Apple's inexpensive iPhone for the Chinese market isn't so inexpensive after all.
At a Sept. 10 event on its Cupertino, Calif., campus and a Sept. 11 event in Beijing, Apple introduced the iPhone 5C, a mild update to the iPhone 5 that's a departure from Apple's usual designs and the first iPhone intended—out of the gate—for consumers keen on midtier pricing.
Until now, those not willing to pay top dollar for an iPhone have shopped for older models—a strategy that has pinched Apple's bottom line.
With the 5C, deals with new Chinese carriers and plans to release the 5C in China the same day as in the United States, instead of months later, Apple is betting big that China will be its newest main revenue driver. But according to early reports, Chinese consumers were less than impressed by the iPhone 5C.
"Almost 90 percent of Chinese users in an online survey complained the iPhone 5C ... is still too expensive and they have no interest in the new gadget," China Daily reported Sept. 11.
The starting price for the iPhone 5C is $728 US. The iPhone 5S, a new high-end, flagship iPhone introduced alongside the 5S, will be priced at $858 US in China.
"For many Chinese users who have been expecting an iPhone of less than [$487], the price is very disappointing," said the report.
U.S. analysts, too, had expected a far lower price point for the 5C.
Technology Business Research analyst Beau Skonieczny told eWEEK in July that he expected a low-end iPhone priced between $350 and $450. Gartner Research Vice President Carolina Milanesi, also July, said she thought Apple might even be able to get the cost down nearer to $300—the price that the iPhone 5C's intended customers were paying for the old iPhone 4S.
In the United States, the iPhone 5C will retail, unsubsidized, for $649, Tech In Asia reported Sept. 11, which means Apple could still see iPhones being smuggled via the gray market to China—a practice the company reportedly was trying to stop by making the phone simultaneously available in both countries.
Susquehanna analyst Chris Caso told investors in a Sept. 11 report that the C doesn't stand for cheap, and that the biggest surprise from the Apple event is that the 5C "won't provide much near-term help in addressing lower price points in emerging markets."
He added that the firm expects that Apple is working on a larger-screen devices and a new iPhone product cycle will enable China Mobile to price the iPhone 5C "more aggressively."
According to Tech In Asia, Chinese consumers also have ideas about what the C stands for. A circulating joke, said the report, is that the C stands for costly, and that it's particularly expensive for something that "looks like a potato peeler."
The site added, "The latter joke is actually about the plastic cases Apple has designed for the phones, but it has been one of the most widely repeated messages about the iPhones this evening."
Even an Overpriced iPhone 5C Will Sell
Ovum Principal Device Analyst Jan Dawson wasn't terribly surprised that Apple's midmarket effort wasn't terribly midmarket.
"Anyone expecting Apple to come truly down market with the iPhone 5C was fooling themselves," he said in a statement immediately following the Cupertino event. "The day that happens is the day the company signals that it has run out of headroom for expansion."
Even with the iPhone 5C's less-than-generous pricing, Analysys Mason Principal Analyst Ronan de Renesse expects a major response.
"The inclusion of China from day one and a total of 100 countries by December 2013 is set to boost demand for iPhone 5S and 5C to unprecedented levels," he said in a Sept. 11 statement.
Analysys Mason expects the demand for smartphones in China to exceed 200 million units this year, "nearly as much as North America and Europe combined," said de Renesse.
He added that he found the iPhone 5C "better designed to complement the iPhone 5S," as well as to address competition from Samsung, Nokia and HTC in the "upper-mid smartphone segment."