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Did Apple Make a Mistake By Releasing Two New iPhones?
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."
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.
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.)
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.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
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
Fun. Free. Online. RPG. BattleMaster.
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.
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.
Timing... for developers.
You want to get your 64-bit processor out the door so that people who make apps that might benefit from more than 4gb of memory can start to write their apps for 64-bit BEFORE you actually start shipping phones with more than 4gb of memory. This allows them time to convert to 64-bit without being rushed into it. It also gives your OS developers time to get the 64-bit OS out the door. If the 64-bit OS isn't ready when you ship the product, you release with a 32-bit OS and you just don't advertise the 64-bit feature. (Or you say "64-bit ready" or something like that and promise the next OS release will bring 64-bit to existing phones.
In short, as a consumer, you don't care... yet. You want the 64-bit in a year or two when you have 8 gigs of memory in your phone. In order to have applications for that 8-gig phone, you want Apple to release a 64-bit phone now, so that developers will be ready with 64-bit applications to put on that 8-gig phone.
The other aspect here is that most architectures tend to clean things up when they move to 64-bit, and ARM is no exception. Some of those architectural changes that come with 64-bit will be more valuable sooner, and could translate to performance boosts right now on some applications that switch to the 64-bit architecture.
Yeah, because Apple never had a history of introducing lower-end colored models into their lineup.
iPod. iMac.