Between the Lines: What Apple told us today
1. The iPhone 5 and 5s’s crazy manufacturing process is expensive.
Apple apparently wasn’t just blowing smoke when they talked about the intense specifications they had for the iPhone 5 in production. The mirror-like polished edges and precise alignment of the glass segments with the metal back give Apple’s flagship a level of quality that to this day remains unmatched by anyone else. And this level of quality doesn’t lend itself well to a $100 price reduction. This is why we now have a free 4s and a $100 5c instead of a free 5c and $100 5.
The advantages here are myriad. The margins on the $550 5c are much juicier than the margins on a $550 iPhone 5 would have been, for one. Secondly, $99 for this year’s model is a much more appealing deal than $99 for last year’s model, even if this year’s is last year’s in a new body. And, of course, there’s the obvious avoidance of the "why get the 5s when the 5 is half the price and looks the same?" issue they faced in 2011.
2. Anodizing black aluminum is hard and not worth it. Anodizing gold aluminum is easy and worth it.
This was, to my knowledge, first put forward by Rene Ritchie on August 16th of this year:
According to our own Ally Kazmucha, who's no stranger to the process, gold is among the easiest colors to anodize onto an iPhone. It involves simple chemical reaction, with the possible addition of dye depending on the exact color they want to produce. (True black, conversely, is the hardest, and takes the most time, which is likely why we currently have "slate" instead.)
Combine that with the general consensus that "scuffgate" affected the black iPhone more than the white and it’s not hard to see why Slate has been replaced with Space Gray (which really should have been called Graphite).
3. Apple is feeling no pressure from low-cost Android phones.
While I admit that I was a bit caught up in the "Apple’s going to put out a $399 iPhone!" mania myself, I’ve always insisted that Apple’s only genuine competition exists in the high-end. iPhone profits are stolen by the Samsung Galaxy S4, not the Samsung Galaxy Proclaim.
Lots of people are buying cheap Android handsets, this is true. Lots of people are buying cheap laptops, too, but that never spurred any action from Apple. Not to go all crazy with a list within a list, but from what I can see, Apple doesn’t care about that market for three primary reasons:
- Cheap phones don’t have good profit margins.
- Cheap phones typically suck* and Apple doesn’t do suck.
- People who buy cheap phones are not typically going to then buy lots of apps, and apps being sold keeps developers happy and the ecosystem healthy.
* Yes, I know, Nexus 4. That’s different: Google is an ad company, not a hardware company. They can afford a pretty big loss on hardware.
The 5c might not gain as much traction as a $350 plastic iPhone 4S might have in emerging markets, but notice that word, "emerging": the Chinese middle class is exploding, faster than anyone really seems to grasp. The market for high-quality phones is ever-expanding in Asia, and Apple will be there with the 5c and 5s to welcome them to Western consumerism.
Apple is very rich, very powerful, and very patient - they won't short-sightedly try to capture Chinese audiences with a low-quality handset. Surveys have shown that more Android users switch over to iOS than the opposite, mostly thanks to sub-par experiences with budget devices. All those cheap Androids are going to drive more and more people to the iPhone as it becomes more and more accessible to them thanks to some newfound wealth.
4. iPhone 5c is the new iPhone for everybody.
We all saw the 5c leaks and we thought "cheap iPhone for Chinese market share!" In fact, nothing could be further from the truth. The 5c is, in fact, aimed directly at the American middle class, Apple's bread and butter. This is the device that Apple’s promoting the hardest, the device that Apple shows you on the front page of their website, the device they’ve shown us a TV ad for.
Apple’s not stupid - they’ve seen how well the cheaper, older iPhones sell. A cheaper, newer iPhone? This thing is going to fly off the shelves. This is the iPod Mini of iPhones: derided as too expensive, dismissed as too close in price to the high-end model to tempt buyers, and - mark my words - incredibly successful.