Apple 2.0

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Nine ways of looking at Apple's $549 iPhone 5C

September 11, 2013: 12:08 PM ET

Wall Street sees trouble for Apple. But there are other ways of looking at the iPhone 5C.

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FORTUNE -- Judging from the analysts' reports, the prices for the iPhone 5C that Apple announced Tuesday -- $99 and $199 with a contract, $549 and $649 without -- are the main reason Apple's shares opened $27 (5.5%) lower Wednesday.

Wall Street has apparently decided that pricing the iPhone so high was a major blunder on Tim Cook's part.

The Street may be right.

But here are some alternative views, many taken directly from Apple 2.0's comment stream:

  • "It looks and feels amazing, with a "bespoke" assembly and "solid dense feel you would not expect from a plastic product." Paying more for an iPhone is worth it... If you disagree, well, we won't sell you an iPhone. -- Stratechery's Ben Thompson.
  • "So long as the MARKET thinks that Apple's iPhone's are worth a premium price -- and it does -- Apple's strategy of skimming the highest profits and the best customer's will work. The bogeyman of market share is just that -- a made up fiction used to scare small children -- and Wall Street. -- Reader John Kirk.
  • "Apple still wants to be part of the emerging markets, but they want to go at 40 mph where investors were looking for 70 mph." -- Piper Jaffray's Gene Munster.
  • "[Apple] may lose market share, but the game in smartphones for Apple is to capture a significant share of more affluent smartphone users; those who will purchase more content for their phones. App spending per user is one of two significant factors developers look at when determining which platform to support; the other being overall number of users. I think Apple understands it cannot win in the war for overall number of users, so its focusing its efforts on building a base of affluent and engaged users." Reader RadarTheCat.
  • "This move is about establishing the iPhone as a two-sibling family, like how the MacBooks have both the Airs and the Pros. Think of the 5C as the Air, and the 5S as the Pro. Or iMac and Mac Pro. The iPhone is growing up as a product family." Daring Fireball's John Gruber.
  • "Lower prices thru lower quality product also lowers perceived value. As an aspirational brand in China, Apple is perceived as the Louis Vuitton of tech. Look at where Apple Stores are located in Shanghai. They're on the most exclusive and expensive shopping streets in Shanghai, Huaihai Road and East Nanjing Street. In Pudong, you have a store that mimics the 5th Avenue NY store, with its iconic location. So, on the one hand, Apple has pressure to reach more of the market by lowering prices, but on the other, Apple must balance that by not lowering value, as that would hurt the brand image that it has worked so hard to achieve. It's a delicate balancing act. Reader Ken Cheng.
  • "I view the iPhone 5c as the iPhone 5 that Ive would have built had he been in charge of iOS design at the time of its creation. And thanks to the executive shake up last winter, I believe he now got to do just that." TechCrunch's MG Siegler
  • "It is signaling that the premium may be more than what the mainstream needs... [It] implies that the iPhone C is "good enough" and the S is more than good enough (or, to spin it another way, it is for "more demanding" customers.) It also implies that the premium "S" version will be a lower volume contributor... The basis of competition is shifting. The shift is toward competing for late adopters in advanced markets and with early adopters in trailing markets. The new C model is still not suitable for trailing markets as it still over-serves and is over-priced, but it is at least signaling the "end of the beginning" phase in the smartphone market." Asymco's Horace Dediu.
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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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