[ABOVE: Noisy but interesting iPhone 5S hands-on.]
Hot or cold?
I can hear the response to that statement now, and I agree that the device is $100 cheaper with a contract (on some models, national and currency differences exist, some carriers may offer different deals in some regions, etc.), but that doesn't deliver on the expectation I had that Apple would broaden its addressable market. Just look at the cost of the unlocked models.
A divergent view comes from John Shinal at Marketwatch, who writes:
“Apple has just produced two new products that will likely appeal to both budget-conscious and affluent smartphone consumers throughout the globe,” Shinal writes. “If the Apple marketing machine can be as effective with them as it has with past models, look for Apple’s year-over-year sales growth in the fourth quarter to accelerate.”
While I get that contract prices are a little lower -- though they only match that of the previous older model, I don’t think this will be enough to worry Android device makers playing in the upper mid-range of the market.
These players will continue to offer a pantheon of devices in different shapes and display sizes at a dazzling array of prices Apple doesn't match. That's an advantage for Android in the current global economy.
Value the brand
Perhaps Apple's decision is about preserving the value of the iPhone brand. This absolutely makes sense. What Apple now offers is two iPhone models, one a highly sophisticated best in class device, the other an extremely impressive best of breed smartphone available in multiple colors, equipped with all the features of last year's model, with a few extras. Both devices are Apple-class, and now users have a choice. "Choice". Wonderful. Except -- users already have a choice: Apple, or someone else.
Has Apple crawled up its own navel, then? Will people choose someone else?
I don't think so. I think the company will sell a few boatloads of these things, and I believe the iPhone 5S will attract hordes of enterprise customers for whom the NSA-proof (hopefully) biometric security system constitutes an amazing and unique way in which to keep their business secrets.
The success of Apple's colored iPhones at least in part depends on how liberal Apple intends being with these things when it comes to reaching deals with carriers. Will this phone be liberally available?
I don't think Apple's new iPhones are about price. They are about diversity.
Diversification -- at last...
Apple has been limited until now. The company has introduced a new iPhone every 12 months, then been forced to stand by while competitors caught up on the device offering. This has created a classic sales pattern in which the first few months of availability have given strong sales, followed by a period of relatively weak sales.
The truth is that this sales pattern has seen Apple lose momentum in comparison to the Android massive. Take a look at this report here. It shows that while Apple has sold 400 million iPhones since that product's beginning, quarterly sales of the product have declined across the last three quarters. That's bad news and the report also suggests that decline continues in the current quarter.
Apple's reaction has been to diversify its brand.
It now offers two new iPhone models. Now it does, Apple can relatively easily diversify product release cycles while retaining brand integrity. Not only this, but should it decide to launch an iPhone with a larger (or smaller) display, it can easily do so with the relatively cheap to manufacture polycarbonate display -- while maintaining the image of the iPhone 5S as a leading device.
(Except, while Apple's press releases stress "polycarbonate", its product designer describes the thing as "unapologetically plastic". So why aren't Apple's press releases stressing "plastic"? Is this a disconnect?)
Will iWatch set the time?
The iPhone 5C becomes the brand for "choice", while the iPhone 5S remains the brand for innovation. This leaves both as devices in the same class but gives the firm a little wriggle room. This would have been a great idea. Last year.
We'll find out shortly if this new diversity will enable Apple to maintain market share, or if it has hit its BlackBerry moment.
Personally? I think it has bought itself a little time -- a lot now depends on its other product introductions as it moves from Fall, through Winter, to Spring. Everything now depends on the iWatch. Unless I'm missing something: for which I rely on you the readers to make an observation in comments below.
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