iPhone 5C: A play-it-safe device that milks Apple’s cash cow, but hands the rest of the market to Samsung

iPhone 5C: A play-it-safe device that milks Apple’s cash cow, but hands the rest of the market to Samsung

The iPhone 5C is an odd device. It is essentially the same smartphone as the iPhone 5, but with a plastic body instead of aluminium. It isn’t even that cheap — at $100 on-contract for the 16GB model ($550 off-contract), it’s the same price that the iPhone 5 would’ve been reduced to, if it hadn’t have been discontinued in favor of the 5C. Despite months and months of journalists reporting to the contrary, the 5C isn’t the vanguard of Apple’s presupposed pile them high, sell them cheap strategy; it isn’t the cheap device that was meant to herald Apple’s magnificent entrance into China and other developing markets. The iPhone 5C is simply a new iPhone, with the same gargantuan iPhone-like profit margins that Apple is famous for, for Westerners who want a bit of color or who want to save 100 bucks.

To be honest, we shouldn’t be entirely surprised that the iPhone 5C is basically a rebadged iPhone 5. Way back when the first iPhone Mini/Lite rumors surfaced, I wrote about my disbelief that Apple would ever release a cheap iPhone. It simply isn’t Apple’s modus operandi. We are talking about a company that has made in the region of 100 billion dollars of profit on the iPhone and iPad — two distinctly premium, top-of-the-line products. One of the key reasons that people buy Apple products in the first place is that your social class/reputation/income bracket is elevated merely by holding the device. If Apple suddenly released a $300 iPhone or $200 iPad, every other iDevice would instantly lose its cachet, angering hundreds of millions of iDevice owners. I don’t think Apple would ever make such a move.

The tech press and stock market are understandably rather confused about the iPhone 5C. Apple’s market value, after peaking before the unveil of the 5S and 5C, is down five percent. Journalists don’t know what to say, other than “hey, this phone isn’t actually cheap.” It would seem that, despite months of speculation, Apple isn’t actually going to make a concerted push into China and other non-Western markets. Instead, Apple is just going to keep on milking that incredibly fat cash cow.

For Samsung and other low- and mid-range phone makers, this is good news. The iPhone 5C will expand Apple’s reach slightly, but at $550 off-contract and no dual-SIM option, it won’t open up entirely new markets. Beyond increasing sales slightly, and thus driving more profits, it’s actually hard to find a purpose for the iPhone 5C. It doesn’t combat any of Apple’s competitors. It isn’t going to slow down Samsung’s massive success in the phablet market (it has now sold 38 million Galaxy Notes). It might shut down the Moto X, which can be customized with a range of colors, but I’m sure Apple isn’t at all worried about the small-time antics of Motorola and Google. Really, all the iPhone 5C does is fill out Apple’s mid range, so that it can offer a “new” phone (with old internals) instead of merely offering last-year’s phone at a lower price.

On the one hand, I think this is a smart move. In the absence of an exciting new product, such as iTV or iWatch, Apple should stick to what it does best: Leveraging its supply chain to produce utterly insane profits. The iPhone 5C is an incredibly safe bet that will probably increase sales and profits, while minimizing the cannibalization of 4S and 5S sales. There is almost no telling what effect a $300 dual-SIM iPhone would’ve had. It might’ve handed Apple control of the entire smartphone market, or it could’ve just as easily irrevocably destroyed Apple’s ability to command the prices that it currently charges. That’s a risk that Apple simply wasn’t willing to take — and so here we are, stuck with what is essentially last year’s phone in a new plastic case. Thrilling.