I believe the iPhone 5s is a good phone. The iPhone 5c? Ummm let’s just say the iPhone 5s provides the better value and that’s where Apple’s emphasis is on. The mid-tier and low/free-tier phones are there only to provide coverage. But here are the numbers as to why I think Apple came out with the iPhone 5c.
Below is the pricing before the iPhone 5s arrived, the pricing if Apple had’t released the iPhone 5c, and the current pricing.
Subsidized Selling Price | Unsubsidized Selling Price | iSuppli Est. Cost | Gross Margin | Gross Margin % | Gross Margin % Change | |
IPhone 5 64GB | 399 | 849 | 238 | 611 | 71.97% | |
IPhone 5 32GB | 299 | 749 | 217 | 532 | 71.03% | |
IPhone 5 16GB | 199 | 649 | 207 | 442 | 68.10% | |
iPhone 4S 16GB | 99 | 549 | 196 | 353 | 64.30% | |
IPhone 4 8GB | FREE | |||||
iPhone 5S 64GB | 399 | 849 | 218.3 | 630.7 | 74.29% | 2.32% |
IPhone 5S 32GB | 299 | 749 | 208.1 | 540.9 | 72.22% | 1.19% |
IPhone 5S 16GB | 199 | 649 | 198.7 | 450.3 | 69.38% | 1.28% |
IPhone 5 16GB | 99 | 549 | 207 | 342 | 62.30% | -2.00% |
iPhone 4S 8GB | FREE | |||||
iPhone 5S 64GB | 399 | 849 | 218.3 | 630.7 | 74.29% | 2.32% |
IPhone 5S 32GB | 299 | 749 | 208.1 | 540.9 | 72.22% | 1.19% |
IPhone 5S 16GB | 199 | 649 | 198.7 | 450.3 | 69.38% | 1.28% |
iPhone 5C 32GB | 199 | 649 | 182.85 | 466.15 | 71.83% | |
iPhone 5C 16GB | 99 | 549 | 173.45 | 375.55 | 68.41% | 4.11% |
iPhone 4S 8GB | FREE |
If Apple hadn’t released the iPhone 5c, they would have taken a 2% reduction in the gross margin of their mid-tier phone. But instead with the 16GB iPhone 5c they were able to pull off a 4.11% increase. Or 6.11% if compared against the alternate scenario. I don’t know about you, but I think 4% is pretty good! Notice that they were also able get modest increases in their top-tier phone gross margins.
This increase is mainly due to savings in the casing. That’s why the iPhone 5c and iPhone 5 are practically the same except for the casing. Apple bumped down their previous top-tier phone as they normally do but this time changed the casing. Plus, given the similarities between the iPhone 5s and iPhone 5 casings, there are production line benefits for the top-tier phone.
People were disappointed by the price of the iPhone 5c. It certainly wasn’t cheaper for them (or me). But it certainly was cheaper for Apple. To manufacture.