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Survey finds China's 'sweet spot' for Apple 'iPhone 5C' priced at $486

post #1 of 51
Thread Starter 
A new survey of smartphone buyers in China has found that the pricing "sweet spot" for Apple's rumored "iPhone 5C" is $486 ? a price higher than the analyst responsible for the poll expected.

Morgan Stanley
Source: AlphaWise & Morgan Stanley Research


Katy Huberty of Morgan Stanley revealed the results of the AphaWise survey on Tuesday, based on 2,000 Chinese handset users in the nation's largest cities. The data shows that customers in "tier 1-2 cities" are increasingly planning to purchase more expensive smartphone models, signaling a benefit to both Apple and Samsung.

But if Apple were to introduce a new, lower priced iPhone model, as the company is expected to do, the survey found that it could gain 13 points of smartphone purchase intent share in China. That would push Apple from a 23 percent share to 36 percent among future smartphone buyers, potentially pushing it beyond Samsung which is seen as falling to a 30 percent share in that scenario.

Respondents to the survey indicated on average that they are willing to pay $486 U.S., or 4,000 RMB, for a so-called "iPhone 5C" that is unlocked and contract-free. That number was higher than what Chinese customers are willing to pay for a Samsung Galaxy S4 Mini (2,600-3,800 RMB) or HTC One Mini (2,000-3,000 RMB).

Morgan Stanley


The $486 that Chinese customers would reportedly pay for an "iPhone 5C" comes in 22 percent higher than Huberty's estimated price of $399 for the anticipated smartphone. She believes this signals that Apple could gain even more market share than the survey indicated, or that the company could obtain even higher margins than expected on the device.

The poll also found that an "iPhone 5C" wouldn't even need to have high-speed 4G LTE to satisfy most potential customers. Among the respondents, 68 percent said they would be fine with a 3G model, while just 18 percent said they were interested in an "iPhone 5C' with 4G LTE.

Apple is expected to introduce a new iPhone model with a plastic back, using many of the same internal components as the iPhone 5, at a media event on Sept. 10. That device, rumored to be called the "iPhone 5C," is presumed to be joined by a new flagship model, referred to by the media as an "iPhone 5S."
post #2 of 51
It needs to be lower than that to really crack China open for Apple.
post #3 of 51
More proof that the 5C will be huge. Likely the biggest product rollout in history due to the sheer demand that it will have in China and India.

If Apple prices the 5C at $450 as analyst seem to be estimating now we can pretty much say game over for Samsung and other Android manufacturers.

If Apple is bold and prices the 5C below $400 then the skies the limit for iPhone sales. Hopefully they'll be able to keep up with demand!
post #4 of 51
Apple should pull an "iPad" trick with the new iPhone 5C and catch the opposition off guard. Remember how everyone counted on Apple charging $900~1000 for the first iPad? Set the oppo back some. Those were the good times.1biggrin.gif

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post #5 of 51
Current iPod Touch 32GB is $299, then add in the cellular for $130 like on the iPad, gives $429. Now with a lower cost materials, $399 seems doable.
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post #6 of 51

$399 is the sweet spot after adding taxes it will be $450 in China

post #7 of 51

So... the 5C is a "real" product?
 

(at least the article said "rumored".)

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post #8 of 51
$399 would be perfect though Apple probably wouldn't be able to make them fast enough! I hope Apple surprises with the price vs what's the highest price we can get away with.
post #9 of 51

Appears to be more "sour" than "sweet" based upon the above posts. 

post #10 of 51
Quote:
Originally Posted by Grand Prick View Post

That's TOO MUCH for me

 

Quote:

Originally Posted by Wurm5150 View Post

It needs to be lower than that to really crack China open for Apple.

 

The so-called "sweet spot" is the result of a survey of the Chinese market. Potential buyers were asked what price they would pay for an iPhone and $486 is what they considered okay. It's not what Apple was planning to charge IF the thing even exists. Chinese consumers are no different than the rest of the world. A certain segment will always choose the cheapest option no matter what brand or features. If it's the cheapest they will buy it. Apple has never been interested in that market and I hope never will be. That would sully and cheapen the brand.

 

And no matter what you two think or say there will always be a very large market of consumers who want quality over price. It's why premium brands exist and continue to thrive even when the economy tanks. Are you envious that some can afford finer things than you? Android is for for cheapsters and that's why they sell the most, not the best.

post #11 of 51
Quote:
Originally Posted by jwdawso View Post

Current iPod Touch 32GB is $299, then add in the cellular for $130 like on the iPad, gives $429. Now with a lower cost materials, $399 seems doable.

 

We didn't know you were an industrial engineer. Really? Just throw around some meaningless numbers and come up with a price that suits you? Really?

post #12 of 51
Quote:
Originally Posted by sog35 View Post

$399 is the sweet spot after adding taxes it will be $450 in China

Regardless of whether it's $399 or $450, at least they finally seem to be talking about a number that's achievable. I can easily see Apple hitting something in that range. When they were talking about $200 as a target, it didn't seem even remotely plausible.
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post #13 of 51

But..But...Samsung..

post #14 of 51

And this you know how?

post #15 of 51

Of course, from the data providced, what survey respondents are willing to pay for a phone, what they think is too expensive, is only part of the equation for the appropriate pricing scheme that Apple will implement.  The so-called "sweet spot" in the AlphaWise "analysis" ignores the cost of manufacture and the profit margin needed by the seller and the supply chain (resellers).  If pricing was based upon only the customer's willingness to pay, then everything would be free.  And Apple would be no more profitable than Nokia or Blackberry or HTC. 

post #16 of 51
Quote:
Originally Posted by lkrupp View Post

 

We didn't know you were an industrial engineer. Really? Just throw around some meaningless numbers and come up with a price that suits you? Really?

 

 

You are right - there's a lot you don't know about me! 1biggrin.gif

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post #17 of 51

I remain unclear about this (and have seen no lucid, irrefutable rationalization anywhere): What is it about 5C that will win over more Chinese customers (or India, Russia and other places where iPhone is less than dominant) than 4 or 4S? I don't think it will be much cheaper than those two? And if it will be cheaper, what will Apple sacrifice to hit the lower price points? Are they simply sacrificing margins? If so, why not just sacrifice greater margins on 4 and 4S?

 

Is it just the illusion that they are getting a new, cheaper iphone rather than last year's iphone?

 

Or is it because iPhone 4 are 4S are being both retired and the current iPhone 5 will become the only "older" model, but they still want/need 3 models in their lineup? With the 5, 5C and 5S, they will have 3 phone models with the same screen size and connector. Is that the rationale?

 

And what about next year? Will they market 4 models - 5C, 5S, 6 and 6C? What will the successor to 6C be called when they release 6S in 2015?


Edited by StruckPaper - 8/20/13 at 9:11am
post #18 of 51
Umm, 4000 RMB is US$650, not $486.
post #19 of 51
Quote:
Originally Posted by sog35 View Post

$399 is the sweet spot after adding taxes it will be $450 in China

Taxes affect all handset manufacturers, so it's probably not much of a differentiator. All a company can really control -- relative to the competition -- is the base price.

post #20 of 51
Quote:
Originally Posted by StruckPaper View Post

Is it just the illusion that they are getting a new, cheaper iphone rather than last year's iphone?

 

Bingo.

post #21 of 51
Quote:
Originally Posted by TokyoJimu View Post

Umm, 4000 RMB is US$650, not $486.

I believe you're right.

 

Where the heck does AI (or this analyst) get $486?!

post #22 of 51
Quote:
Originally Posted by StruckPaper View Post

I remain unclear about this (and have seen no lucid, irrefutable rationalization anywhere): What is it about 5C that will win over more Chinese customers (or India, Russia and other places where iPhone is less than dominant) than 4 or 4S? I don't think it will be much cheaper than those two? And if it will be cheaper, what will Apple sacrifice to hit the lower price points? Are they simply sacrificing margins? If so, why not just sacrifice greater margins on 4 and 4S?

Is it just the illusion that they are getting a new, cheaper iphone rather than last year's iphone?

Or is it because iPhone 4 are 4S are being both retired and the current iPhone 5 will become the only "older" model, but they still want/need 3 models in their lineup? With the 5, 5C and 5S, they will have 3 phone models with the same screen size and connector. Is that the rationale?

And what about next year? Will they market 4 models - 5C, 5S, 6 and 6C? What will the successor to 6C be called when they release 6S in 2015?

The 5C will be a much better phone than the 4 currently is for the same price. Also the 5C has the benefit of being Apple's newest iPhone plus all of the new colors will add a lot of appeal as well.

I don't think you can really compare the impact of the 5C to the iPhone 4 on the low end because both are completely different products designed to address different needs
post #23 of 51
Quote:
Originally Posted by blackbook View Post

The 5C will be a much better phone than the 4 currently is for the same price. Also the 5C has the benefit of being Apple's newest iPhone plus all of the new colors will add a lot of appeal as well.

Not to mention that the rumored baseband chip in the 5C may be necessary to cover all the required frequencies in China - at least for one or two of the larger networks.
Quote:
Originally Posted by anantksundaram View Post

I believe you're right.

Where the heck does AI (or this analyst) get $486?!

Agreed - their conversion appears to be wrong.

However, there's enough information to ignore the conversion factor:
Quote:
That number was higher than what Chinese customers are willing to pay for a Samsung Galaxy S4 Mini (2,600-3,800 RMB) or HTC One Mini (2,000-3,000 RMB)

If consumers are willing to pay 3-4,000 RMB for an iPhone vs these much lower numbers for competitors' phones, it's a good sign for Apple.
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post #24 of 51
Quote:
Originally Posted by jragosta View Post


However, there's enough information to ignore the conversion factor:
Quote:
That number was higher than what Chinese customers are willing to pay for a Samsung Galaxy S4 Mini (2,600-3,800 RMB) or HTC One Mini (2,000-3,000 RMB)

True, but that completely changes the assumptions implicit in the pricing discussions here and elsewhere. An ASP of $650 is squarely in the region of where Apple is now with its iPhones.

 

If that were true, the discussion of 5C as 'low cost' is moot (unless the 5S was slated to be like $900 or some such thing)?

post #25 of 51
Quote:
Originally Posted by StruckPaper View Post

I remain unclear about this (and have seen no lucid, irrefutable rationalization anywhere): What is it about 5C that will win over more Chinese customers (or India, Russia and other places where iPhone is less than dominant) than 4 or 4S? I don't think it will be much cheaper than those two? And if it will be cheaper, what will Apple sacrifice to hit the lower price points? Are they simply sacrificing margins? If so, why not just sacrifice greater margins on 4 and 4S?

 

Is it just the illusion that they are getting a new, cheaper iphone rather than last year's iphone?

 

Or is it because iPhone 4 are 4S are being both retired and the current iPhone 5 will become the only "older" model, but they still want/need 3 models in their lineup? With the 5, 5C and 5S, they will have 3 phone models with the same screen size and connector. Is that the rationale?

 

And what about next year? Will they market 4 models - 5C, 5S, 6 and 6C? What will the successor to 6C be called when they release 6S in 2015?

 

No one wants a 2 or 3 year old phone.  The 5C is BRAND NEW. 

 

 

There will be only two models: 5C and 5S. All the same screen size and lightning adapter.  This will save manufacturing costs big time.  Next year we will probably have 3 phones: 6, 6C, and 6L (large screen).  I don't think we will be seeing 2 year old phones anymore. The C line will be the 'budget' phone.

post #26 of 51
Originally Posted by sog35 View Post

This will save manufacturing costs big time.

 

Except that they're different cases and internal designs and hardware.

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post #27 of 51
Originally Posted by dillio View Post
I think as the smartphone market matures, Apple will need to lower their margins and cut the prices, just to maintain enough market share to keep the iOS platform and ecosystem viable.

 

Or maybe they like selling high-end products.


I think this is inevitable. Otherwise, they will again be relegated to a niche.

 

Let's see… that happened with Macs in roughly, oh… five years, was it? Dick and others would remember. And yet now, even with tech adoption moving ludicrously faster, Apple still has… something like 40% of the marketshare in the western world with cell phones. Doesn't sound like that will ever happen. Ever.


And cut the BS. Going out of their way with special welding to make the iMac look thin around the edges, and passing that cost to the customers is BS. Do that with a laptop maybe, not with a desktop.

 

I can't wait to see the looks on all these peoples' faces when Apple finally shows us the reason they're doing that.

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post #28 of 51
How is it that in China, where you hear all the time about what tiny amounts of money many workers make (the ones that assemble iPhones for instance), the acceptable price for the mid tier next gen iphone is so close to price of the current top in iPhone in the US?
post #29 of 51
Originally Posted by Andrew Payne View Post
How is it that in China, where you hear all the time about what tiny amounts of money many workers make (the ones that assemble iPhones for instance), the acceptable price for the mid tier next gen iphone is so close to price of the current top in iPhone in the US?

 

What does that have to do with anything?

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post #30 of 51
Quote:
Originally Posted by dillio View Post
Otherwise, they will again be relegated to a niche. 

lol.gif

post #31 of 51

Funny! I thought here at Apple Insider no one believes what analysts say! Or you do believe the analysts only when its convenient to you?

post #32 of 51
I hope the "5C" (if true) is priced around $400 and has updated internals (like the 5 at least). I would definitely consider getting one over the 5S although the talk about this fingerprint sensor is intriguing and may sway my choice. It just sucks to have to pay $900 for a phone to get a cheap $35 plan (or pay $200 and pay $80 a month).
post #33 of 51
Quote:
Originally Posted by Tallest Skil View Post

 


 

I can't wait to see the looks on all these peoples' faces when Apple finally shows us the reason they're doing that.

 

The iMac design is a prototype for the iTV

post #34 of 51
Originally Posted by sog35 View Post

The iMac design is a prototype for the iTV

 

Touchscreen desktop OS… 

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post #35 of 51
Quote:
Originally Posted by Andrew Payne View Post

How is it that in China, where you hear all the time about what tiny amounts of money many workers make (the ones that assemble iPhones for instance), the acceptable price for the mid tier next gen iphone is so close to price of the current top in iPhone in the US?

What often gets lost is that China's middle class is larger than the entire US population. (Or, as my daughter's engineering teacher pointed out, the top 25% of China's citizens in intelligence outnumber the entire US population).

Apple's not going to sell anything to the farmer who earns $10 per month. But there are tens or hundreds of million people who CAN afford a product like the iPhone.
Quote:
Originally Posted by dillio View Post

Going out of their way with special welding to make the iMac look thin around the edges, and passing that cost to the customers is BS. Do that with a laptop maybe, not with a desktop.

Why don't you tell us what extra cost they're passing on to consumers?

In order to calculate that, you'll need to know the difference in manufacturing cost (everything - materials, labor and overheads) as well as the difference in support costs.

So what's the difference? And how do you know that the welded design isn't cheaper?
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post #36 of 51
Quote:
Originally Posted by blackbook View Post


The 5C will be a much better phone than the 4 currently is for the same price. Also the 5C has the benefit of being Apple's newest iPhone plus all of the new colors will add a lot of appeal as well.

I don't think you can really compare the impact of the 5C to the iPhone 4 on the low end because both are completely different products designed to address different needs

You seem to know a lot about a product that hasn't seen the light of day. Can you explain what the different needs are? IPhone 4 can be used to read/write emails, surf the net, read books, play games, buy/sell, take photos, etc. How different are the needs addressed by 5C from these?

post #37 of 51

Quote:

Originally Posted by sog35 View Post

 

No one wants a 2 or 3 year old phone.  The 5C is BRAND NEW. 

 

I can see your logic ... sort of. But then, Tim Cook was pretty clear that Apple sells decent numbers of 4 and 4S. That's a lot of nobodies, don't you think?

 

Quote:

Originally Posted by sog35 View Post

There will be only two models: 5C and 5S. All the same screen size and lightning adapter.  This will save manufacturing costs big time.  Next year we will probably have 3 phones: 6, 6C, and 6L (large screen).  I don't think we will be seeing 2 year old phones anymore. The C line will be the 'budget' phone.

Big time? Sounds like you have put a lot of thought to calculate the savings. Can you elaborate how big the savings are and how they are achieved?

 

 

Quote:
Originally Posted by sog35 View Post

 

 I don't think we will be seeing 2 year old phones anymore. The C line will be the 'budget' phone.

Well, a lineup of 5, 5C and 5S do not include a 2 yr old phone, does it?

 

 

Quote:
Originally Posted by sog35 View Post

 

Next year we will probably have 3 phones: 6, 6C, and 6L (large screen).  I don't think we will be seeing 2 year old phones anymore. The C line will be the 'budget' phone.

 

 

6L - large screen. So they eliminate the 4 and 4S this year to have a product lineup with a consistent form factor, only to mess it up again next year?

post #38 of 51
Quote:
Originally Posted by anantksundaram View Post

I believe you're right.

 

Where the heck does AI (or this analyst) get $486?!

Maybe the analyst used to follow Intel, circa 1988?

post #39 of 51
Quote:
Originally Posted by island hermit View Post

So... the 5C is a "real" product?
 

(at least the article said "rumored".)

Well, history suggests that rumors tend to converge asymptotically toward reality as September draws close.

post #40 of 51
$349-$399 is surely doable considering the material is plastic. Beyond that I might be considering getting the aluminum one with just $150 different. Besides putting it beyond $400 would certainly give a good breathe to Samsung for showing their competitiveness as they had already made phones with plastic materials and able to put the price even lower. The lower the Apple can do the better chance it will reach the broader market.
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