Last year Apple (NASDAQ:AAPL) came out with its latest and the greatest iPhone so far - the iPhone 5S - and what a reception they have got for the offering. Along with the iPhone 5S came the iPhone 5C, the polycarbonate-colorful sibling. But Apple didn’t manage to bag a great round of applause or warm reception by the consumers for the 5C and rather the reaction was a cold one.
But now, Apple has done something to make the 5C look more appealing to the consumers. The Cupertino-giant has rolled out a new version of the colorful iPhone in certain European and Asian markets after slashing the price of the handset by cutting down on the storage memory from 16GB to 8GB. How will this fair? Let’s take a look.
The unique and difficult positioning for the iPhone 5C
The last run that the iPhone 5C has was not a great one. Apple thought the young smartphone users will get attracted to the colors. What it failed to anticipate was, the price of the iPhone was not suiting the target audience. Especially the emerging markets considered the price to be unreasonable as consumers continued to support Google (NASDAQ:GOOG) Android and Microsoft (NASDAQ:MSFT) Windows Phone powered devices. However, Apple’s this move might just solve value for money issue.
- Warning! GuruFocus has detected 7 Warning Signs with AAPL. Click here to check it out.
- AAPL 15-Year Financial Data
- The intrinsic value of AAPL
- Peter Lynch Chart of AAPL
The 8GB iPhone 5C has got a very unique and difficult target audience. While an 8GB memory is not that low also, when it comes to iPhones it’s the lowest so far. iPhone users are used to getting 16GB, 32GB and 64GB of storage space. So, a typical Apple user might not be very happy about this storage space cut. On the other hand, Apple didn’t make the move for the typical iPhone users. Rather, the move is aimed towards the smartphone users who would like to own an iPhone, but are opting for other platforms such because of the cost factor.
From that point of view the 8GB iPhone 5C looks tempting. But again, another point to consider is, it can’t be assumed that people opting for the parallel OSs were necessarily buying low on memory devices. To cut the chase short, the actual target audience of the new 5C would be those consumers who were opting for Android or Windows and that also with low storages or may be the new-to-smartphone audience looking to enter the iOS ecosystem. And with this, let’s move on to the issues with the target audience.
The issue with the positioning
If you have ever tracked the speed at which the higher capacity memory cards or pen drives are growing on the e-commerce websites, you will know how the consumer requirements are changing. In the emerging economies, the basic storage capacity being used is 8GB and many have started moving to 16GB and 32GB. With each passing day the requirement for storage space is only increasing. That coupled with the assumption that if one buys an iPhone, the user is likely to use it for the next two years at least, makes the buying decision a difficult one, especially in the absence of expandable memory option. They will be stuck with a low storage memory decide for the entire time, and won’t be able to easily make a shift to a new device, as understood from the price-sensitive nature of the consumers.
One can’t satisfy everyone. This surely seems to be the situation with the iPhone maker. There are several issues when it comes to the iPhone 5C and Apple can’t solve each of them immediately. The company had focused on the price issue and it has come out with a solution to make the phone further cheaper. That automatically comes with a cost for the consumers – low memory. Though the low memory may cause some to lose interest, I feel Apple will still manage to pull in a noteworthy crowd and put up better sales numbers this time. Apple has come half way and now the consumers need to travel their share of the distance.