Let's be honest: iPhone 5C pricing is a major blunder
If you're going to go with a contract, you'll just pay for the 5S. That is obvious.
The other part of the market is the always increasing no-contract market. But the public was largely under the impression that the "C" in 5C meant cheap. Not so at all, at $550 and surely not with such a small screen. Therefore the 5C really does not have a market, except among diehard Apple loyalists and people who desire jarring bright plastic. Apple's poor reasoning about this will not be papered over with marketing hype.
When Larry Ellision said that he expected Apple to fail without Steve, he wasn't making an outsider's speculation: He was a close friend of Steve, and surely Steve had confided in Ellison, speculating on how things could go wrong. And now it has. A typical mistake is to over-price products out of a greed. Another is out of ignorance. Middle management, which typically live in a bubble and are well paid, want to sustain their luxury lifestyles and often do so by over-pricing products. They don't know the consumer; they don't want to.
The 5C, priced at $550, does not have a market. For $550 any consumer who is not absolutely loyal to Apple (that's 90% of people globally) will go for a quad-core, big screen Android phone. Why, the loyalists ask? Because any person with any sense will recognize that even if Android is not perfect, it is mostly OK. That's why most of the planet is going with Android. Apple is the Betamax to Android's VHS, for those of you who know history.
Can Apple still salvage the situation? Unlikely. This is a management blunder. Management problems stem from people being greedy, out of touch, and in denial.
Comments
Let's be honest, you don't have a clue what you're talking about. Hush.
It has the iPhone 5's market. Now go away.
I was surprised by the high price, too. But after a little thinking it comes clear what the strategy behind that really is.
Apple will NOT go after the "cheap" phones out there. They have never done with iPods or Computers either. Let the others sell millions and millions of crippled smartphones around the world and make virtually no money out of it. And yes, millions and millions of first time customer will buy them. But none will be really happy about it. So for their next smarphone a lot of customers will consider higher end Androids and iPhones.
And to fish on this bank, they let out the 5c. It is exactly in the price range of Samsungs S4 and other "top end Android phones". There is no reason anymore to buy the high end of HTC, LG, NEXUS or Samsung. Apple has packed the 5c with lots of tech and an OS that most people would call better than Android, or at least on the same level. But Apple has certainly a better reputation. So I think the 5c is going to be REALLY troublesome for Samsung & Co in the next months.
I was surprised by the high price, too. But after a little thinking it comes clear what the strategy behind that really is.
[Re android phones] But none will be really happy about it. So for their next smarphone a lot of customers will consider higher end Androids and iPhones.
And to fish on this bank, they let out the 5c. It is exactly in the price range of Samsungs S4 and other "top end Android phones".
Perhaps Apple isn't in touch with what people actually need, any more than the Android phone makers are. People want the new-and-fancy features that are cheap, not the ones that are expensive. We don't need quad-core phones, and gaming on a phone is awkward so why even push that? It's because people don't need excess that the Nexus 4 is popular: It doesn't break any records but at least the screen is larger and it is responsive. As for Android not being up to snuff, yes it is the Microsoft Vista to Apple's OS/X, but there are more Android apps now using NDK (C++ code) and this is showing the maturation of the Android area. I'm not super-happy about Android, but to be honest I was never super-happy about iOS either. Apple did some dumb things with the UI that I gather Cydia addressed, but using an iPhone daily I was constantly reminded that Apple didn't do it right. So I don't know in whose minds besides fanboys Apple has the great reputation. Most people will switch away from them on a whim.
More on the pricing fail:
Shares of Apple slide, analysts cut targets in disappointment over iPhone 5c pricing
http://appleinsider.com/articles/13/09/11/shares-of-apple-slide-analysts-cut-targets-in-disappointment-over-iphone-5c-pricing
Value for money: Apple iPhone 5c pricing stacked up against the competition (not pretty)
http://www.phonearena.com/news/Value-for-money-Apple-iPhone-5c-pricing-stacked-up-against-the-competition-not-pretty_id47377
Once again, be quiet. Stop the false concern, stop the lies. When Wall Street and analysts hate it, that proves Apple has done the right thing. You want proof of how you're wrong? Look at every single product launch Apple has ever done.
It's the same pricing level they've been using for years now. How is that bad?... They've made a tone of money at those levels which they are able to pour back into R & D (or share with people like myself that hold a lot of APPL stock.
)
Apple DOES NOT MAKE cheap products... you need to buy a different brand if that's what you want.
Even from Day one with the original Macintosh, It was NOT the cheapest computer available. In fact it was (as now) one of the more expensive ones. That business model seems to be working quite well, despite you're thinking otherwise.
It's the same pricing level they've been using for years now. How is that bad?.
Just because Apple is addicted to overpricing their products and living large on the proceeds doesn't mean that addiction doesn't come at a serious cost, which is shrinking market share. Read the articles with an open mind, if you can.
Just because Apple is addicted to overpricing their products and living large on the proceeds doesn't mean that addiction doesn't come at a serious cost, which is shrinking market share. Read the articles with an open mind, if you can.
I did ...
Ultra-thin margins are NOT the way to run a successful business long-term.
It takes MONEY to do R&D and try hundreds of new things to get ONE thing that will work... that money comes from PROFITS ... those large margins and huge profits are what enables Apple to make such stellar products.
Their products are not for everyone, but they're apparently not concerned about EVERYone.
The same idea can be applied to ANY business.
I could come up with several other examples if I felt like typing it all out for you. Companies that can and do command large margins tend to be better long-term players.
Fallacious reasoning. If that were true, why did Rolls Royce fail and get bought by BMW?
If it were true, why did Hummer fail and get bought by GM?
If it were true, why did NeXT nearly fail and get bought by Apple?
Lots of expensive products fail. In fact, if you check your history Apple almost failed.
Apple DOES NOT MAKE cheap products... you need to buy a different brand if that's what you want.
Even from Day one with the original Macintosh, It was NOT the cheapest computer available. In fact it was (as now) one of the more expensive ones. That business model seems to be working quite well, despite you're thinking otherwise.
The iPod shuffle is generally considered to be a cheap product.
The first Macintosh was indeed expensive but after the initial fanfare sales were poor.
Personally I think that a cheaper phone would have made sense. Sales of the current flagship models would be tiny in comparison were it not for the contract subsidies. There will always be people willing to pay top notch for an offline phone but as the number of "capable" cheap smartphones increases the mobile phone companies seem to be less willing to cross subsidise the premium iPhones to the same extent.
On the other hand a cheaper phone might well tarnish the "aspiration" image that apple are trying to sell.
The words, rock and hard place spring to mind.
Recent history says that Apple is the most profitable company in the world because of the iPhone price points. They only need to adjust price after demand dies down, not in anticipation of it, that's how markets work. It's easier to lower prices than it is to raise them.
A lower iPhone 5C price would drive people to the lower model and a much lower average selling price. The iPhone 5C only being $100 less than the iPhone 5S drives people up to the 5S. That's what they want and it's what every manufacturer wants - sell more premium models at high prices.
When they release their sales results in October, it'll be clear if their pricing strategy worked because if it's successful, it will show increased volumes and/or increased margins vs last year. If these are down since the same time last year, that's when they need to be more aggressive in pricing.
It's annoying as a consumer to see high prices but if you were selling them, you similarly wouldn't want to go out of your way to ship 2-3x the volume to make the same or less profit if the market will allow you to ship fewer models to make the same or more profit. Employees for example don't aim to work more hours for less pay, the ideal career progression is to get paid more per hour of work.
If this will work long term remains to be seen as I think there will come a point where a phone at £400 is going to start being hard to sell. When you compare cheap phones like the lumia 520 and 620 that cost around £100, they have good build quality, reasonable screens, battery and arnt any slower. All most users are getting from the high end phones are a nicer case.
good point, timgriff84...
People aren't really buying the iPhone, they're buying a piece of hardware that runs iOS ... the OS is what they're REALLY after... it's just icing on the cake that Apple makes really solid hardware to run it.
A lower iPhone 5C price would drive people to the lower model and a much lower average selling price. The iPhone 5C only being $100 less than the iPhone 5S drives people up to the 5S. That's what they want and it's what every manufacturer wants - sell more premium models at high prices.
Can you even think for yourself? Apple products are only slightly better than Android. That tiny difference doesn't justify spending twice the cost of a Nexus 4 to get the 5C.
I'm a consumer. I don't give a crap about Apple or Google or any other company. I want a good product at an affordable price, period.
At a time when real unemployment is at 13.7% in the US, what idiots are going out buying luxury products anyway? Are they the same ones that got variable-rate mortgages a few years ago?
Tim Cook seems to be doing his best Nero impression: While the US economy burns down, he's busy playing the fiddle.
Apple products are only slightly better than Android.
Later, skater. Go to MacRumors; they’re too stupid not to keep you.
At a time when real unemployment is at 13.7% in the US…
Unemployment is ~7%. “Real” unemployment is even higher than you’ve stated.
Fortunately for Apple, absolutely nothing you’ve said is relevant, as during THE ENTIRETY OF THE RECESSION FROM 2008 TO 2012, APPLE POSTED RECORD PROFIT AND REVENUE EVERY SINGLE QUARTER.