Apple can't win when Wall Street wants cheap products but high margins and huge profits.
I think the "issue" here is that the analysts were hoping that Apple would make a phone that was cheap enough for emerging markets where the carriers don't offer subsidies. The 5C really doesn't do that, although it certainly gets closer to the mark. What the analysts are upset about is that Apple may be cannibalizing 5S sales with the 5C. The 5C will sell like hotcakes, sure, but the question is how many of those folks would've just bought the higher-profit 5S is the 5C didn't exist. In order to really reach China and India, the belief is that the 5C needs to be a lot lower than $550. We'll see if that belief is correct, though I hope it's not.
I agree. That's exactly right. People forget about families and how now days kids --and I literally mean kids-- and now getting cellphones from their parents. I can see kids wanting the iPhobe 5c. It's going to be an explosion I'm telling you. People are complaining about it just like they did when Apple first released the iPad, but you just wait. This phone is going to sell. You just watch!
Bingo. It's also going to appeal to a lot of young professionals. It's going to sell like hotcakes. Just like the iPhone 5 inside, but entirely new design which will appeal to younger, more fashionable people. It's also going to appeal strongly to customers in Asia - in spite of the price.
All of the "the Chinese can't afford an expensive phone" arguments are idiotic. "The Chinese" is not a reasonable description. They range from people who can't afford their next meal to people who could buy a new Gulfstream jet every month without noticing the drain. The question is, 'how many Chinese can afford $550 for an iPhone'? The answer is, 'plenty'.
I see that Constabe Odo is still confusing Apple's architectural statement in plastic and metal with Samsung's lazy use of plastic that reaembles an insect's carapace. Couldn't be more different.
Exactly. People who use 'plastic' as meaning 'junk' are obviously uninformed. Good design means choosing the proper material for different elements. Plastic can easily be the 'premium' material in some cases.
Lol, it's just plastic! By the way look at AAPL price! $445!!! I guess the markets doesn't like too much this "extraordinaire plastic"!
Wall Street is notoriously bad on defining Apple's value - especially in short term swings like this. How else do you justify Amazon's market cap compared to Apple's, for example?
So, basically, Apple is willing to trade their "premium" brand status to save a few bucks.
Two flaws with that argument:
1. Apple was never a "premium" brand. They don't sell on the basis of exclusivity or high price. Rather, they sell on the basis of design, ease of use, and ecosystem. That hasn't changed a bit.
2. The fact that they use plastic doesn't make it any lower in quality. There are plastics that cost hundreds of times what aluminum costs. There are plastics that outperform aluminum in many regards. You can't simply say "plastic = bad" because that's foolish. By all reports, Apple's 'plastic' phone is better than the other ones on the market - which simply reinforces what you're calling the 'premium brand'. "Sure, some people make junky phones, but ours are high quality - even when we use plastic".
The 5C is not better than the 5. It's just cheaper for you to make. The entire 5C move was to pad margins and increase profits.
Good for shareholders. I'm actually surprised the stock is down. Wall Street should be happy Tim is make a big business move like this...
While the 5c is based on the 5 it has revised components, better (more compatible) radio and likely improved battery life (even w/o iOS 7).
It is also less fragile which is key in a younger, hipper, more active crowd than the typical top-end iPhone customers are.
As for Wall Street, they don't know what they want:
Had the iPhone been cheaper the stock would go down for lower margins, if the pricing and margins stay up the stock goes down for lower sales, and if apple had put out a castrated device that could have been made with high margins and sold at a low price, the stock would have tumbled because such a product would hurt Apple's brand image.
You should know that AAPL will remain doomed for as long as there are speculators that can make money that way...
The 5C is no where near as nice as the 3GS. The 3GS felt expensive in the hand and it was a delight to press the metal buttons and switches.
Although both phones are polycarbonate the 3GS looked and felt like a premium product. The 5C does not.
So let me get this straight. There are now 3 arguments in this thread?
1. "plastic is plastic"
2. "5c is premium plastic"
3. "3GS was premium plastic, 5c is not"???
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
1. Apple was never a "premium" brand. They don't sell on the basis of exclusivity or high price. Rather, they sell on the basis of design, ease of use, and ecosystem. That hasn't changed a bit.
2. The fact that they use plastic doesn't make it any lower in quality. There are plastics that cost hundreds of times what aluminum costs. There are plastics that outperform aluminum in many regards. You can't simply say "plastic = bad" because that's foolish. By all reports, Apple's 'plastic' phone is better than the other ones on the market - which simply reinforces what you're calling the 'premium brand'. "Sure, some people make junky phones, but ours are high quality - even when we use plastic".
I'll give you #2 to a degree (plastic is still cheap to me regardless of the manufacturing process) but #1??!! Are you kidding??!! That is all we hear on this forum. Apple is a premium phone!! Apple is a premium phone!! You pay more because you get more!!
Maybe Apple didn't intend it, as you say (although I don't agree), but almost every Apple fan on here would agree that Apple's image is that of a "premium" phone maker.
[... and I never said that Apple based its premium status on exclusivity or high price. ]
Apple explicitly says otherwise. And since plastic is inherently recyclable, you don't have a leg to stand on.
There's nothing inherently recyclable about plastic; as a matter of fact most plastics are inherently non-recyclable, many even toxic to burn for energy recovery.
Polycarbonate is a fortunate exception which is one reason why it's use has surged.
So yes, the iPhone should be good for recycling, although the coloring and possibly also the coating may restrict the use of the recycled plastic to low grade applications, but that's very much due to a deliberate choice of a specific material and nothing inherent to all plastics.
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
Actually, that's not quite true. I can remember quite a few people who were upset that Apple had started using plastic.
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
Because they weren't cheap, nor was there anything wrong with them. Nor is there anything wrong with the iPhone 4, 5, 5C, 5S.
It's so they can compete with the nokia 1020, obviously. How convenient it is to forget that this exciting new design was created 2-3 years ago from nokia and continues today with their impressive camera phone which also has a oversized pixels, only it has a 9 element lens not a 5 element lens.
Are you nuts? On ATT an iPhone 5 costs effectively $1100 + $199 or $1300 when compared to an equivalent BYOD plan on t-Mobile. In other words thats how much extra you pay over 2 years for a similar data plan but with subsidized phone.
The 5C effectively costs $1200.
Nowhere near half. Methinks effective marketing has sucked you in nicely.
Yup you nailed it. I for one would spend the extra 100 and get the 5s(which I will)... no brainer. But... there are probably a significant portion that that $100 makes a difference. Time will tell. Plus next year the price will drop after the new iphone... maybe.
Another 'tech site' asked its readers if they are the updating and if so which iphone would they get- ~59% 5s to ~3% 5c ~ (~35% will not upgrade) ... 5s is the huge winner for that un-scientific survey.
Pure opinion here.... While Jony is unapologetic (think about it, he had to say it... that says a lot), IMO, the 5C phone 'looks' like a Fisher-Price toy... something a Weeble would use. Yes other iphones where plastic, but the iP 4 set the bar so high on 'quality build/feel etc'. To go back...just seems a step back. And the colors... its ok to have Pink and neon green etc.. to each their own. But how about some colors that are shifted in the palette(to dare I say 'normal'.. ok conservative.. alright boring ), a dark blue for example, ... something to compliement these Weeble colors.
Apple's marketing is really good. They now tout a steel frame inside the plastic shell !!!
As if other plastic phones do not have a steel frame inside. Almost all of them do. There is nothing special with Apple's steel frame inside the plastic shell
Nothing really new since Motorola used a similar method with the RAZR almost 2 years ago, but they used a rigid form of kevlar for the back.
The more I hear and see from Tim Cook the less impressed I get. This was an opportunity for Apple to completely capture the Chinese market for decades by launching a lower cost phone. If they had made a phone exclusively for China Mobile and priced at $450 unlocked, it would have been a game changer. They could have used cheaper components to keep margins around 25 to 30 percent and no one could use the phone elsewhere because China Mobile has a unique 4G frequency. Instead the 5C is priced over $700 in China while competitors are selling smartphones as low as $200. Apple would sacrifice a little bit of margin but be able to griw its ecosystem which is the key value driver for its share price. Instead, Apple is rapidly losing share in China to Android. The content in China is quickly moving away from iOS and once it's lost it's very hard to get back. Tim Cook seems incapable of appreciating this and I really think he needs to go. He's become a hinderence and a very high priced hinderence at that.
My thought is that Apple isn't motivated solely by market share as they are by profit. Apple's experience with the Mac is that they know how to be profitable without having the lions share of the PC market, and they may be balancing lower sales with higher profit in China. Remember: Apple is still growing in China--don't confuse market growth for marketshare (which is a ratio), and the long term bet is that as the Chinese middle class become more affluent, they'll switch to a better, more premium product. That might be Apple's long game. It's easier for a premium brand to sell downmarket than for a cheap brand to sell upmarket. The 5c is not going to compete with the bottom of the barrel, and Apple will never go there.
That is all we hear on this forum. Apple is a premium phone!! Apple is a premium phone!! You pay more because you get more!!
Apple doesn't even begin to be a premium/luxury phone: that would require a totally different positioning, could never be a mass-market product, because premium requires exclusivity, and there's nothing exclusive about the iPhone except if you want to be first one in your hood to sport one after a new model was released.
So no, non-crap != premium. To deliver certain things requires asking a certain price, and if what you want to deliver is high-quality that affects the price tag; but "high-quality products" and "premium products" are totally different markets.
Comments
Apple can't win when Wall Street wants cheap products but high margins and huge profits.
I think the "issue" here is that the analysts were hoping that Apple would make a phone that was cheap enough for emerging markets where the carriers don't offer subsidies. The 5C really doesn't do that, although it certainly gets closer to the mark. What the analysts are upset about is that Apple may be cannibalizing 5S sales with the 5C. The 5C will sell like hotcakes, sure, but the question is how many of those folks would've just bought the higher-profit 5S is the 5C didn't exist. In order to really reach China and India, the belief is that the 5C needs to be a lot lower than $550. We'll see if that belief is correct, though I hope it's not.Then don't complain when the reports of exploding iPhones start pouring in.
Otherwise known as C5
Bingo. It's also going to appeal to a lot of young professionals. It's going to sell like hotcakes. Just like the iPhone 5 inside, but entirely new design which will appeal to younger, more fashionable people. It's also going to appeal strongly to customers in Asia - in spite of the price.
All of the "the Chinese can't afford an expensive phone" arguments are idiotic. "The Chinese" is not a reasonable description. They range from people who can't afford their next meal to people who could buy a new Gulfstream jet every month without noticing the drain. The question is, 'how many Chinese can afford $550 for an iPhone'? The answer is, 'plenty'.
Exactly. People who use 'plastic' as meaning 'junk' are obviously uninformed. Good design means choosing the proper material for different elements. Plastic can easily be the 'premium' material in some cases.
Wall Street is notoriously bad on defining Apple's value - especially in short term swings like this. How else do you justify Amazon's market cap compared to Apple's, for example?
Two flaws with that argument:
1. Apple was never a "premium" brand. They don't sell on the basis of exclusivity or high price. Rather, they sell on the basis of design, ease of use, and ecosystem. That hasn't changed a bit.
2. The fact that they use plastic doesn't make it any lower in quality. There are plastics that cost hundreds of times what aluminum costs. There are plastics that outperform aluminum in many regards. You can't simply say "plastic = bad" because that's foolish. By all reports, Apple's 'plastic' phone is better than the other ones on the market - which simply reinforces what you're calling the 'premium brand'. "Sure, some people make junky phones, but ours are high quality - even when we use plastic".
For emerging markets, it's 5/6 the price. Hardly a dent.
While the 5c is based on the 5 it has revised components, better (more compatible) radio and likely improved battery life (even w/o iOS 7).
It is also less fragile which is key in a younger, hipper, more active crowd than the typical top-end iPhone customers are.
As for Wall Street, they don't know what they want:
Had the iPhone been cheaper the stock would go down for lower margins, if the pricing and margins stay up the stock goes down for lower sales, and if apple had put out a castrated device that could have been made with high margins and sold at a low price, the stock would have tumbled because such a product would hurt Apple's brand image.
You should know that AAPL will remain doomed for as long as there are speculators that can make money that way...
It's only half the price if you're in the United States.
For emerging markets, it's 5/6 the price. Hardly a dent.
No, it's half the subsidized price. You still pay approx $1200 for a 5C over 2 years on contract, and approx $1300 for a 5S.
Same as a mortgage, you put 20% down and pay for the remainder over the duration of the loan (in this case at exorbitant interest rate).
Doesn't mean you bought the house for 20% of its value.
So let me get this straight. There are now 3 arguments in this thread?
1. "plastic is plastic"
2. "5c is premium plastic"
3. "3GS was premium plastic, 5c is not"???
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
Two flaws with that argument:
1. Apple was never a "premium" brand. They don't sell on the basis of exclusivity or high price. Rather, they sell on the basis of design, ease of use, and ecosystem. That hasn't changed a bit.
2. The fact that they use plastic doesn't make it any lower in quality. There are plastics that cost hundreds of times what aluminum costs. There are plastics that outperform aluminum in many regards. You can't simply say "plastic = bad" because that's foolish. By all reports, Apple's 'plastic' phone is better than the other ones on the market - which simply reinforces what you're calling the 'premium brand'. "Sure, some people make junky phones, but ours are high quality - even when we use plastic".
I'll give you #2 to a degree (plastic is still cheap to me regardless of the manufacturing process) but #1??!! Are you kidding??!! That is all we hear on this forum. Apple is a premium phone!! Apple is a premium phone!! You pay more because you get more!!
Maybe Apple didn't intend it, as you say (although I don't agree), but almost every Apple fan on here would agree that Apple's image is that of a "premium" phone maker.
[... and I never said that Apple based its premium status on exclusivity or high price. ]
I see no benefit
Making lots of money, is benefit a few people will notice, I assure you.
There's nothing inherently recyclable about plastic; as a matter of fact most plastics are inherently non-recyclable, many even toxic to burn for energy recovery.
Polycarbonate is a fortunate exception which is one reason why it's use has surged.
So yes, the iPhone should be good for recycling, although the coloring and possibly also the coating may restrict the use of the recycled plastic to low grade applications, but that's very much due to a deliberate choice of a specific material and nothing inherent to all plastics.
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
Actually, that's not quite true. I can remember quite a few people who were upset that Apple had started using plastic.
People seem to forget that not long ago all iPhones were plastic. I loved the 3GS. The contour of the plastic back was very ergonomic. No one called the 3G or 3GS cheap back then...
Because they weren't cheap, nor was there anything wrong with them. Nor is there anything wrong with the iPhone 4, 5, 5C, 5S.
People just need something to bitch about.
http://www.nokia.com/us-en/phones/phone/lumia1020/
Actually, that's not quite true. I can remember quite a few people who were upset that Apple had started using plastic.
LOL on the Internet I'm sure!
Are you nuts? On ATT an iPhone 5 costs effectively $1100 + $199 or $1300 when compared to an equivalent BYOD plan on t-Mobile. In other words thats how much extra you pay over 2 years for a similar data plan but with subsidized phone.
The 5C effectively costs $1200.
Nowhere near half. Methinks effective marketing has sucked you in nicely.
Yup you nailed it.I for one would spend the extra 100 and get the 5s(which I will)... no brainer. But... there are probably a significant portion that that $100 makes a difference. Time will tell.
Plus next year the price will drop after the new iphone... maybe.
Another 'tech site' asked its readers if they are the updating and if so which iphone would they get- ~59% 5s to ~3% 5c ~ (~35% will not upgrade) ... 5s is the huge winner for that un-scientific survey.
Pure opinion here....
While Jony is unapologetic (think about it, he had to say it... that says a lot), IMO, the 5C phone 'looks' like a Fisher-Price toy... something a Weeble would use. Yes other iphones where plastic, but the iP 4 set the bar so high on 'quality build/feel etc'. To go back...just seems a step back.
And the colors... its ok to have Pink and neon green etc.. to each their own. But how about some colors that are shifted in the palette(to dare I say 'normal'.. ok conservative.. alright boring ), a dark blue for example, ... something to compliement these Weeble colors.
Nothing really new since Motorola used a similar method with the RAZR almost 2 years ago, but they used a rigid form of kevlar for the back.
My thought is that Apple isn't motivated solely by market share as they are by profit. Apple's experience with the Mac is that they know how to be profitable without having the lions share of the PC market, and they may be balancing lower sales with higher profit in China. Remember: Apple is still growing in China--don't confuse market growth for marketshare (which is a ratio), and the long term bet is that as the Chinese middle class become more affluent, they'll switch to a better, more premium product. That might be Apple's long game. It's easier for a premium brand to sell downmarket than for a cheap brand to sell upmarket. The 5c is not going to compete with the bottom of the barrel, and Apple will never go there.
Apple doesn't even begin to be a premium/luxury phone: that would require a totally different positioning, could never be a mass-market product, because premium requires exclusivity, and there's nothing exclusive about the iPhone except if you want to be first one in your hood to sport one after a new model was released.
So no, non-crap != premium. To deliver certain things requires asking a certain price, and if what you want to deliver is high-quality that affects the price tag; but "high-quality products" and "premium products" are totally different markets.