Apple refuses to play low-price ball, stakes strategy to premium brand rep

Tuesday's event, iPhone 5c pricing showed Apple has no intention of marching to someone else's drum, says analyst

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"There will come time when Apple will need to evolve and further segment the iPhone line," said Restivo. "Apple's left half the market and more to its competitors. At some point, the gated community of Apple users will have to open up to that market because Apple will need to sell more services and software to each customer."

But Thompson's point, and Restivo's too, is that, in Apple's opinion, that time is not 2013. Maybe not even 2014. It's holding to its premium lodestar.

That strategy, in other words, isn't going to be discarded. And anyone who doesn't realize or remember that will predict moves Apple simply won't make in the short or mid term.

Whether that strategy will work is another matter. "The strategy, then, is clear. Apple has decided to not even pretend to pursue market share, but instead embrace their up-market status. The question remains, of course, as to whether or not it is right," Thompson wrote on Stratechery early Wednesday.

Analysts are split on that point. Restivo said that he believes the iPhone 5c will reward Apple, but primarily because he expects the new device to help increase the company's sales by 25 million to 30 million units annually -- for an increase of 17% to 21% over Apple's sales last year -- as a result of a soon-to-be-announced deal between Apple and China Mobile, the largest carrier in China and the world.

Thompson thought the iPhone 5c and its pricing would pay off. "You can't dismiss the effect of being $100 cheaper," said Thompson. "That's what people don't understand. They're hugely underestimating the iPhone 5c, and too focused on China. Apple has moved to cover 16% more of the price curve. I think sales of the 5c in the U.S. will be absolutely massive."

Singh disagreed. While he would not be surprised to see the iPhone 5c become Apple's best-selling smartphone -- replacing the flagship, which held that distinction in the past, when older models were the only other option -- he said he doubted that the color-coded handset would boost shipment numbers. Sans a truly low-priced iPhone, he said, Apple is playing a zero-sum game in which 5c sales will be offset by declines in sales of the more expensive flagship, the iPhone 5s.

Cook and Apple are taking a risk, Thompson acknowledged. But he said it is a calculated risk that plays to the company's strengths, not its weaknesses.

"My criticism of Nokia and BlackBerry, but not Android, was that they chose to compete in an area, operating systems, that they had never excelled in," said Thompson. He has also slammed Microsoft's decision to push both devices and services, arguing that the two are exclusive. By claiming to compete on both fronts, he contends, Microsoft may succeed in neither.

In contrast, Thompson said, "Apple is betting on their brand."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His email address is

Copyright © 2013 IDG Communications, Inc.

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