The iPhone 5C debuted Monday, with its colorful plastic back and special cheese grater cases, but starting at $549 retail — or $99 if you sign a 2-year service contract — it's not as cheap iPhone as people were expecting. It's actually rather expensive.
When Apple CEO Tim Cook went on stage at company headquarters in Cupertino, Calif., on Monday, he was expected to announce two separate phones: the upscale iPhone 5S, and the cheaper, affordable iPhone 5C. The lesser option was supposed to be Apple's entry into the budget phone market, both domestically and abroad, in places where cheap phones are huge, like China or India. But then the iPhone 5C's price point was revealed, and no one could believe their eyes.
The iPhone 5C is not cheap by any measure. Its $549 unsubsidized price is the same price as the iPhone 4S when it was first announced. And it's not cheap compared to Apple's new top-of-the-line iPhone 5C which is $100 more — starting at $649 unsubsidized or $199 with a contract. But, most importantly for Apple's product line, the 5C is not cheap in China, where people expected the new model to help reintroduce Apple as a major cell phone supplier. The company's market share has slipped in recent years as other budget phones became hugely successful there. But the iPhone 5C will cost 4,488 yuan (or $730 U.S.), only $130 less than the iPhone 5S. That's not a very drastic difference between phones. This was also the first time China will be able to purchase a new iPhone at launch. The welcome mat was laid down: here are our phones, now pay up.
Tech analysts were thoroughly underwhelmed with the iPhone 5C's debut, arguing that Apple needed to go cheaper than what they're offering now. "When you really look at it, they didn’t make a cheaper phone," Francis Sideco, an analyst at the research firm IHS, told The New York Times. "They made a more expensive phone so that they could call the other one a cheaper phone." And it's tanking in the target market of China. "The iPhone 5C is so expensive. Originally I absolutely planned to buy it, now the price makes me uncomfortable. Isn’t it just an iPhone 5 with a plastic back?" asked one user on Sina Wiebo, the country's version of Twitter.
And now Apple is "getting smoked" on the markets, as Business Insider's Jay Yarow puts it. Apple stock is down 4 percent after the iPhone launch. Investors and analysts who are normally bullish on Apple's rocket-like trajectory are hitting the breaks and changing their recommendations. This is unusual for Apple, who have become used to breathless praise and heightened expectations after a product launch. The new iPhones were met with financial yawns.
That may change as things progress, though. The new iPhones are debuting on China's two smaller cell phone carriers. Apple just got regulatory approval to make a deal with China Mobile, the biggest cell phone carrier in the world, to carry the new iPhones. That may lead to a cheaper plan program for the phone, though it's unlikely, as Yarow notes.
We'll have to wait and see how many units Apple moves of the iPhone 5C before we can really say Apple faltered here. A slight dip in stock price likely won't last. The iPhone 5C will not be the break in the wall that leads to Apple's demise. This is Apple, after all. They'll probably be fine.
Correction: a phrase in this article has been changed to avoid any confusion or possible offense. Sorry for the initial lapse in judgement. We meant no harm.