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Did Apple Make a Mistake By Releasing Two New iPhones?

samzenpus posted 1 year,4 days | from the double-trouble dept.

Businesses 348

Nerval's Lobster writes "As noted by CNET, Apple hasn't released data on the number of iPhone 5C units it presold in the device's first 24 hours of availability—a first for the iPhone since 2009. Why is that? Reporter Josh Lowensohn speculates that iPhone 5C sales 'may not be as impressive when stacked up against tallies from previous years,' with one outside analyst suggesting that Apple racked up 1 million iPhone 5C preorders last Friday, or roughly half the 2 million presales scored by the iPhone 5 on its first day of ordering availability last year. However well the iPhone 5C ends up performing on the open market, Apple's decision to launch two iPhones this year—rather than a single 'hero' device—could result in self-cannibalism, as users who would've bought the iPhone 5S instead gravitate toward the cheaper option. Cannibalism is a topic that Apple knows well, as it's been dealing with the iPhone cannibalizing the iPod for the past several years; but a new iPhone eating away at another new iPhone is fresh territory for the company. During earnings calls, Apple CEO Tim Cook likes to argue that cannibalization—whether iPhones feeding off the iPod, or the iPad taking the place of MacBooks—is a good thing, so long as it's Apple products eating other Apple products. But it's far more questionable whether he would welcome the iPhone 5C—almost certainly a low-margin device, despite its current-generation components and plastic body—taking a bite out of the more expensive, and presumably higher-margin iPhone 5S. Margin erosion remains a prime concern of investors and Apple watchers; anything that contributes to that erosion is bound to be viewed unfavorably."

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Apple makes money either way... (3, Insightful)

mlts (1038732) | 1 year,4 days | (#44866859)

Part of the issue is that this is the "revise the device" year for Apple. Even with their immense cash reserves, it takes a lot of time to design a phone, design its form/function, test it internally, and make sure all is in order for their legal department before it makes it out the door. Then, they have to make sure the ODM/OEM are ready to produce the device in the needed numbers.

Because the 5S/5C are not "groundbreaking", Apple ends up with not as many sales as the year when they have something with a completely new design.

Another part is that the 5C models are cheaper to make, so Apple still turns a tidy profit either through lower priced, but less cost to them models or higher cost, higher overhead offerings. The 5C appears intended to help get a foothold in other markets, but in the US, it will do well against the entry level Android devices or the back-generation iPhones that are sold to keep people on contracts.

As for the "hero" phone, the 5C really isn't aimed that direction. The 5S seems to have made to toss a bone to the enterprise, adding another useful (even though this can be argued) security feature so data on the device has another layer of protection.

In summary... (1, Redundant)

orthancstone (665890) | 1 year,4 days | (#44866945)

"Apple makes money either way"

You nailed it right there

Re:Apple makes money either way... (5, Interesting)

ToastedRhino (2015614) | 1 year,4 days | (#44866983)

The narrative around Apple has certainly shifted, and this is having a tremendous impact on how people view what Apple is doing. Especially hear on Slashdot, people seem anxious for any sign that Apple is failing. That said, I would argue that the iPhone 5s is just as "groundbreaking" as any phone that's been released in the last few years. The inclusion of a 64-bit processor and the fingerprint reader are sure to be huge selling points, even if most people don't understand what 64-bit means or why it's advantageous.

I agree with you, and disagree with the summary, in stating that the iPhone 5c is almost certainly not a low-margin device. In fact, the very existence of the iPhone 5c seems to be a response to the lower margins Apple has had in selling devices that are one and two years old. The iPhone 5c is an iPhone 5 in lower-cost packaging. This serves to increase Apple's margins. People here like to give Apple a hard time, but the reality is that the iPhone 5 remains not only a usable phone, but a phone that provide a tremendous customer experience. Instead of keeping the iPhone 5 in the lineup and selling it as one of their "cheap" phones (as Apple has done with the releases of their last two flagship phones), they designed a cheaper to manufacture version that has all of the same benefits.

It is true that selling two "new" phones instead of one this year will likely decrease the number of sales for either device individually. That said, I expect that next Monday (after the iPhone 5s has actually gone on sale) there will be a press release indicating that combined sales (and pre-orders) of these two new phones exceeds the initial sale of the iPhone 5. (I'm also prepared to eat crow if I'm wrong.)

Re:Apple makes money either way... (1, Funny)

Anonymous Coward | 1 year,4 days | (#44867129)

...hear on Slashdot...

And that's where I stopped reading.

Re:Apple makes money either way... (4, Funny)

Anonymous Coward | 1 year,4 days | (#44867187)

You mean listening.

Re:Apple makes money either way... (4, Insightful)

Anonymous Coward | 1 year,4 days | (#44867165)

even if most people don't understand what 64-bit means or why it's advantageous.

Heck, I know what it means and still don't understand why it's supposed to be advantageous.

Re:Apple makes money either way... (4, Funny)

MightyYar (622222) | 1 year,4 days | (#44867245)

You haven't heard Siri until you've heard her in 64-bit through your Grados!

Re:Apple makes money either way... (4, Interesting)

AmiMoJo (196126) | 1 year,4 days | (#44867249)

The inclusion of a 64-bit processor and the fingerprint reader are sure to be huge selling points, even if most people don't understand what 64-bit means or why it's advantageous.

That's exactly why consumers don't care about it. In the past iPhone features have had a very visual and immediate "wow" factor that people can see the utility of straight away. App Store, 3G, Siri, Apple Maps (lol), widescreen, retina displays and so forth.

Instead of keeping the iPhone 5 in the lineup and selling it as one of their "cheap" phones (as Apple has done with the releases of their last two flagship phones), they designed a cheaper to manufacture version that has all of the same benefits.

Yes, but they seem to have missed their target. The point of the 5C was to break into markets where the 5S is too expensive to gain big market share. For years Apple fans were saying Apple didn't care about these markets and there was no money in cheap(er) phone, but actually they wanted in and just couldn't come up with a suitable product. It needed to be current generation (i.e. have a 5 in the name) to remain desirable but also be affordable, and it seems that most analysts think that it's too expensive.

Like it or not Android is offering very strong competition, and even on fairly low end hardware is now smooth and provides an excellent user experience. I recently installed Cyanogen on an old Galaxy S (~1GHz single core CPU, 512MB RAM) and it's a very nice phone. The reality is you can buy a pretty good dual core, 1GB RAM, large HD screen phone in China for a fraction of what Apple wants to charge and it's as good as the iPhone in most respects to most ordinary people.

Re:Apple makes money either way... (4, Insightful)

DCstewieG (824956) | 1 year,4 days | (#44867397)

The point of the 5C was to break into markets where the 5S is too expensive to gain big market share.

According to who? That's what pundits wanted and assumed but it should now be obvious that it's not what Apple wanted. For the time being, they're still happy with their premium device strategy. You only have to look as far back as the iPod and iPod mini to see what they're doing.

It should be noted the iPhone 4 is still being sold in China.

Re:Apple makes money either way... (0)

timeOday (582209) | 1 year,4 days | (#44867255)

64 bit is no advantage on a device with less than 4 GB of non-upgradeable RAM.

Re:Apple makes money either way... (1, Interesting)

HuguesT (84078) | 1 year,4 days | (#44867285)

It may still be since you can memory-map more than 4GB of storage.

Re:Apple makes money either way... (1)

Kielistic (1273232) | 1 year,4 days | (#44867391)

Why would anybody be doing that on a phone that probably has 64GB storage total? 0.01% of iPhone users might be able to find a use for that. 0.01% of that might actually do it. Being as there's probably more people that enjoy watching the glass shatter when the phone is dropped than will mmat that amount of storage I'm not sure that is very advantageous.

Re:Apple makes money either way... (0)

Anonymous Coward | 1 year,4 days | (#44867289)

Right, because being able to mmap large files isn't advantageous, and being able to do two ops at the same time because the registers are much large isn't advantageous. You're mostly right, but you haven't thought of all of the issues at hand.

Re:Apple makes money either way... (1, Informative)

AlphaBit (1244464) | 1 year,4 days | (#44867351)

Moving to a 64 bit word size has other effects than simply increasing the amount of memory that can be addressed. When doing mathematical computations, if a number doesn't fit in your word you have to fake it. 64 bit words allow for much bigger numbers that can now be handled natively by the CPU. This might make a big difference in crypto performance, like on your SSL connections.

Re:Apple makes money either way... (3, Informative)

DCstewieG (824956) | 1 year,4 days | (#44867355)

Not the bits themselves, but changing the architecture gave ARM a chance to clean up the instruction set and double the registers. And that IS an advantage. It's very similar to what AMD did with x86-64.

Re:Apple makes money either way... (1)

amorsen (7485) | 1 year,4 days | (#44867387)

This was certainly not the case on PC's. You began to see advantages as early as 1G because that is when some memory had to be moved away from permanently mapped memory on 32-bit. You ended up with a less than 200MB high memory area which was difficult to use effectively and you had to pay the PAE overhead to get it. Best option was to run a non-PAE kernel and forget about that last bit of memory (or run a custom memory split, if you like compiling your own kernel).

2GB was more or less ok and 3GB was a bit of a sweet spot (but who has that?). 4GB brought the extra pain of having to deal with 32-bit devices and DMA32 memory, or you did the sane thing and just gave up on a few hundred MB again to avoid bounce buffers. To be fair, DMA32 plagues 64-bit Linux as well, but it should not be much of an issue on modern hardware anymore.

Anyway, Android uses a 1GB/3GB memory split, so 1GB is still an unfortunate amount of memory, and all current Android devices are 32-bit.

Re:Apple makes money either way... (-1)

Anonymous Coward | 1 year,4 days | (#44867311)

The narrative around Apple has certainly shifted ...

Yeah, the jig is finally up. People released that "Designed in California" really means "Sweatshop in China".

Re:Apple makes money either way... (5, Insightful)

AmiMoJo (196126) | 1 year,4 days | (#44867077)

The problem is that the iPhone 5 wasn't particularly exciting or new either. After the iPhone 5 was basically a year behind the competition when it was released people expected Apple to do more this time around to catch up, but instead they just did an incremental update.

The other issue this time around is that the 5C isn't cheap enough. It was supposed to open up China, but it's way too expensive to compete. I suppose Apple are hoping that their name will make it desirable.

Re:Apple makes money either way... (5, Insightful)

Arrogant Monkey (2818767) | 1 year,4 days | (#44867237)

I know all the pundits believe that the 5C was supposed to open up China, but that doesn't mean it is what Apple intended. As pointed out elsewhere in this thread, this is just the same strategy of taking last year's hot phone and bumping it down to the peons -- but ensuring they maintain their margin. about 20% of the cost to build the 5 was in the machining and assembly, not to mention the press they got on how easily scratched anodized aluminum was. So instead of a Iphone 5 with an aluminum back that's $100 less than last year's price, you have the 5c which probably adds $20-30 back into the margin for Apple and avoids some of those pesky customer complaints.

Apple (even if currently reviled) is not stupid. If they want to compete on the low end in China, it won't be with the 5c at twice the price of a HTC android. Maybe it'll be a 4c at a slight premium to HTC with a similarly high margin.

Re:Apple makes money either way... (0)

Anonymous Coward | 1 year,4 days | (#44867287)

I expected the 5C to replace the 4S (perhaps it would then have been called the 4SC) getting rid of the old screen size and connector, and that would also allowed them to make it cheaper.

Re:Apple makes money either way... (0)

Anonymous Coward | 1 year,4 days | (#44867313)

What was a year behind about it? It's CPU was up there with the fastest devices of the time, it's GPU was still the fastest out there right up until the S4 was released, it has all the apps you'd ever want. What was it that was "a year behind"?

Note: No, "it doesn't have a 16 meter screen" doesn't count, that's not being "behind", it's a pretty significant advantage to many to have a smaller screen.

*sigh* Yet More Anti-Apple FUD... (5, Insightful)

danaris (525051) | 1 year,4 days | (#44867203)

Apple has shown time and again that, as far as the public is concerned, they know what they're doing.

But because they don't bring out something as amazing as the iPhone and the iPad were when they were first announced every single month, everything they do do gets panned as "not revolutionary enough," "more proof that without Jobs, Apple is DOOOOMED," etc.

So, in the minds of most of the pundits today, yes, Apple made a mistake by releasing two new iPhones. They also would have made a mistake if they had released one new iPhone, or three, or a smartwatch, or a smart TV, or a bloody time machine. No matter what Apple does, the tech press have to find ways to make it fit the narrative of "Apple is Doomed." That's pretty much all there is to it.

If you read the Macalope column over at MacWorld (and read it with a grain or two of salt, of course, because it's primarily intended to be humorous...but it still cuts deep a lot of the time), you can see him point out a lot of the glaring inconsistencies and habitual methods of trying to twist reality to make Apple's successes sound like failures. (Like the old favourite, "compare Apple's current products to hypothetical future products from its competitors.")

Dan Aris

Self-Cannibalism is A-OK, especially for Apple (5, Insightful)

tlhIngan (30335) | 1 year,4 days | (#44867253)

Why the worry about self-cannibalism?

I believe it was Jobs that said that if you aim to protect your bread and butter, someone else will just eat you up.

So Apple has absolutely no issue with creating devices that will eat into existing product lines - take the iPod line. You had the original, then the mini, shuffle and nano. Each of which eats into each other's sales somewhat. But you still sell more this way than any other way.

Or the iPhone. It certainly ate into the iPod (group) sales, and the iPod Touch certain ate into iPhone sales (an iPhone without the phone!)

Or the iPad - it's certainly eating into Mac sales, especially lower end - people who would've bought an Air probably bought iPads instead - it does everything they needed it for anyhow.

If you innovate by trying not to compete with yourself, you end up like Kodak, inventor of the digital camera. However, the digital camera concept was not Kodak's focus, which was selling chemicals, so Kodak sat on the technology until other companies started selling them and film and chemical sales bottomed out. They could've transformed from a chemical company to an imaging one - the bulk of their sales would be chemicals, but they'd have a growing business doing all sorts of imaging - from digital cameras to printers and even having photo printers that develop to regular print paper, selling more chemicals.

If the 5C sales eat into the 5S sales - so be it. Each should compete on their own merits, and if the 5C should prove more popular, well, it means the 5S didn't deliver good value for money.

And just like it was said, they both make money. And the end goal is to make money - if you convert a Samsung user to an Apple user, a plus - who cares if they buy a 5S or 5C? It could also be if you didn't have one or the other, the user may have stuck with Samsung. And yes, there will also be users who go from Apple to Samsung.

Re:Apple makes money either way... (1)

Derec01 (1668942) | 1 year,4 days | (#44867267)

The most compelling argument I saw for the 5C, aside from appealing to a different aesthetic, is that it is trying to cannabilize it's own back-catalog of devices (iPhone 5,4s,etc.) that are still out there and already function as the "cheaper" iPhone. This drags that market into the future in terms of connectivity and features so that they can better sell their services and platform to all iPhone users.

Re:Apple makes money either way... (0)

Anonymous Coward | 1 year,4 days | (#44867343)

But they make less money off the 5c... or do they I wonder? Maybe the profit margin net is the same for each. Either way Apple definitely seems to have lost both Jobs' magic touch for marketing and his obsession for actually putting in the latest and greatest tech as fast as ever can be managed. It might be "trendy" to bash Jobs for mostly imagined trespasses, but looking at the 5s and 5c you can tell the man that was talking with Lytro about lightfield cameras in cellphones is gone. And that's really the point articles like this would probably like to get at, but miss in all the confusion.

Crime against humanity. (-1)

Anonymous Coward | 1 year,4 days | (#44866895)

Apple commits a crime against humanity each time it releases a new products. Those crimes are somehow mistakes.
So yes apple did make a mistake by doing this once more.

This time... (-1)

Anonymous Coward | 1 year,4 days | (#44866909)

This time the "C" stands for Crap.

Hard Shell (1)

Bigbutt (65939) | 1 year,4 days | (#44866913)

Heck, since I (and many others) typically encase the phones in all manner of protective cases (I have an Otter case for my iPhone 5 and will be replacing it with a BlueTooth keyboard case soon), a plastic case isn't all that big an issue assuming reasonably similar devices (functionality, not tech specs). If you're giving your kid a phone, you might go with the C and put it in a hard shell of some sort. I've bounced mine, banged against walls, or put things on top of it that a hard case of some sort is necessary.

[John]

Re:Hard Shell (1, Insightful)

h4rr4r (612664) | 1 year,4 days | (#44867093)

You could just be more careful.
I have had lots of smartphones, no iphones though, and I have never used a case or a screen protector. They are all still unscratched.

Re:Hard Shell (2)

nickybio (1458399) | 1 year,4 days | (#44867135)

Obviously, not all of us are as coordinated as you. You must be amazing in bed.

Re:Hard Shell (1)

h4rr4r (612664) | 1 year,4 days | (#44867151)

Actually I think most people are more coordinated than me. I just think bulky cases destroy the point of a thin device. Being careful is easy.

Re:Hard Shell (1)

nickybio (1458399) | 1 year,4 days | (#44867395)

Agreed that bulky cases destroy the point (or at least the "sexyness") of a thin device. But alas, there are some things I just can't control. . . like my wife dropping the phone. For me, the otterbox defender beats the heck out of having to constantly obsess over being careful with it or being upset at someone else when they scratch it. I have to protect my crappy 'ol Iphone 5 till the next iteration comes out since the 5S/C is in between upgrades for me. I bow to the copious amounts of patience you must have that allow you to be so careful with your phone. Patience is a virtue. Not everyone is virtuous. There's a case for that.

Re:Hard Shell (1)

MightyYar (622222) | 1 year,4 days | (#44867317)

It's still $549. That's not exactly cheap, and isn't really any different price-wise than when they simply offered the older model. Not seeing the point.

Two new iPhones? (3, Insightful)

wjcofkc (964165) | 1 year,4 days | (#44866923)

Apple made a mistake by not releasing any new iPhones.

Mod me down all you want, it wasn't long ago I was getting modded down for defending Apple and their yearly product releases. I can no longer find any room to defend their smartphone platform.

Re:Two new iPhones? (0)

Anonymous Coward | 1 year,4 days | (#44867079)

If you get past all the "tech" media's babble, there's the move to the ARMv8. Pretty nifty to see how they'll move forward and if 64-bit register sizes helps more things be done by the central processor, but since it doesn't have any immediate impact, those impressed by gloss and flair are upset and those who look only for the next quarter's profit are upset.

Re:Two new iPhones? (2)

PsychoSlashDot (207849) | 1 year,4 days | (#44867307)

This is a company that made its market share on the basis of "cool". When Blackberry was the king of secure, reliable and familiar, Apple sold phones that were sexy. That's what iPhone has always held over its competition... sexy.

Users don't know an ARMv8 from a LEGv8. BigNum++ doesn't work alone to sell phones and users have been weaned off the MoreGehertz progression for years now. 32 more bits doesn't mean anything to Joe ShinyGlass Don'tHoldItThatWay.

This year is very much lacking in sexy. Sort of like last year's "look, it's... um... longer. But at least Google Maps is gone!" We'll see what happens.

Re:Two new iPhones? (1)

MightyYar (622222) | 1 year,4 days | (#44867333)

Well, the 5s isn't any worse than the 5. And their platform is still pretty nice, even if they don't blow us away every single year. They are too rich for my blood, but there doesn't seem to be a high-performance Android with that form factor. I'm stuck with a cheap Android just to keep the screen size down (and my bank balance up).

What two new phones? (1)

king neckbeard (1801738) | 1 year,4 days | (#44866925)

Last time I checked, the 5C was more or less a 5 with a few parts changed out for equal-speed but lower power usage. Roughly the equivalent of a slim playstation release. Even if you consider it enough change to be a new phone, it doesn't appear to be all that different from the 5S. It's less powerful and lacks some of the features, but it isn't like it's going in a drastically different direction. It's a little more of a difference than models with more storage capacity would be.

Re:What two new phones? (1)

postbigbang (761081) | 1 year,4 days | (#44867049)

And it wasn't the iPhone 6, or something actually new, just new-price points to buffer marketshare dominance. Why?

Because the iPhone is just part of the revenue mix, and Apple makes more money on all the iTunes and apps you chew and use, accessorizing, and so forth. This was an iPhone 5(whatever) and doesn't do anything save combat lower price-point phones. And it's not the point at all. Apple continues to make hay while the sunshines. When that's over, they'll have handily have been able to evolve whatver is up their sleeve for the next product line launch, which will be endlessly speculated about, much to their liking. It's all about brand, and making revenues in as many rational ways as is possible with that brand, then doing it all over again before Ballmer wakes up, or Eric can pull his head from his butt long enough see the world.

Re:What two new phones? (0)

the_B0fh (208483) | 1 year,4 days | (#44867099)

You really think the iPhone 5C is not that different from the iPhone 5S? Aside from twice the performance, better camera, fingerprint reader, 13 LTE bands, and so on, that is?

Then, is there any difference between the Galaxy S4 and the Galaxy S3?

Re:What two new phones? (1)

ArcadeMan (2766669) | 1 year,4 days | (#44867167)

The difference between the iPhone 5C and the iPhone 5S is 16.
The difference between the Galaxy S4 and the Galaxy S3 is 1.

Re:What two new phones? (2)

gl4ss (559668) | 1 year,4 days | (#44867147)

and people just don't seem too keen on buying a plastic iphone for essentially the same price. everyone puts a bumper on them anyways so you're not even going to notice you got a 5C and not a 5.

the mistake from apple was that the C stands for Color and not Cheap. a 300 bucks, even if slower, iPhone would have flown off the shelves.

but if they can't produce them cheaper without hitting a satisfying margin then as a (smartphone)company they're fucked as smartphones turn into commodities from being luxury. they'll really have to come up with some justification for paying 600-800 bucks for a phone when a phone can do all the same things for 300 bucks and all the same things but with a bit crappier screen for 150 bucks and almost all the same things for 100 bucks - and the "things" spoken of here aren't even essential communications functionality since all that(fb, sms, phonecalls, video calls..) you can get for under 100 bucks - so it's 6 to 8 times more expensive than a device that does all the essentials. that's over 500 bottles of beer you could be drinking while still being just as connected in regards of email, news and calls if you bought some 100 buck device instead of the new iphone every time it comes out.

if you just need a phone that can do sms and phonecalls all day long you can get it for 30 bucks.

all prices mentioned are off-contract of course since only total retards compare on contract pricing in a context like this.

it also sounds from lot of people that they already considered iphone 5 to be just a bit different and more expensive iphone 4s - that is to say that the 5C doesn't even replace iphone 4s in the lineup(so now they have 3 models -excluding the plain 5- in the over 550 bucks range).

Re:What two new phones? (1)

CanHasDIY (1672858) | 1 year,4 days | (#44867365)

the mistake from apple was that the C stands for Color and not Cheap. a 300 bucks, even if slower, iPhone would have flown off the shelves.

Sure, until the next week when phone companies start subsidizing iPhone 5's at 99 cents.

I know a number of folks who only have a smartphone because AT&T was giving them away for less than a buck a pop.

It's not the phone (-1, Flamebait)

larry bagina (561269) | 1 year,4 days | (#44866927)

the phone is fine. But it comes with iOS 7. Nobody wants iOS 7. Tim Cook listened to the hipster dipshits and went all-in on flat. Turns out, the only people who like it are hipster dipshits.

If Apple sold the 5c with Android, it would be flying off the shelves.

Re:It's not the phone (1)

Anonymous Coward | 1 year,4 days | (#44866997)

Actually, what "only hipster dipshits" care about is whether the icons on their phone are kinda-sorta-vaguely-3D-ish.

Re:It's not the phone (0)

Anonymous Coward | 1 year,4 days | (#44867127)

Hah! Android as a selling point for non-zelots. That's an amusing thought.

Re:It's not the phone (1)

ArcadeMan (2766669) | 1 year,4 days | (#44867185)

Don't worry, the semi-3D-look will be the new main feature of iOS 8, because Apple responds to what their customers want!

Upselling is not canibalization (4, Insightful)

MrEricSir (398214) | 1 year,4 days | (#44866929)

It's the oldest sales trick in the book -- you lure people in with promises of a bargain, then try to upsell them to a more expensive product. Movie theater popcorn is the classic example of this (OMG it's 2x the popcorn for only $1 more!) but electronics companies have done this for decades.

Perhaps... (1)

fatgraham (307614) | 1 year,4 days | (#44866931)

They made a mistake of not releasing a cheap option....

Re:Perhaps... (1)

Beardydog (716221) | 1 year,4 days | (#44867061)

They did. It's the 4s. You can still buy a new one. They announced a new, more capable device, and they refreshed the current model. Do you really need them to design a brand-new worse iPhone with the sole goal of making it less capable that the 5?

Re:Perhaps... (1)

the_B0fh (208483) | 1 year,4 days | (#44867117)

iPhone 4S, $1 on contract, not cheap enough?

Re:Perhaps... (2)

ArcadeMan (2766669) | 1 year,4 days | (#44867195)

The iPhone at $1 is cheap enough. The contract, on the other hand...

Re:Perhaps... (1)

MightyYar (622222) | 1 year,4 days | (#44867373)

Why bring the contract into it? It's a $450 phone! Not all of us piss away money on contracts. It might be different if I were running a business from my cell phone and needed Verizon's coverage - but fortunately that's not the case.

Re:Perhaps... (1)

jandrese (485) | 1 year,4 days | (#44867177)

fatgraham has a point though. The C is only slightly cheaper than the S when you factor in the subsidy, so why pinch those last few pennies when you could have a much faster phone with a nicer camera that won't be obsolete as fast? It's not a very compelling product at the current price point. It might have been different if it were $50 and the 4s was discontinued entirely, but as is the phone doesn't really have a place in the lineup. It's not cheap enough to be the cheap option.

Re:Perhaps... (1)

CanHasDIY (1672858) | 1 year,4 days | (#44867379)

They made a mistake of not releasing a cheap option that doesn't require you to volunteer to be anally rape by a telco.

FTFY.

Low margin device? (5, Insightful)

twistofsin (718250) | 1 year,4 days | (#44866943)

The "cheap" 5C still retails for $549-$649. I'm sure Apple has a healthy amount of profit with that figure.

I don't see the 5C as a low end device, instead I see the 5S as a premium model. No one pays over half a grand for a low end phone.

Re:Low margin device? (0)

Anonymous Coward | 1 year,4 days | (#44867131)

We don't know they'll keep that price. They could just be milking the higher paying people first before a price drop.

Re:Low margin device? (2)

gl4ss (559668) | 1 year,4 days | (#44867205)

We don't know they'll keep that price. They could just be milking the higher paying people first before a price drop.

well yeah iphone 4s 16gb is still 550 euros here.

if 5C is low margin then I'm the mefisto pope. practically the only more expensive phone I can buy is the iphone 5S(excluding vertus). does it have something crazy like 512gb of memory? fuck no. nothing special at all, if it doesn't have one of the highest margins then their soc provider fucked them up the ass really well(and with them being the designer that's actually a possibility). and don't get started on the dirt cheap polycarbonate machined shell(that part wouldn't make much of a dent on the price even if it machined in finland.. http://www.youtube.com/watch?v=RqxYiXtzKd0 [youtube.com] at 0:50 in the video ).

Investors be damned (1)

ugen (93902) | 1 year,4 days | (#44866949)

Sometimes I wish Apple was a private company and didn't have to look over the shoulder at "investors".

Investors felt differently (1, Interesting)

tuppe666 (904118) | 1 year,4 days | (#44867081)

Sometimes I wish Apple was a private company and didn't have to look over the shoulder at "investors".

They had the largest shareprice drop since year start in one day. The reason was 1. Because they didn't announce a deal with China Mobile and 2. Because they don't have a competitive phone in that market...they thought that would be the iPhone 5C they were wrong.

It is better than the alternative (1)

ModernGeek (601932) | 1 year,4 days | (#44866957)

The alternative was to keep the last-generation phone still around for quite some time as the lower-end device. This way, they are able to cater to the second-rate market while still giving them a refreshed device.

The alternative was better (1)

tuppe666 (904118) | 1 year,4 days | (#44867109)

The alternative was to keep the last-generation phone still around for quite some time as the lower-end device. This way, they are able to cater to the second-rate market while still giving them a refreshed device.

The alternative was having the old aluminium versions of the old phone rather than it being rebadged and put in a plastic case and having a "c" added to the end, many people think that is a step back. I am not sure who is fooled.

Theory. (0)

Anonymous Coward | 1 year,4 days | (#44866967)

Maybe people are finally waking up and realizing a phone is just a phone. Who cares if there's a newer trendier one out? The old one still works fine!

Re:Theory. (0)

Anonymous Coward | 1 year,4 days | (#44867305)

May we infer that you do not work in marketing? Anymore, anyway...

Is this article more sensationalist crap? (2)

jessecurry (820286) | 1 year,4 days | (#44866971)

I wonder if Apple is going to wait until after the 5S is released before providing sales figures to the public?

Re:Is this article more sensationalist crap? (0)

Anonymous Coward | 1 year,4 days | (#44867273)

^^ THIS !

Yet more anti-Apple bullshit .. (1)

codeusirae (3036835) | 1 year,4 days | (#44866973)

That whole article is noting more than anti-Apple bullshit. What consultancy got paid by Microsoft for typing that?

Re:Yet more anti-Apple bullshit .. (1)

king neckbeard (1801738) | 1 year,4 days | (#44867043)

Why would Microsoft pay for an article attacking their BFF?

Why 5C? (1)

Beardydog (716221) | 1 year,4 days | (#44866985)

Why write this article abut the 5C? It's literally last year's model.

When the 4s came out, it would have been stupid to complain that the 4 didn't break presale records. The 5C isn't meant to rock you like a hurricane. It's meant to make your consolation prize more palatable.

/. Obligatory Disclaimer: I won't be buying either of them.

Brand Dilution (0)

willoughby (1367773) | 1 year,4 days | (#44867005)

Last month if someone said they had an iPhone you knew what they were talking about. Different generations, sure, but you knew it was arguably the finest device Apple had ever made, within each generation.

Next month when someone says they have an iPhone the first question will be, "Do you have the cheap one, or the good one?"

Re:Brand Dilution (1)

spire3661 (1038968) | 1 year,4 days | (#44867263)

The 'cheap' one will run everything the 'good' one will. The vast majority of people keep their phones in cases. No one will notice, nor will it matter.

Re:Brand Dilution (1)

whisper_jeff (680366) | 1 year,4 days | (#44867277)

Yeah! Exactly! I mean, that's precisely what happened when Apple started releasing new less-expensive versions of their iPod alongside their top of the line iPods. When will Apple learn from their past mistakes. Stoopid Apple. /sarcasm

Re:Brand Dilution (1)

MightyYar (622222) | 1 year,4 days | (#44867385)

The kids already can recognize the newest, fanciest one from half a block's distance. This changes nothing.

Or maybe they could try a different product... (0)

Anonymous Coward | 1 year,4 days | (#44867019)

While I'm personally not sold on these new "watches", perhaps they should try something innovative and new. Instead, they release basically the iPhone 5 with some upgraded under-the-hood technology and a cheap version for developing markets like China, but is still more expensive than their competitor.

The original iPhone was a great phone, but it sold because it was unique and flashy and the average non-techie consumer out there saw cool new things they could do. Catering to the non-techie consumer market is key because it's vastly bigger than the techie consumer market that understands the under-the-hood enhancements. Each iteration kept staying focused on adding new things that the average, non-techie consumer could grasp, things like a forward facing camera, Siri, better displays, etc. But the newer phone's features are too obscure. I'm not a software developer, so while I understand that there's a better processor under the hood, I fail to see why I should upgrade from my 4S which works fine to the 5 or the 5S. Thumb print recognition means nothing to me, and nothing else is offered that is useful or attractive.

Who Cares (0)

Anonymous Coward | 1 year,4 days | (#44867027)

I don't really care if there sales are split and don't make headlines for tech websites. They just need to make great devices that people want. At one point they had 3 or 4 ipods out at once. (shuffle, nano, micro, and touch) They still made tons of money.

Magic 8 Ball says "Cannot predict now" (1)

elistan (578864) | 1 year,4 days | (#44867031)

If history is any indication, the answer is "No." Might as well have been asking during previous iPhone releases "Did Apple Make a Mistake By Continuing To Sell The Older Model At a Reduced Price?"

the iPhone 5C - almost certainly a low-margin device

How certain is "almost certain"? Considering the history of various sites gleefully posting the component cost list of any new iPhone and pointing out that the sum is a lot less than the sale price, I wouldn't be surprised if the iPhone 5c has just as much a margin as Apple's flagship phone products. In the US - iPhone 5s unlocked price: $649. iPhone 5c unlocked price: $549. iPhone 4S unlocked price: $450.

Re:Magic 8 Ball says "Cannot predict now" (0)

ArcadeMan (2766669) | 1 year,4 days | (#44867279)

iPhone 5s unlocked price: $649. iPhone 5c unlocked price: $549. iPhone 4S unlocked price: $450.

It's a good thing they dropped the iPhone 5 from that list, because If I extrapolate those prices, I get the following:

iPhone 5S, $649
iPhone 5C, $549
iPhone 5, $449
iPhone 4S, $349
iPhone 4, $249
iPhone 3GS, $149
iPhone 3G, $49
iPhone, -$49

They would have to pay you USD$49 for every first-generation iPhone that you take home. Sadly, with a two-year contract, it's still too expensive.

Unlocked and contract-free. costs about the same (1)

Joe_Dragon (2206452) | 1 year,4 days | (#44867033)

Unlocked and contract-free. costs about the same as S4 at full price and the 5S costs more.

Let's look at the competition... (3, Insightful)

Dzimas (547818) | 1 year,4 days | (#44867039)

Samsung offers 31 different smartphone models in my local market alone. They range from awful $79 single core handsets intended for the prepaid market through the S4 and Galaxy Note series. Their shotgun approach guarantees that whatever price range a customer is looking, they're likely to at least consider a Samsung. The problem is that they don't make money on the low end, even though they ship millions of units. It's only the top tier handsets that command the large margins.

Apple is a far smaller company that doesn't have its own manufacturing facilities. That fact alone prevents them from participating in the low end of the smartphone market -- by the time they give Foxconn or Pegatron their cut, the margin on a sub-$100 phone would be unacceptable. It would be a make-work project. By eliminating the iPhone 5 from the lineup and replacing it with the 5C, the company seems to be positioning the 5C to gradually slide into the midrange market in a way that doesn't cannibalize sales from the top of the line glass and pixie dust series.I suspect that it will be under a year before the 5C is available for $0 on contract, with a manufacturing cost that's lower than the 4 that it replaces.

WTF?! Market segmentation is now cannibalization? (4, Informative)

the_B0fh (208483) | 1 year,4 days | (#44867055)

Would you rather sell X number of one product or some factor of X (larger than 1) of two products?

Also, when you sell two new products, at the same time, it is not cannibalization, otherwise, the entire effing PC market is full of cannibals. Hell, how many similar products does Samsung have?

It's market segmentation, idiots.

Do these people even have a damned clue?!

Re:WTF?! Market segmentation is now cannibalizatio (3, Informative)

vux984 (928602) | 1 year,4 days | (#44867163)

Also, when you sell two new products, at the same time, it is not cannibalization [...] It's market segmentation

It might be cannibalization.

Its segmentation if the new lower tier product picks up millions of new buyers who just couldn't afford the high tier one.

But its cannibalization if millions of users who would have bought the high tier one if it was the only one one on offer, but now buy the low tier one because its available and good enough.

The key to segmentation is to make sure nobody who can afford the high end model would be satisfied with the low end one, that they would rationalize spending the extra to stay in the premium product.

they've always had a "lesser" phone (1)

erotic_pie (796522) | 1 year,4 days | (#44867057)

The 5C is nothing new, Apple has always sold a "lesser/budget" phone with the previous year's model, it's just that this year they tweaked the previous years model with a new ccase.

The 5C is nothing more than a 5 with, what I am assuming, is a cheaper to produce case, leading to higher margins compared to just selling the previous year's model.

About those margins... (1)

mbessey (304651) | 1 year,4 days | (#44867075)

But it's far more questionable whether he would welcome the iPhone 5C—almost certainly a low-margin device, despite its current-generation components and plastic body—taking a bite out of the more expensive, and presumably higher-margin iPhone 5S

Seriously? This guys thinks the margins on the iPhone 5c are *lower* than the 5s? In that case, why is everybody else complaining about how expensive the 5c is, and saying it should have been released at a $300 price point? If you believe that the 5c could be made & sold at $300 (and I do), then since it sells at $550, Apple *must* be making something like 40% margins on them. The 5s is $100 more, but I bet it's considerably more-expensive to make.

Newsflash: They're not new (0)

Anonymous Coward | 1 year,4 days | (#44867125)

Nothing to see in these products. They're just slight modifications of the old ones.

iPhone 5 was difficult to manufacture (4, Informative)

MCSEBear (907831) | 1 year,4 days | (#44867141)

How quickly people seem to forget:

"The iPhone 5 is the most difficult device that Foxconn has ever assembled. To make it light and thin, the design is very complicated," said an anonymous company official to The Wall Street Journal. "It takes time to learn how to make this new device. Practice makes perfect. Our productivity has been improving day by day."

http://www.informationweek.com/mobility/smart-phones/foxconn-iphone-5-is-hard-to-make/240009249 [informationweek.com]

If you want a device you can sell for 99 bucks on contract it needs to be easier to make.

iPad is not a Mac (1)

tuppe666 (904118) | 1 year,4 days | (#44867145)

I always find it hilarious that Apple articles try to spin Apples floundering Mac sales are cannibalised by the iPad, When the iPad is selling *Less* that it did a year ago, in a growing tablet market. Android is dominating on the tablet, and Chrome is growing in the laptop? market.

5C is basically a 5 on a less expensive chassis (1)

saunderscc (1014083) | 1 year,4 days | (#44867155)

In the past, outgoing iPhone models stayed around as a less expensive alternative for people. With all of the R&D and other expenses amortized over many, many units, margins were still attractive at lower ASP's for outgoing models. This time around the 5 is no longer available in it's current form. It stays around as a "new" iPhone model on a less expensive chassis--compare the 5 and 5C and you will see the main difference being the housing. The "new" iPhone 5S has the new gee-whiz features, and the 5S will be built on the current, more expensive 5 chassis.

5C might be more profitable (0)

Anonymous Coward | 1 year,4 days | (#44867169)

There were numerous reports that the margin on 5C is higher than on 5S. Apple can make more money if everybody switches to 5C.

Idiotic? (0)

Anonymous Coward | 1 year,4 days | (#44867173)

1. The 5C is essentially an iPhone 5 in a plastic case, with a new cellular baseband chip. It's not a "new model" in the classic sense.

2. It's almost certainly a higher margin item than the 5S, and perhaps even commands the same net profit per unit. Something tells me the A7, better camera sensor and flash, metal case, and fingerprint sensor add up to almost $150/unit in costs.

Can I speculate too! (1)

MacTO (1161105) | 1 year,4 days | (#44867175)

Maybe Apple isn't releasing the figures because the 5c has 10 million units in preorders and they don't want people who would otherwise buy a 5s to figure out how great the 5c is!

Wow! Wow! Wow! That must be it. Yes! That must be it! After all, no information is as good as solid figures!

short answer delete as applicable [yes,no,maybe] (0)

Anonymous Coward | 1 year,4 days | (#44867179)

this space intentionally left blank

margins (1)

redfood (471234) | 1 year,4 days | (#44867189)

I don't think its a good assumption that the 5c is lower margin relative to the 5s.

Apple has always sold last years model at a discount. The 5c is essentially a 5 engineered to be cheaper to produce - Plastic (err Polycarbonate) vs Aluminum and I'm guessing other tweaks as well.

The 5s on the other hand has two brand new processors the 64 bit A7 and the M7 (anyone know if the GPU is new too).

I wouldn't be surprised if the 5s is the lower margin device. I think the allowed for preorders on the 5c but not the 5s so they could sell as many 5cs as the good to improve their overall margins.

They didn't release enough phones, IMO.... (2)

mark-t (151149) | 1 year,4 days | (#44867225)

As a current iPhone user who has had over 2 years of headaches trying use such a tiny touch screen,I would be all over getting a new iPhone if Apple would release a model of phone that was phablet-sized ... bonus points if it came with a precision stylus.

(yes, I already know about the galaxy note 2, and I'm planning on getting one [or something similar, depending on what is available at the time] as soon as my current contract is up next April, but if Apple would come out with a feature-comparable phone, I'd definitely get it because then all of my existing apps will all move straight over. Such compatibility, however, is insufficient to make up for the frustration I experience trying to use it)

faster upgrades (1)

u19925 (613350) | 1 year,4 days | (#44867265)

The iPhone-C is a low end device with older hardware. Which means it will become obsolete faster and owners will upgrade in shorter time than iPhone-S owners will. Also, the price difference is not all that high (550 vs 650 USD for iphoneC and iphoneS). Assuming it is $50 cheaper to make iPhone, Apple will recover that in quicker upgrade cycle. Also, it allows Apple to sell iPhone to users who would have gone most likely to Android. In fact, this is the best thing Apple could have done. Apple's recent fall of stock price is because the investors believes that it should have introduced an even lower end device which they didn't. So imaging what would have happened without iPhone-C?

Those who forget history... (4, Insightful)

swimboy (30943) | 1 year,4 days | (#44867283)

The last time people thought Apple was making a huge mistake and cannibalizing their own sales was with the iPod nano replacing the iPod mini, and we saw what a *disaster* that was.

Steve Jobs even said that if Apple doesn't cannibalize their own sales, somebody else will. This is such a non-issue that it's laughable.

Apple has little choice (4, Interesting)

steveha (103154) | 1 year,4 days | (#44867297)

If Apple doesn't cannibalize some of their own phone sales, lower-end Android smartphones will eat those sales. Apple is not as able to command a premium price as formerly.

Apple products are well-made, work well, work well in the Apple ecosystem, and are premium priced. In the early days of the iPhone, Apple successfully sold premium devices to customers who normally don't buy premium, because those customers couldn't get a non-sucky smartphone anywhere else. And buying an Apple smartphone, even at a premium price, still only means a few hundred dollars of extra expense.

But as the premium Android smartphones of yesterday move down and become the budget Android smartphones of today, there is less need to pay a premium to get a nice smartphone. Apple needs to compete on price.

With the 5C, Apple is trying to walk a fine line. They are trying to lower the entry-level price of an iPhone enough to keep sales that would have gone to Android phones, while at the same time they are trying not to take too many sales away from their top-of-the-line iPhone. (IMHO the plastic case is an inspired bit of product segmentation. Whether it's significantly cheaper or not, it serves as a nice differentiator between the bargain iPhone and the premium iPhone.)

I think in the USA, the 5C will serve its purpose pretty well, because most people get subsidized phones and the $100 subsidized price looks attractive. But worldwide, the entry-level phone customers will all be buying Android devices. I don't think there is anything Apple really can do about this. Their choice is either to accept lower profit margins on phones, or else watch as Android solidifies its hold on developing markets. The conservative thing for Apple to do is to keep charging premium margins; if they ever slash their prices it will be very hard ever to change their mind and go back to premium pricing.

I had a dream last night (1)

PaddyM (45763) | 1 year,4 days | (#44867323)

where an apple was eating me!

(adapted from Seinfeld)

Same Stratergy + Higher Mark-Ups (1)

tuppe666 (904118) | 1 year,4 days | (#44867361)

The harsh reality is the 5C designed to fool consumers in the highly subsidised American market, but fooling those customers into believing they are buying a phone at half the price $99 vs $199 (That one dollar fools people :), when the unsubsidised price is $500 more.

Apple found customers were cannibalising their latest model with their older model is sells...rather than having a range and it was killing their legendary margins. The 5C is simply a a cheaper version (using plastic and sharing some components with the newer model phone) of the old model...while still maintaining margins, cementing unapologetically plastic phones(sic) like those made by Samsung as being cheap, while pushing people to the newer model (people are drawn to models with more).

So did apple make a same mistake by launching two phones...not if you were happy with the old strategy, or if you think plastic on the old phone is *cough* premium. The old model + new product line with high mark-ups does not work in countries where highly subsided phones do not exist, and their are cheap and plentiful (and I would say better) alternatives. We continue to the erosion of Apples Market share (and Profits, Brand value, Sales) and this strategy does not change that, as Apple is becoming a niche product whatever you think of that.

having it both ways (1)

FreeBSDbigot (162899) | 1 year,4 days | (#44867383)

This story makes two primary points:

1. The 5c is selling poorly.
2. The 5c will cannibalize 5s sales.

Anybody see a problem here?

Waiting for both phones to be out? (1)

e_armadillo (14304) | 1 year,4 days | (#44867389)

Apple hasn't released data on the number of iPhone 5C units it presold in the device's first 24 hours of availability—a first for the iPhone since 2009. Why is that?

Perhaps they are waiting to post the results when the iPhone 5S gets its first 24 hours of sales? After all, releasing two new phone models is a first for the iPhone since . . . forever.

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