![]() We are seeing an increased number of smartphone manufacturers play with the use of color in their devices to go after this more mainstream market where the color of your phone may be just as important (if not more) than what SoC is inside. For people further away from the early adopter summit (further down the pyramid), carrying the absolute latest technology isn’t always at the top of the purchasing decision tree. We’ve passed the point of everyone being an early adopter to smartphones now encompassing a larger section of the technology buying pyramid. The smartphone market is definitely maturing. I don’t know that Apple has to do the same thing here, but if you’re looking for an ultra cheap mobile computing device from Apple - it may not look like a phone. Instead of putting out a low cost PC competitor, Apple eventually brought the iPad to market - a completely different device, with a very different cost structure, to compete with those lower cost PCs. In fact if we look back at the period of netbook success during the late 2000s, Apple was often under pressure to compete in that space. The 5c comes in iPod touch-like packaging but still includes a pair of Apple EarPods (with remote and mic), a 5W wall adapter and a Lightning cable.Ĥ-inch 1136 x 640 LCD sRGB coverage with in-cell touchĨMP iSight with 1.5µm pixels Rear Facing + True Tone Flash At the same time, anyone who is familiar with Apple’s business will know that a low cost volume play was never in the cards. Anyone expecting the 5c to be Apple’s solution for volume in China or somehow compete in the feature phone space will be disappointed. These are exactly the same price points you’d expect the iPhone 5 to drop to after the introduction of the 5s. With a 2-year contract Apple expects a 16GB 5c to sell for $99, and a 32GB for $199. The savings on materials however is enough to allow Apple to sell the iPhone 5c in place of the outgoing 5. Having as many common components between Apple’s two iPhones at this point is another great way to capitalize on economies of scale. For example, the WiFi, cellular and BT hardware is different than the iPhone 5, but shared across the 5c and 5s. Other elements aren’t necessarily newer but are at least shared with the 5s platform. It even brings some new features to the table like sharing the same front facing FaceTime HD camera as the iPhone 5s. The iPhone 5c retains all other features of the iPhone 5 including in-cell touch, Lightning connector, the same rear facing iSight camera stack and A6 SoC. The iPhone 5c leverages the entirety of the iPhone 5 hardware platform, but moves from a glass + aluminum construction down to a more cost effective glass + polycarbonate design. With its core motivations unchanged, Apple needed a solution to continue to make the 3 phone strategy work. The incredible volumes that followed were a side effect of the state of the industry, not a deliberate change in business model. Keep in mind that Apple built its phone business much like it built its Mac business, by focusing exclusively on higher margin products. Add in other flagship features like in-cell touch and premium construction and the iPhone 5 quickly became a device that Apple would rather not discount. Capacitive touchscreen display costs increase with display size, making the iPhone 5’s display a more expensive option than its predecessor. The previous model leveraged the same industrial design, and it’s definitely not a cheap one at that. With the iPhone 5s however, Apple was caught in an interesting situation. No attention was paid to the impact on the iOS brand however of having a bunch of customers walking around with new 3GSes as recently as late 2011. ![]() The strategy worked quite well.ĭuring the days of the iPhone 4S the strategy made a ton of sense, as the 3GS was undoubtedly cheaper to manufacturer than the glass + metal iPhone 4 and 4S designs. ![]() In the early days of this strategy, it was a great way to continue to build up the iOS user base without having to compete in the lower margin feature phone space. ![]() With the arrival of every new iPhone, the previous generation gets a $100 discount from its on-contract price, and the generation before that one is offered for free on-contract. ![]() For years now Apple has followed a rather intelligent waterfall of its products down the pricing stack. ![]()
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