Apple Flirts With Lower-End Mobile Market
"Apple" and "cheap" don't often occur in the same sentence, much less headline, but the company is knocking down the price of its iPhone 5c by offering a model with reduced storage capacity, while offering its resurrected 9.7 inch iPad 4 with a new name and a more comfortable price tag. The moves may quell analyst and investor demands that Apple broaden its customer base.
Mar 18, 2014 1:26 PM PT
Facing unrelenting pressure to come up with a new killer device, along with strong competition from Android smartphones, Apple on Tuesday unveiled lower-cost versions of its iPhone 5c and 9.7-inch iPad.
The company debuted an 8-GB version of the 5c in Europe, and it revived the iPad 4, calling it the "iPad with Retina display."
Both items are offered at what are relatively low prices for Apple devices -- but that may not negatively impact the company's image as a producer and purveyor of premium products.
"I don't think people are looking at the specs when it comes to the [8-GB] iPhone 5c," Jeff Orr, a senior practice director at ABI Research, told the E-Commerce Times. "They'll still buy it based on the appeal of the brand. This is a device that can appeal to people who perhaps thought the 5c with 16 or 32 GB was not low-cost enough for them."
More About the Devices
Apple reportedly is listing the 8-GB iPhone 5c in France and the UK at just over US$700 on its website, and UK carrier O2 is charging just over $680 for an off-contract 8-GB 5c, which is $100 less than the 16-GB version.
Meanwhile, the device once known as the "iPad 4" is being offered in black or white with 16 GB of memory, at $400 for the WiFi-only version and $530 for WiFi +cellular.
In comparison, Apple lists the 16-GB versions of the iPad Air at $500 and the iPad mini at $400.
The iPad with Retina display replaces the iPad 2. It has a 9.7-inch display; a 5-MP iSight camera in the back that captures 1080p HD video; and a FaceTime HD camera in front. It runs iOS 7. The WiFi +cellular version supports LTE from carriers worldwide.
The iPad with Retina display offers a "dramatic" upgrade in power, performance and value over the iPad 2, Apple said.
Thoughts About the iPhone 5c
Sales of the iPhone 5c, Apple's first foray into the less-than-premium market, have been weak, especially in China, where demand for Apple products generally is insatiable.
In October, Apple slashed production of the 5c in half, just weeks after launching the device.
The launch of the 8-GB 5c in Europe was not expected.
"We initially thought this particular configuration would only be available in emerging markets -- the Chinas and Indias of the world," remarked ABI's Orr.
The launch in Europe is "somewhat of a test to understand if there's a demand for a product at that price point," he said.
The 8-GB 5c is not being released in North America, because Apple "has not had a problem selling its products in the United States, and there's not a market need," Orr said.
Time for an iPad Changeout
The iPad with Retina screen is replacing the iPad 2, which has been around since 2011, and "three years is the expected lifespan of a tablet," ABI's Orr said. It "has met the requirements of school districts and the Department of Education and businesses, and now it's time to move them up to a more modern product."
Apple revived the iPad 4 and is remarketing it because it incorporates tried-and-tested components; because business and the education sector need to have a product that will be around for a few years; and because this is a way for Apple to continue leveraging the streamlined processes honed with the iPad 4, Orr opined.
With Apple's entry into the lower-cost market, the company "is reaching more consumers but demising the upside potential for any one particular model," Larry Chiagouris, professor of marketing at Pace University, told the E-Commerce Times.
"The only way to make money," he said, "is to hope it can migrate consumers to higher-end models for their next purchase."