Why the iPhone 5c Makes Sense
Take, if you would, a second to look at Apple.com today. Then head over to Apple.com/iPhone.
Notice which phone is featured? Yup, the 5c. Not the fastest and greatest iPhone, but the new mid-priced iPhone. The 5c the featured iPhone.
That makes perfect sense.
Over the past year, a number of people I know have purchased iPhones. I'm an American living in Thailand — a market without subsidized phones — so I have friends and family in both countries. And of everyone I know who bought an iPhone since the iPhone 5 was released, not one person I can think of bought an iPhone 4S. Everyone either went for the iPhone 4 ("free" in the US, ~$350+ in Thailand) or the iPhone 5.
If Apple had continued its normal policy of making one new iPhone and keeping the past two models as cheaper options this year, the iPhone 5 would likely have fallen into the same limbo. The 4S would be free in subsidized markets, and cheap enough to appeal to comparatively budget consumers in unsubsidized markets. The 5s, on the other hand, is the aspirational product, one people will pay extra for no matter which market they're in. Why buy the mid-priced 5 when for $100 extra you could get the newest phone?
Thus, the 5c. Apple's made two new iPhones this year, one that's enough different to attract budget customers and convince them to pay a bit extra. It's the iPhone they're going to market the most, I think, because it's their new shot at mass market. This past year, the iPhone 4 has been their marketshare-boosting model — this year, they want a brand-new iPhone with better margins than any "free" model could offer to be their marketshare-boosting model.
People who want the best will still get the 5s. The fingerprint reader alone will make it the device of choice for corporate rollouts. But for the mass market, a new no-compromises iPhone now costs $99 in subsidized markets and ~$150 or so less than before in unsubsidized markets.
It's not cheap — far from it, in fact. It's just a different product at a different price point. iPad Mini to the 5s' New iPad. MacBook Air to the Retina Display MacBook Pro. Mac Mini to the iMac (and Mac Pro). iPod Nano to the iPod. iPhoto to Aperture. iMovie to Final Cut Pro. All of which get their own updates, and are never seen as the older version of the other. Actually, every software or hardware market Apple's in now has two lines: something entry level that's great on its own, and something bigger/faster/more pro.
That's the iPhone market now: two new devices that in all likelihood will get their own annual updates. A high quality phone that's great for everyone, and a pro-level aspirational phone that's the future of the platform. Notice that the iPhone 5 — a one year old device, but the tech baselevel of the 5c — has all of iOS 7's features aside from Touch ID and the new photo features like slo-mo video, both of which require the hardware in the 5s. Nothing software-wise is limited on the 5c (or the 5) this year, unlike every other last-year iPhone to date.
In that, there's the message: the 5c is a full-featured iPhone. It's the only iPhone you need, and it's just $99. Why get the old iPhone when you could get this year's new phone for $100 extra?
Honestly, they almost could have just called the two devices iPhone and iPhone Pro, but somehow that just doesn't sound Apple-y for a mobile device.
The iPhone predictions and leaks this year ended up being precisely spot-on, but the discussion around them was often comically odd. Everyone suddenly became an expert about what would sell well in China and the rest of Asia, about pricing and what the rest of the world could afford, and about exactly why Steve Jobs would or wouldn't have made the 5c.
If we're all entitled to our opinions, here's mine. I'm an American who's lived in Asia half my life, and my wife is Chinese/Thai. We both thought the gold iPhone mockups were gaudy and wouldn't have appealed to Chinese more than any other market. The gold color that was released with the 5s is beautiful, though, and I'm certain it'll fare as well as the silver variant in all markets around the world. But just because Chinese in particular buy gold to store wealth doesn't mean they'd want a gold iPhone. If anything, an iPhone is a status symbol on its own — no gold required.
Then, the brightly colored plastic iPhone 5c isn't any more for China than it is the rest of the world. The c definitely doesn't stand for cheap, nor does it stand for China. It's simply just the 2nd line of iPhones, just like Apple's done with so many of its other products.
The 5s will still be an aspirational product, and the 5c is still relatively expensive. But the 5c is a great product on its own, one Jony Ive seems incredibly proud of (and I have to think Jobs would have been proud of it too — he, after all, introduced brightly colored iMacs and iPods) — and I expect it to sell great.
If anything, it should boost the iPhone ASP, since I happen to think it'll get a ton of customers who otherwise would have opted for this year's free iPhone to pony up a bit more for this year's cheaper brand-new iPhone.
Thoughts? @reply me on Twitter.