I don't want to say "I told you so," but it might just be, as we wrote a few weeks ago, Chinese consumers may not bite iPhone 5c. I wonder what was Apple's original expectaion -- in terms of 5c vs. 5s demand in China.
China can not have a premium brand? Why? There is money being made in China, by Chinese. The people with money want to have the latest, greatest, fastest coolest stuff, just like... ummm ... everywhere.
I read there are about 200 Million high end celular customers in China. Will everyone in the country buy the 5s, NO. Even 100 Million new phone buyers is pretty good.
No, dougwithau. we never said that China cannot have a premium brand. They actually LOVE premium brands like Apple. The issue is that those China Mobile subscribers -- the largest subscriber base in China -- need to move onto LTE to truly appreciate the power of iPhone 5. Right now, their proprietary 3G (TD-SCDMA) is not doing its justice (compared to the standard 3G); so most iPhone users under China Mobile are using 2G!
Something needs to change here.
But at any rate, what I was amazed about is the irony that many industry observers including myself who thought cheaper iPhone 5c might be perfect for Chinese consumers might turn out to be false.
Originally, rumor said iPhone 5c is targetting the non-subsidsized market like Europe and most Asian countries. I thought there will be a bigger price difference, $150+, between iPhone 5s and iPhone 5c. With $100 difference, iPhone 5c seems to be more attractive in subsidized market. A $99 iPhone for a year or 2 is no doubt a big attraction to a lot of parents who have their kids demanding an iPhone.
As of iPhone 5s goes, gold version will undoubtly be the most popular iPhone in the coming couple months simply because it is unique in iPhone 5s. In a long run, I can see the gold version will outsell any other color in China and Indian. High demand of "Gold". ;)
It is only the press that decided Apple was going to release a cheaper phone, and that it was targeted at China.
Looking at the lineup now, it seems reasonable that the 'C' didn't stand for "cheap" or "China", but perhaps for "colorful"...
This is no different than how they continued selling the 4S after the 5 came out, except they change the case. Perhaps product differentiation, so people getting last year's phone at a discount don't have something that looks exactly like the current top of the line. Maybe next year they come out with the 6, and keep the 5S as is and 5C as is, and if they do a 6S two years from now that looks too similar, they'll drop the 6 for a 6C or something?
@Doug_S, OK, mea culpa on the media. But I must say that there are a number of industry analysts who also thought that 5c would be perfect for China, given Apple's need to expand its business in the Chinese smartphone market. (Maybe such a thought never crossed the mind among those at Apple, right?)
But why does Apple need to expand its smartphone business in China? They sell to the premium end of the market, because they don't have to compromise quality and of course because that's where you make the most money.
They could probably make a cheaper version that sells for half as much, but how much better would it sell? I think Bert's comment is on the mark, neither the 5S or 5C is affordable by most in China, those who can afford it see the additional ~15% higher cost as no big deal. Why not buy the best? I wonder that maybe one selling for half as much isn't going to add a whole lot more people who can afford it, since my understanding is that incomes are more stratified in China than they are in the US or EU. To really increase sales in China in a big way, they'd have to go for the low end market in the range of $100 where Chinese companies are converting people from feature phones. Apple can't make money there, and an iPhone would no longer be seen as a high end high quality product, so it could very well cost them sales on the high end.
The media's obsession with "smartphone market share" is the real problem here. Apple is still growing its share of the overall mobile market, but so many people are switching from feature phones to smartphones on the low end of the market that it makes naive people think that Apple's sales are collapsing. They aren't. They have been a bit under 10% of the overall mobile market worldwide for the past year, slowly gaining bit by bit. Once the feature phone market has disappeared entirely in 3-4 years, Apple's smartphone market share will be equal to their share of the overall mobile market, probably around 10%.
I think the idea that people have is that Apple has to compete on the low end, because if they don't get people in their ecosystem now, they'll stay forever in the Android ecosystem (or whatever Chinese ecosystems are created by companies selling Android phones but replacing all the Google services) However, surveys have shown (in the US at least) that Apple gets more people defecting from other smartphone platforms than they lose to other platforms, and if/when they come out with a bigger phone that should help in that regard even more as I'm sure Apple's stubborn insistence on only one choice for size is causing some defections from people who would stay if Apple had a bigger phone. It only becomes hard to switch platforms if you feel like you have a lot of money invested in that platform. I doubt very many people have spent the many hundreds of dollars on apps that it would take to influence their decision in buying a phone that costs many hundreds of dollars. I don't believe that the ecosystem is nearly as sticky as analysts seems to think.
Those who are waiting in line to get their hand on the latest Apple iphone donot care much for 100 dollars or so. The 5C is suppose to cater the less affluent section and latest and new iPhone might be last thing on their mind. But i think 5C will start outselling 5S in coming days or months.
It seems to me that in a market where the price of either iPhone is very, very high relative to what most people can afford, initially at least, the expensive one can outsell the cheaper one. Not because everyone in China is buying one, but rather the opposite. Very few people can afford any of them at all. Those few who can will want "the best."
In markets where most people can afford either one, the cheaper one wouldn't be perceived as "you haven't quite made it yet."
Seems to me that the c model isn't nearly cheap enough to make a big dent in the Chinese market, however. So the truth seems to be, in a market like the Chinese one, the tactic doesn't work at all. (I kind of like that gold color of the s too!)
I find it interesting how the whole world has an opinion about how Apple should run its business. It is the same thing as discussing which soccer players should start in the next game of Barcelona. Everybody has an opinion, bachelors' wives and maidens' children are well taught. But I understand EE Times: the whole scheme is to generate more page views, and pointless discussions by uninvolved clueless people about Apple generate a lot of those. Well done!
Apple sales is smart. The ugly 5c color palette pretty much guarantees the dominance of the 5s. I bet the vast majority sold are white, the only "neutral" color. I find this almost comical, because the first thing most buyers do is then hide their pretty phone in an ugly case to keep it precious.
Look at the distribution of sales: in the big markets, 5c is much more popular in UK (31%) and US (24%) than in China (9%). Chinese culture is much more image conscious than UK/US, and they would not want to be seen as too poor to buy the "good" version. Another interesting comparison is Canada vs US: although vastly different size markets, they are similar cultures. Yet, Canada has a greater proportion of ethnic Chinese and, arguably, proportionally fewer low-income households, so the 5c adoption rate is lower (18%) than US (24%).
I'd be very surprised if Apple does not know how to judge markets by cultural preferences and disposable income. Their marketing is far smarter than that. The 5c is intentionally ugly, and intentionally not very cheap, so as to not cannibalize sales of the 5s. Apple did not want to come out with a truly cheaper iPhone at this point because it would significantly erode their margins, yet they wanted to capture the thrifty market who prefers to save $100 to get an iPhone rather than lose the sale to a Samsung.
But you don't need to put the 5C in a case, it has that essentially built in. There is little reason to put it in a case for protection, how much more protection do you need for a phone with a plastic exterior? Unless you use one of those 1/4" thick rubbery cases like my friend who does construction has on his phone, most of the thin cases are for looks only and would seem to offer little protection to the phone.
It doesn't matter what colors Apple offered, people will always want something different. Do you see very many solid color cases of any color? I see very very few of those, they're usually some sort of crazy patterns or blinged out with rhinestones or whatever. You see it on every phone, Android or Apple, though on Android sometimes they just replace the back cover with a new one that has a different pattern than the plain white of the rest of the phone. I guess it kind of makes sense not to have a more expensive exterior when most people cover their phones with a case, more typically not as much for protection but rather to personalize it.
It is my understanding that the UK public are being 'forced' into getting the 5c rather than the 5s. Phone suppliers/networks just haven't got the stock for the 5s. The articles I've read are all saying people are coming in asking for a 5s and the reply has been 'sorry, we're out of them but we have plenty of 5c'
The suppliers/networks are a bit annoyed with Apple because they feel that the public will blame the suppliers rather than Apple.
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