Did Apple Make a Mistake By Releasing Two New iPhones? 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."
Apple makes money either way... (Score:4, Insightful)
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.
Two new iPhones? (Score:3, Insightful)
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.
Upselling is not canibalization (Score:5, Insightful)
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.
Low margin device? (Score:5, Insightful)
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.
Let's look at the competition... (Score:4, Insightful)
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.
Re:Apple makes money either way... (Score:5, Insightful)
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:Hard Shell (Score:2, Insightful)
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:Apple makes money either way... (Score:4, Insightful)
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.
*sigh* Yet More Anti-Apple FUD... (Score:5, Insightful)
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
Re:Apple makes money either way... (Score:5, Insightful)
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.
Self-Cannibalism is A-OK, especially for Apple (Score:5, Insightful)
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.
Those who forget history... (Score:5, Insightful)
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.
Re:Apple makes money either way... (Score:5, Insightful)
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... (Score:5, Insightful)
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.
No, that was the rumored point of the 5C - back before it was announced, when everyone assumed the C stood for "cheap," or "China." Now it is clear that wasn't it - it's the same price as the iPhone 5 would otherwise have been at this point, and internally it contains all the iPhone 5's hardware. As the poster you responded to clearly explained, the only significant change here was that it's cheaper to manufacture, allowing Apple to make a better profit off essentially the same year-old phone they would have been selling anyway.
Market share vs Profits (Score:3, Insightful)
Apple has shown time and again that, as far as the public is concerned, they know what they're doing.
Apple have shown time and again that they can maximise products in new markets by hoovering up all that ealier adopter money only to flouder in the maturing market. Steve Jobs Said. "What ruined Apple was not growth They got very greedy Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible they went for profits. They made outlandish profits for about four years. What this cost them was their future. What they should have been doing is making rational profits and going for market share.”
The bottom line is Android now dominates in Tablets and Smartphones and Apple is relegated to niche product. I am not sure whether Apple will survive in the electronics market as a niche product.
Re:Apple makes money either way... (Score:4, Insightful)
Too bad. The rest of the comment was insightful and completely devoid of any further grammatical errors.
Re:iPad copied creative. (Score:4, Insightful)
Only point I am trying to make is that Apple didn't initially diversify. They sold one iPod.
Eventually when that played out, they started producing other ipods starting with the nano, then color nanos and their clip on thingies.
This time Apple has been selling one iPhone initially, now they are selling a parsed down version that is colorful.
I think eventually they will producing a wider variety to remain a player in the markets they can glean a profit from.
Maybe that will be in smaller clip on phone devices, maybe that will be in larger phablets.
This just seems similar to me to what they did with the roadmap of the iPod.
I wasn't even thinking of the marketshare aspect really.
I disagree Apple is sacrificing market share for profits any more than they have always done. Apple has been getting the bulk of profits from the phone market up until Samsung was a good match for them. Apple still gets 45% of the worldwide PC profits despite having only a 5% share.
Apple seems to be operating like Apple has forever and yet people seem to find that this approach is somehow flawed, as if Apple will magically disappear at some point when their phones make up some smaller percentage of the market.
Re:Why a 64-bit phone is good: (Score:5, Insightful)
Which is the phone manufacturer that has a better record of backwards OS compatibility than Apple?
I'm curious.
Re:Apple makes money either way... (Score:5, Insightful)