iPhone 5c: Apple's Chevrolet strategy

September 10, 2013: 4:01 PM ET

By offering an iPhone in the United States starting at $99, Apple is moving aggressively into the low end of smartphones.

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FORTUNE -- Choose your luxury metaphor, but Apple (AAPL) always has been the BMW, the Tiffany, the Four Seasons of the computing and electronics industry. On Tuesday, it unveiled its Chevrolet strategy.

That's a big deal, a moment worth noting. (Should I have added J.C. Penney (JCP) and Courtyard Suites by Marriott (MAR) too? Yes, for sure.)

By offering an iPhone in the U.S. starting at $99 -- the iPhone 5c made of PLASTIC -- Apple is moving aggressively into the low end of smartphones. It's a bold strategy intended to attract a whole new class of consumers. The strategy fully envisions and anticipates the self-cannibalization of Apple's existing product line.

Self-cannibalization is an Apple hallmark. The company engaged in a brutal replacement strategy on the iPod, which itself was plunged into slow and then negative growth mode by the iPhone. Apple also knows about low prices. The iPod Shuffle was inexpensive from the beginning, as were 99-cent songs on iTunes.

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But going for the low-end mass market while maintaining the high-end is new. Apple spent plenty of time showing its newest BMW of a smartphone, the 5s. The metaphor isn't as loopy as its sounds, given the powerful engine of a microprocessor Apple showed for its top-of-line phone, whose three-color offerings include gold. The low-end model, made of a polycarbonate that design chief Jony Ive referred to as "unapologetically plastic," will make an iPhone available to absolutely everyone who can buy a smartphone. That will be true in the U.S. and even more so in developing countries like China and India.

"Wait a second," you might be thinking. Is Apple about market-penetration strategies, or is it about fabulous new stuff?

Well, the company did show its new fingerprint authentication technology, which will enable iPhone users to skip a password and identify themselves to their phone simply by pressing the home button. The camera technology in the iPhone 5s will wow shutterbugs and even more so photography neophytes who will just appreciate taking better photos and being able to find them more easily. Apple suggests that its voice-activated search service Siri now finds more things than before. That's a welcome change.

So, once again, there is incrementalism from Apple, not radical breakthroughs. But there's time for that. Miracles don't happen on a quarterly schedule. Apple is a business, and a big and successful one at that. If boldness now is a willingness to depart from previous norms, so be it.

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A quote from Steve Jobs appears on the wall of Apple's Town Hall auditorium building, where Tuesday's event took place. "If you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long," it reads. "Just figure out what's next."

Most of us tend to dwell too long on the "pretty good" things that Apple has done in the past. Whether or not Apple does too, it certainly is trying to figure out what's next and acting on its findings. That's pretty good too.

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About This Author
Adam Lashinsky
Adam Lashinsky
Senior Editor at Large, Fortune

Adam Lashinsky is a San Francisco-based editor-at-large for FORTUNE, covering Wall Street and Silicon Valley. Lashinsky joined FORTUNE in 2001, after two years as a contributing columnist. Prior to joining FORTUNE, Lashinsky covered Silicon Valley for TheStreet.com and The San Jose Mercury News. A Chicago native, Lashinsky holds a B.A. in history and political science from the University of Illinois at Urbana-Champaign.

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