A couple of weeks before the iPhone event, I tried to figure out how Apple could make a low-cost, new iPhone and not devalue the overall product lineup. It turns out the core premise – something that has been vacantly flying off the fingertips of the technorati for at least a year – was wrong.
Of course Apple wasn’t going to make a low-cost iPhone. Every pricing decision Apple has made in its recent history pointed to this reality, but the unpaid Apple consultants around the world can’t be bothered with those details when a mobile device business model that is making dozens of other companies zero dollars remains unexplored!
Apple did in fact announce 2 new iPhones on Tuesday, the 5C and the 5S. But instead of installing the 5C as the low end/free-on-contract option, they repackaged the iPhone 5 with speedier guts and candy colors and made it $100 cheaper than the 5S. And if you think that $100 savings on contract was going to translate into some more substantial savings for the unlocked flavor, sorry: no. It’s $100 less than the 5.
The 5 as we know it has vanished entirely, with the low end being represented by the 4S. Again, this makes perfect sense. Basically the only thing separating the 5C from the 5 is the M&M coating, so the value delta between the 5C and 5 wouldn’t be as pronounced as it is between the 5C the 4S. Now Apple gets a lower-priced phone in its lineup that doesn’t compromise margins but also doesn’t suffer from the “year old phone” syndrome. Nifty.
Although I am (and have been for awhile) convinced that Apple won’t deviate from its high margin strategy, rest assured the usual gaggle of asshats will start speculating about the ZOMG APPLE MUST DO CHEAP IPHONE around the same time next year.