Apple’s miscalculation?

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The iPhone 5C is cheaper than the iPhone 5S and comes in five bright colours (photo credit: Apple).

The iPhone 5C is cheaper than the iPhone 5S and comes in five bright colours (photo credit: Apple).

By Oon Yeoh

Oon Yeoh Profile PicFor months now, rumours abounded about Apple’s impending launch of a low-cost iPhone. Last week, when it announced the iPhone 5C, the media was quick to brand it a “cheaper” iPhone if not exactly a low-cost one.

Several tech commentators, especially those that cover business stories as well, were quick to point out that the iPhone 5C is cheaper than the iPhone 5S (the other fancier model announced last week as well) by US$100 (RM330)! An unsubsidised, non-contract iPhone 5C will cost US$550 (RM1,810). The iPhone 5S will go for US$650 (RM2,140).

That’s not much of a discount considering the 5C has a plastic casing – although they do come in five bright colours!

But it wasn’t just the tech media that wasn’t impressed. Investors weren’t either.

According to Newsweek’s global business editor Daniel Gross, Apple’s stock, which was trading at US$505 in the middle of the day last Tuesday (when the announcement was made), closed at US$494.64. By noon the next day, the stock was down to US$465.55. That’s a fall of 7.8% within a day, equivalent to the reduction of US$35 billion in Apple’s market value.

The negative reaction to the announcement of the iPhone 5C and 5S has revived concerns that Apple’s innovative ways have stalled since the passing of its iconic founder Steve Jobs. There’s nothing particularly impressive about the new phones. It has a thumbprint security feature and there’s a better camera and faster processer but all these things are expected.

What Apple has failed to do for some time now is to “wow” people again. To be fair, mobile phones are so advanced now – they are practically mini-computers – it would be very difficult to come out with game-changing features or functionalities.

One way to do that is to seriously tinker with the design of the hardware and offer some radical new form factor for the iPhone. Instead what it has done is given consumers five colours to choose from! One can’t help but wonder what Jobs would think if he were alive.

But as Slate.com’s tech columnist Farhad Manjoo has astutely noted, there’s only so much you can do with form factor for mobile phones. What Apple has with the iPhone now is already the optimal form, Manjoo argues. So, it would be extremely difficult for Apple to come up with something radically better.

Could Apple still do it? Can it one day come up with a look and feel for a new iPhone that will knock you off your socks? This is Apple. It’s possible. I would never discount Jonathan Ive, Apple’s senior vice-president of design who helped gave birth to the MacBook Pro, iMac, MacBook Air, iPod, iPod Touch, iPhone, iPad, iPad Mini and iOS 7. He might just come out with something that is so mind-blowing it will force the rest of the industry to play catch up again.

But even if that were to happen, it’s unlikely to be anytime soon. So, what can Apple do to keep the iPhone competitive? It could come out with a genuinely low-priced iPhone, one that is cheap enough to be a hit in developing markets where the masses yearn to have smartphones but can’t afford iPhones at today’s prices.

It’s definitely possible for Apple to do this. Google has proven that a really good smartphone – the Nexus 4 – can be sold at US$200 (RM660). Nokia has an even cheaper smartphone, the Lumia 521, which sells for US$150 (RM490). So, Apple can definitely do it. But will it?

Somehow I doubt it will. Apple has never been about cheap prices but, on the contrary, premium prices. The whole ethos and philosophy of the company is that its products are superior and therefore should cost more. And perhaps the iPhone is today still the best phone in the market. But others are catching up and even their high-end phones are considerably more affordable than the iPhone. This unwillingness to budge on prices could be Apple’s undoing.

 

Oon Yeoh is a new media consultant.

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