For months, there was speculation about what Apple was planning for its new iPhones. In particular, analysts asked two questions: (1) Would Apple introduce two new models of the iPhone at the same time? (It has never done this before.) (2) Would Apple introduce a lower-priced model? (a strategy that the late Steve Jobs probably would have not have allowed)
Now, we know the answers. But, the reaction to Apple’s Tuesday announcement has been mixed, at best — and the company’s stock has taken a hit. Why? Some analysts feel the lower-priced model will tarnish the firm’s high-status image. Others object to the very small discount for the iPhone 5C and think the price is not low enough to make a difference.
Consider these observations from Ian Sherr, writing for the Wall Street Journal: “Investors punished Apple Inc.’s stock after concluding the iPhone lineup unveiled a day earlier wouldn’t usher in a new low-price strategy. The investor response spotlights a particular challenge for Apple, which has long positioned its products as luxury goods: Staying high-end could limit the company’s growth, particularly in the developing world. But cutting prices to go mass market threatens its profitability, and could destroy the cachet that has made it a hit.”
WHAT DO YOU THINK?
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For many people in the world, Apple product are the way to show their status. People want to own it but it is expensive. More people will have a chance to buy Apple if they produce a cheap one. But this is like Ferrari makes a middle level car. Since it is a luxury brand in many countries, cheap product may harm the brand name of “Apple”. Looking from different perspective, Toyota and Lexus. They both Toyota companies, one is middle level, one is luxury and they are doing good job I guess.
Apple’s focus on overseas consumers, made their marketing strategy flawed from the start. Instead of trying to tap into the low end market in china and other overseas markets they should have keep their original business plan and unveiled the latest high-tech gadget they’ve been working on but nooo don’t give the people what you want tarnish the identity of the brand by going to a market where your products still cost more then the phones your were trying to undercut.
This obviously puts Apple in a tough position, but if investors “punished” Apple for not releasing a low cost phone, that should tell them something. I think one of their problems is that they are focusing too much on the iPhone as a status symbol and less on making something that the consumer could really benefit from. Sure, there are people with strong brand loyalty to Apple who will buy every new iPhone, but they are forgetting that most Americans don’t have the disposable income to do that. They’re ignoring a whole market of people who would pay less per individual phone, but who, as a whole, would bring in a lot of profit.
Apples decisions to release two types of phones at once could be beneficial because it increases the hype of the release however it could also have a negative effect on the sale of both new products. The majority of the apple consumer population is constantly upgrading their phone to the newest version. Releasing two new versions at once forces the consumers to select one over the other which minimizes the sales for both the 5c and 5s. If they were released separately with some time in between that apple consumer population would have most likely purchased both phones at their released which could have increased profit for the company.
Apple has definitely run into a rough patch. On one hand they want to keep their high class status by not marking down the other model but also they want to appeal to many more people by having a lowering costing model. In the end what ever decision they make will end up hurting them in one way or another. Personally I think it is a good idea to have one high-end model and one lower costing model. This way it gives customers a choice of what they want or what they can afford. Now there will be people who buy the high-end model because they simply love getting the latest and greatest versions, but not every person can do that. More middle class people will buy the cheaper model but you also have to think that this is a newer version as well. Just not as high-tech and fancy as the other. I think it would be in their best interest to have two different prices for these new models, this way they appeal to every person in society.
I agree that selling a lower priced iPhone that caters to customers ‘on a budget’ could have a negative affect on the loyal, high paying customers. As mentioned in the article, the lower priced iPhone wasn’t even priced low enough to make much of a difference. However, I believe that using a cheaper material and pricing the phone lower ultimately downgrades the iPhone brand. This controversy resembles our class example about Mercedes introducing a starter vehicle priced around $30,000. This may attract a different kind of customer and give the brand a different image, while also angering the loyal, high paying customers as well. I guess Apple will have to wait and see if they prosper from this risky decision, or not.
When I found out that apple released these two phones, I was a little confused and didn’t understand the necessity for these phones coming out at the same time, but I’m starting to grow accustomed to this idea. By now, I feel like we trust apple to give us the phone we love, and I don’t necessarily think that a cheaper phone option will hurt apple because there are customers, who don’t want to spend so much money on a phone. I think at this point, apple does have already so many loyal customers, that they should be reaching out to new customers, while keeping old customers happy. That’s why the lower price phone might help gain new customers. When I go shopping at a new store, I always compare, not only quality, but prices. New customers are going to be comparing phone prices, and apple might just win these new customers over with this cheaper phone. I can definitely see both sides of the argument, and I’m not sure what the answer is. In my opinion right now, I do think this could be a good choice.
As a huge supporter of iPhones, dating back to the iPhone 3G era, I don’t think that this was one of their best unveiling’s. I’ve never been crazy about the “S” models because there never is much of a huge update besides speed. I stick with my standard model a year past my upgrade eligibility and by that time the next standard iPhone will have come out. Everytime the S model comes out it drops the price of the standard model significantly. So my biggest question was, since essentially the iPhone 5 standard is better than the 5C due to better casing, why wouldn’t you just get a 5 since most providers would surely be dropping their prices from 200 to at least 100 which is the price of the 5C. However, Apple realized this flaw and instead of allowing providers to sell the iPhone 5 at a low price which could even match the price of the 5C, they completely discontinued the iPhone 5 standard model. It’s an unfortunate case because an iPhone 5 at $100 certainly is better than an iPhone 5C at the same price. As a consumer, I will keep an eye out for the iPhone 6.
I feel like Apple is putting themselves in a tough predicament with the release of the 5C. Over recent years, Apple has successfully marketed and promoted themselves to be the standard of technology, the company that everybody strives to be one day (similar to the “Mercedes” of technology). I feel like their name and brand is taking a hit with this release of the 5C. They are clearing trying to break into the Chinese market, and they are trying to promote their products to people with lower incomes. I feel like many loyal Apple customers will be turned off by this.
I think that Apple has put itself in a tough position, either way some customers will be dissatisfied. Loyal customers will feel like all their money they have “invested” into the new IPhone models means less status wise now that a cheaper model is available. But I do not think it is that different because once the newest models are released the previous one is always sold at a discounted rate. Peoples’ perception of class with owing the IPhone changes but I do not think the actual company will suffer because of the 5c being released.
It has become an annual event almost as predictable as clockwork, with Apple’s latest iPhone release once again taking place the 2nd week of September. This year, there was no new iPod hardware announced at the grand unveiling, however the debut of two new iPhones (5C and 5C) was certainly a shift from the Apple pattern… or was it? In previous years, Apple would transition the older iPhone model to a lower price point in light of their new iPhone being announced. For example, last year, when the iPhone 5 was announced, Apple lowered the price of the 4S from $199 to $99 (aka a “cheaper” iPhone.) This year, everyone was amazed there were two “new” iPhones, though one was not that new at all.
Going through the tech-specifications of the iPhone 5C, you’ll realize an interesting fact: they’re exactly the same as the ones on the iPhone 5 when it was announced a year ago! In fact, the only thing that has changed is the outer-plastic shell, which replaced the 5’s aluminum casing, now built solely into the 5S. What’s more interesting is that this plastic shell cost $42 less to manufacture than the aluminum casing (See article linked here for more details: http://blogs.wsj.com/digits/2013/09/30/how-much-does-it-cost-to-make-an-iphone/)
Thus, Apple has made the iPhone 5 experience a more monetarily profitable for the company by producing the iPhone 5C, thus reaping a greater profit for each unit sold by replacing the aluminum casing with a plastic shell. Smart move, Apple. We’ll surely see more changes coming to Apple’s Holiday Product lineup as they prepare to announce new iPad models and OSX Mavericks in the coming weeks.
I feel that it was necessary for apple to release a lower grade product. They needed to stay competitive and do so they needed to start making their product available ind developing countries. By allowing a cheaper product to be made it expands their market even though it can damage their products image as a prestigious luxury item.
I think that apple is making a wise decision releasing the less expensive phones. I don’t think less expensive phones will tarnish apples image because I didn’t purchase my iphone to show it off. I bought it because I felt it had the best features. Yet then again, I don’t know how much of an impact it will have. A lot of people that don’t purchase iphones, purchase subsitutes because they like the other phone’s features better. I am not sure the price is a big factor. Yet, I think it will help a little to those that feel it is too costly.
Apple is known for their amazing products that numerous people have. I do not think that Apple coming out with a less expensive phone is going to hurt their image. I actually think it is a smart idea. Majority of the people I know have Iphones because they like the features the phone offers, they disregard the price. Other people who do not have the iphone either don’t have it because they prefer other phones with different features, or they do not want to pay that much for a phone, but they may want that phone anyways. I think that Apple coming out with a cheaper phone can maybe bring it more customers.
I think that the lower price of the Apple iPhone is a good idea. Apple can appeal to a lower income audience now with this new phone. Regardless of the price, people who can afford the Apple iPhone’s will buy them because of the name. People who don’t like the Apple products simply won’t buy them because of the features or even the durability of the iPhone.