Apple’s Strange Concept of a ‘Budget’ Phone

by Matt Klassen on September 12, 2013

There’s no question Apple needs to infiltrate burgeoning smartphone markets, particularly in places like Africa and Asia, or more specifically China. Up until now, however, establishing such a market presence was impossible with the company’s traditional iPhone line-up, the reality being that few people can afford an expensive iPhone, which of course led to the speculation years ago that Apple would one day deliver an affordable option.

But while Apple finally delivered this long awaited ‘budget’ handset on Tuesday, September 10th, its doubtful that anyone in China, or anywhere else in the world for that matter, will be lining about around the block to get their hands on the new iPhone 5C, for the simple fact that the phone is, well, not affordable.

In fact, while the ‘C’ in the new phone’s name may stand for ‘cheap,’ as in cheaply made with cheap components, at $99 on a two year contract or $549 unsubsidized, the price of the phone is anything but. Simply put, while it’s in the latter unsubsidized prepaid markets where Apple is hoping this new phone will be a hit, it’s exactly where the iPhone 5C absolutely misses the mark.

Hoping to avoid the debacle the company faced when it finally released its more affordable iPad Mini, a device that essentially undercut the sales of its bigger brother the iPad 4, the rationale behind the iPhone 5C is that it is Apple’s answer to the rest of the world, an affordable iPhone model that will better compete in the lower end, prepaid, unsubsidized smartphone markets (which, by the way, is most of the world).

It’s in these markets where Apple’s flagship iPhone line-up has struggled mightily, as most folks on the planet are unable to afford the handset that has become ubiquitous (and not to mention mundane) here at home. The problem with the iPhone 5C, as I mentioned, is that it fails to deliver the one thing it was created to provide: an affordable price point.

It seems Apple has failed to comprehend that most people now finally looking to get their first smartphone—those who have relied on the now antiquated feature phone—don’t want to be tied to a contract, probably don’t even have the option of a contract, and are those would need to liquidate an excessive amount of their assets to even afford Apple’s ‘budget’ phone in the first place. Talk about being out of touch.

Now there’s no question that Apple still sells boat loads of iPhones, but with that high end smartphone segment of the globe almost fully saturated, Apple’s iPhone is now consistently losing ground in other markets to Android competitors who have no qualms about offering well-equipped smartphones at rock bottom prices.

In fact, while I’m sure to endure a great deal of scorn from Apple fans the world over, it seems Apple is at a similar crossroads to the one Nokia found itself at five years ago, when the Finnish company was absolutely convinced it knew how to keep selling phones to its massive worldwide user base, unaware it really had no idea what it was doing.

The point being, if this is Apple’s idea of a ‘budget’ phone for the masses, the company is more disconnected from reality than I ever would have dreamed, as those who can afford this phone don’t want it, and those who want it simply can’t afford it. While Apple needs to establish a competitive foothold in places like China and India, its going to have to do a lot better than the iPhone 5C, lest it be left on the outside of these lucrative burgeoning markets, wondering where all the good times have gone.

But as I’ve said before, perhaps that’s exactly how Apple wants even its budget phone to be perceived, as selling the phone at a higher price point in the low end market will likely achieve the same result the original iPhone did here, creating a ‘must have’ buzz around a piece of elitist technology.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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