For the first time, Apple released not one, but two new iPhone models last month. However, there was a huge difference in how each of the models was received by consumers.
Dan is a good friend of mine. We get along quite well—both of us being in our early 20’s and hailing from New England, we see each other as kindred spirits who occasionally feel like fish out of water in the decidedly more friendly and conventional Midwest. We also both love to know about the latest goings-on in the world of consumer technology, but if there is one point where Dan and I differ, it’s in our spending habits.
While I try to be prudent with my money and may often come across as being a bit on the stingy side, there are few things that Dan will deny himself, materially speaking. He has been the proverbial “wait-in-line-for-the-newest-iPhone” person year after year (the only reason he didn’t miss school for last year’s release of the iPhone 5 was because he had wisely pre-ordered it). But, he has been learning overtime to rein in these habits, and was able to refrain from getting either the new iPhone 5S or the 5C, which were both released in September.
Dan is typically my go-to guy for the latest news from Apple, and we inevitably discussed what kept him from getting either new iPhone this year. Speaking only briefly on the 5S – the premium new iPhone, and citing “not enough significant improvements” as his reasoning for not purchasing it – he instead found the 5C to be the more interesting conversation piece. To put it simply, the iPhone 5C is turning out to be sort of a flop. Although the combined sales total of both phones has climbed into the millions since their release in September, more than twice as many of those sales have been for the 5S; the 5C was left in the dust.
With its “unapologetically plastic” polycarbonate enclosure, more varied color options, and a price tag of $100 less than the 5S, the 5C was seemingly being marketed as the “budget iPhone.” Why, then, has the 5C been performing so weakly in sales? Wouldn’t everyone want a cheaper iPhone? Dan and I discovered two reasons the 5C hasn’t received a very warm welcome from otherwise loyal Apple fans: first, for those who would purchase the “budget iPhone,” the 5C isn’t actually cheap enough to deserve that title; and secondly, the remainder won’t buy it precisely because it is known as the budget iPhone.
Even though the 5C starts at $99 with a mobile data plan, many predicted (and it is proving to be the case) that it will have to be even cheaper for sales to gain any traction in emerging markets like China and India. For example, in China, where phones aren’t subsidized by mobile carriers, the 5C is selling for 3,500 yuan, which is approximately $560. This is a pretty shocking price, considering how so many analysts believed that this iPhone model was meant to bridge the gap between luxury consumers and the mainstream, especially in countries where iPhones aren’t as cheap to begin with.
The latter point is mostly speculation, but because we both come up with the notion independently, it might be worth considering: Apple has always been touted as an innovator in the field of consumer electronics. And while some may argue that in a post-Steve Jobs world Apple may be past its prime, there is no arguing that it is still dominating the industry, sales-wise. Everybody wants the newest, the latest, the greatest piece of tech, and we usually look to Apple to deliver (and they usually do not disappoint). This may be precisely why the 5C fails: it is not an improvement, per se. It is a re-hashing of the iPhone 5 with brighter-colored casing. And in the tech world, which almost always encourages consumer one-upsmanship, people want to be the envy of their peers—something they are not likely to accomplish with the “budget” version of a product, especially when it comes to the industry standard for smartphones, Apple’s iPhone.
So, while the 5C may have its time in the limelight, it definitely won’t be this year. As the case has been with previous iPhone models, by this time next year the 5C will likely sell for $0 on-contract, which is a fair price for the phone, especially if it won’t be subsidized. But until then, most Apple customers (Dan being a notable exception) will gladly shell out the extra $100 for the 5S which is actually an improvement on last year’s 5, even if it’s not the kind of innovation most people have come to expect from Apple.