Ben Thompson On The iPhone 5c Pricing

Really interesting piece by Ben Thompson. I was originally going to post my thoughts on the iPhone 5c because although my predictions for the Apple event were, on the whole, pretty much spot on, as were those of almost everyone else on the Internet, the big surprise was the starting unlocked price of $550. Thompson does a good job at explaining it, much better than me, so I decided to link to his work instead.

Below are some additional points I did want to make however and, other links I want to point you to.

You should read Businessweek’s complete interview with Tim Cook which was released in full ten days ago. The key point with regards to the 5c is the fact that Apple clearly doesn’t want to play in the low-end device market. They’re happy with a certain type of customer who will buy a certain type of device and feel that the overall smartphone market is big enough for two distinct approaches to co-exist and succeed. Apple will be content with lower market share, for example 15%, because they are more focused on margins on hardware and profit share, whereas Google, through Android, wants volume; more users on the mobile web further drives their advertising revenue. Although it’s not related to the business side of things, you should also check out the complete interview with Jony Ive and Craig Federighi, especially because Ive rarely gives any sort of public interview to anyone.

Marcus Wohlsen writing for Wired:

Though the faster, sleeker, more powerful phone is unarguably cool, the steps forward are still incremental. And incremental isn’t what the world expects from Apple. Steve Jobs’ death wasn’t an event of worldwide significance because he could craft better spec sheets. Apple’s brand is synonymous with vision, a corporate identity that was once its greatest asset. Now that asset has become a liability.

I understand where he’s coming from but I have two points to counter. Firstly, the smartphone is now a mature platform and most of the big picture innovation is done. The definition of what a smartphone is and does, and what it should look like is pretty much complete. A lot of the credit for this definitely goes to Apple. Also, you can’t realistically expect major innovation in smartphones every single year anymore. If that’s what you’re looking for then the next big thing is going to be wearables, but we haven’t quite reached that point yet. Secondly, Apple usually innovates iteratively and is best at taking an existing idea, perfecting it and marketing it to the masses, making a bucket load of money along the way. The Retina Display on the iPhone 4 was a true innovation for smartphones, but it was not mind blowing and market changing like the original iPhone when it first launched. To expect Apple to “innovate” each year isn’t feasible anymore, even if Wall Street still does. The Samsung Galaxy S4 also suffered from this type of reaction when it was released earlier this year, despite the fact that it’s a solid device. Getting Wall Street to change is not that easy, but the press should at least adjust their expectations, especially since they influence the regular, non-tech masses.

Jessica Lessin has a quick article explaining why the “cheap” iPhone came out this year and not earlier:

But what has really changed is how Apple makes its products. It has broadened its base of manufacturing partners beyond Foxconn to Pegatron and others. It starts building its products earlier to ensure enough supply to stock shelves. Last fall, when it launched the iPhone 5, it sold more than five million in the first weekend, about a million more than the launch of the previous model.

Apple executives have blamed this ballooning supply chain for the slew of product photos leaked before launches. Because Apple has more partners, device parts are getting into more hands.

The lesson here: there are as many internal reasons why companies launch or don’t launch products as external ones.Apple is a complex organization that’s becoming more so by the day. With or without competition from Samsung, only now, was Apple ready to take this on.

Finally there a couple podcasts you should listen to:

Episode 11 of Vector by Rene Ritchie, where he talks to Benedict Evans about ‘cheap phones’. 

Episode 22 of 5by5 Specials where Dan Benjamin and co. share their reactions right after the Apple event on September 10.