite of it all they are doing well. And they seem to have attracted a bunch of nay-sayers who love to report the slightest imagined foible as predictive of impending catastrophic failure. I think it's incredible that the company (after all it's just a company) has inspired such passion on both ends of the spectrum.

For people who are owning 4s or 5 does not make any sense to upgrade to 5c or 5S. In India the 5c is going to be priced around INR 40,000/- and it will be a very expensive affair. I have used Iphone for around 4 years, I have been using Galaxy note for past one year, I will not make the mistake of buying a Iphone at this point of time. Iphone still doesn't provide basic features like 1. A good keboard 2. File management system 3. Email attachments while replying, mainly documents. and many more critical features which android provides.
I cant imagine Apple has taken one whole year with several top class engineers to change the colour of the phone case. Very disappointing.
To sum up it is old dish in new plate

Preach on brother Cohen! The gall of those execs, wanting to make money, even if their business is a business, and for-profit at that! Does anyone remember the Commodore Amiga? Probably lost most of you on that one - and that is total proof that people don't buy on specs. That computer rocked, it had the best specs, and best OS, best software, and more - all but the best sales. You may not realize it, but the iPhone 5 was the single best selling smart phone of all time. And, they discontinued it. My take, despite what anyone may want to believe, it is Apple after all, and it will hands-down be a success. Check out my blog TechGeekJay for a more in-depth post-announcement response on Sep 11, 2013.

i bought one of these , a blue one to be exact and , i liked it at first then i could hear a cracking sound coming from top right corner. this got worse as time went by , and depending on tempurature like hot or cold it would be worse. so i had it replace with another blue one that was fine and dany, until 2 weeks later the hombutton adheisive came loose and the home button was almost double clicking and the top left corner started to make the noise that the first one was making . and i have had the iphone 4 , i loved that phone . with this being said i wentto my carrier and payed 300$ to get away from iphone 5c and then i ended up with a samsung galaxy s4 , which seems almost more delicate then iphone 5c . but holds up just fine . so in result i fine they mad poor design choices and i never expected this from apple . and now i would not recomend it to anyone because of this incodent. and i do not feel that i am wrong by saying this , when i went to my carrier they said dont worry about it we are after having 20 iphone 5cs come back with same issue . and i am not siding with samsung , i dont even really like the s5 . but i was looking forward to the iphone 6 but i can guarentee i have given up on apples products all togeather .

"That's why I bet Apple will sell them by the boatload."

I must point out a mistake in this statement. In actuality, Apple will sell them by the planeload (mostly FedEx 777s) if one is to believe a recent piece by another news organization. ;-)

Pete, you are dead on!

I've been having this argument here with some guys in my office who were squawking about the 5C not being "cheap" like it was "supposed to be".. and "what a crappy China strategy Apple has" by not having a bargain-basement off-contract device. But Apple themselves never said the 5C was supposed to be cheap.. the bloggers and media pundits assumed it, then the public just ran with it.

I, and many others, were hoping for an iPhone 5C that retailed between $300 - $450 off-contract. I wish they had made an 8 GB 5C at $450 off-contract. The 4S has no LTE, no dual band wi-fi, and a 3.5" screen. I'm assuming the 16 GB 5C next year will be $450. Still would have been nice if it were available this year instead.

The iPhone 5C is the iPhone 5 with a plastic case. It's not a new product.

I've had an iPhone 5"C" for almost a year now. Spent $5 on a colored plastic case.

I got a blue 5c for work the other day. I'd like to write a big comparison against my 150 dollar Android / HTC device I've had for a couple of years, but because we're all busy, basically for 700AUD the 5C is a piece of shit.

Also, regardless of what any of you say, its _just_ a phone. It means I'm connected to work 24 hours a day and can't escape from emails, calls, meetings etc. It serves _no other purpose_

Having a 700 dollar blue phone is not "a lifestyle choice", Apple's plastic phone is no different to Samsungs plastic phone. There isn't a single "innovation" in this device.

Its just a plastic phone that costs 700 dollars.