The C Stands for Siiiiiiiigh

While in the past, Apple’s just bumped down the current-gen phone, this time, the old phone got a facelift on its way to mid-range land. With the exception of the case and the FaceTime camera, the iPhone 5c is the exact same phone that occupied the top-tier slot until 24 hours ago.

While the changes seem easy to write off, in reality, the 5c is a genius marketing move on Apple’s part. Many are predicting that it may out-sell the 5s. The 5c will not only pick up the market of people who either can’t or don’t pay for the high-end phone, but will be very attractive to new customers as well. The fact that that iPhone is now following in the colorful footsteps of iPod isn’t by accident.

Just don’t expect the pricing to follow the iPod model anytime soon, regardless of what you might have read recently in the press.

See, Apple never said it would be releasing a lower-priced iPhone. In fact, on stage yesterday, Tim Cook said the company was not doing that.

The iPhone 5c isn’t the rumored cheap phone. It doesn’t move Apple down into markets the company hasn’t been able to reach. It’s not available from Apple as a cheap pre-paid, unsubsidized device.

In fact, it’s $549 unlocked, just $100 less than the 5s. That’s not the mythical cheap phone everyone was talking about for the last several weeks.

Thankfully, many tech writers that have already caught on that the groupthink that was taking place this summer was wrong.

Horace Dediu:

My assumption going into this, sixth iteration, of the iPhone was that we would see the expansion of the iPhone into two distinctly positioned products: a low-end C and a high-end S. The assumption was based on what what we saw with the iPad: the regular iPad and the mini iPad.
By using the iPad as a template, my exercise in August was to forecast what the pricing might turn out to be for such a split-personality product.

John Gruber:

I got this one wrong.
I fixed my thinking by this week, but as of a month ago, I had it wrong when I wrote “The Case for a New Lower-Cost iPhone”.
Here’s the thing. The iPhone 5C has nothing to do with price. It probably does have something to do with manufacturing costs (which are lower for Apple), but not price. Apple’s years-long strategy hasn’t really changed.

MG Siegler:

The “c” in the iPhone 5c title doesn’t stand for “cheap”. It stands for “clueless”.
As in, we were all clueless in our speculation on Apple’s motivations for creating this device.

While I think Apple probably should move down-market at some point, it’s clear that 2013 isn’t the year it will happen. In reality, Apple’s game plan this year isn’t all that different from what it did last year, and the year before that. This might change in the future, but for today, it’s business as usual with the iPhone product line.

While all the talk about margins and price points is interesting, the reality is that Apple’s lost control of its own narrative.

Here’s Ben Popper at The Verge:

Apple showed off its newest iPhones yesterday and the market did not like what it saw. Analysts at UBS, JP Morgan, Credit Suisse, and Bank of America all downgraded their ratings on Apple’s stock, which is down more than 5 percent this morning.
The big concern on Wall Street was the iPhone 5c — investors were hoping Apple would unveil a low-end model that could compete on price with cheaper Android phones, which have been making big gains in developing markets like China. But despite its cheaper plastic shell, the iPhone 5c will retail for north of $700 in China, meaning it will be too expensive for most consumers there.

Popper’s money quote is from Mark Moskowitz, an analyst at JP Morgan, who said:

The lower-priced iPhone 5c may not be priced low enough, in our view, which could limit incremental penetration of the midrange smartphone segment.

The views of guys like Moskowitz hold more weight than what Apple says or does. That’s a position I don’t envy.