Today saw the launch of not one, but two new iPhone models: the iPhone 5S and the iPhone 5C. Personally, I am more interested in the latter.
The 5C marks the first ‘budget’ iPhone model. Back in June 2007, the first generation iPhone model was released. While it wasn’t groundbreaking in the sense that there had been previous internet enabled phones and previous touch screen phones, this was the first phone that allowed both of the features to function together in a stylish manner. It was considered a luxury item, and the price tag reflected this.
But the ‘C’ in the new model not only stands for ‘colour’ (it is available in a spectrum of five colours) but also ‘cheap’. It is Apple’s attempt to break into the mid-range market as it has been losing this battle to Android in recent months. The 5C features an A6 chip, ultra-fast wireless, an 8-megapixel camera and runs the new iOS 7 system, so it is well equipped to do battle with the likes of the Samsung Galaxy phones.
When it comes down to the money, the 5C is only £80 cheaper than the 5S. The 5C will cost £469 for the 16GB model and £549 for the 32GB model. At the launch, the handset was quoted at a subsidised price of $99 for a two year contract.
After a dip in Apple’s net profit last quarter, there is a high level of expectation on this phone. But will a cheaper model cheapen Apple’s brand image? Malik Saadi, principal analyst at Informa Telecoms & Media, told CBR: "There is no doubt that the introduction of a cheaper version of the iPhone could extend the opportunities to lower price points and capitalize on the strength of the halo effect created by iPhone brand.
"However, if the cheaper version is aimed at the global market, including the developed world, it could have an adverse effect on the iPhone brand and could lead to cannibalization of premium devices.
"Apple is facing an enormous competitive factor in this segment – the price of the device. However, getting the price "just right" (the Goldilocks effect) will be the company’s major challenge – too high and it will not hit the right market segments, too low and it risks endangering/diluting its brand value and strength. Large-scale deployment of the iPhone brand across different market segments could lead to brand dilution. Consumers could increasingly associate the iPhone with affordability and less with innovation and the premium experience that represent the key building blocks of the Apple brand."
Indeed, premium experience is one of the corner stones of Apple’s brand identity. Much like the iPod, which upon its release many deemed as simply a glorified MP3 player, the iPhone was criticized for style over substance. But in fact, the plastic-backed 5C seems better than some of its rivals. It’s hard-coated polycarbonate shell is solid and the gloss makes it impressively shiny. It’s a little heavier and thicker and the 5S, but feels more robust. Although, as is inevitable with many plastic phones, it does still seem rather toy-like.
So have Apple got it "just right"? Considering it is meant to be a cheaper model, the iPhone 5C is still quite expensive considering the alternatives on the market. But as Saadi said, Apple needs to avoid the cannibalization of premium devices. Apple also faces the dilemma that if they do not sell enough of the premium 5S models in comparison to the 5C models, their profits will continue to slump. The 5S and 5C will be on sale in the US and UK on September 20.
There has always been considerable demand for Apple devices with their sleek designs appealing to the hipsters and the masses at the same time. But only time will tell if Apple’s new ‘C’ strategy will increase its popularity increase and give its profits a healthy upturn.
