iPhone 5C: Possibly Too Pricey for Russia, Like China
Apple introduced the plastic-case iPhone 5C Sept. 10, as way of reaching buyers unwilling or unable to afford its high-end smartphones. In key markets, however, the device is still proving too pricey.
Apple expanded availability of the iPhone 5S and iPhone 5C Oct. 25 to 25 additional countries, including Russia, India, Spain, Mexico and Italy. In Russia, however, the iPhone 5C is "set to cost almost $800—about the country's average monthly income," Bloomberg reported Oct. 25, adding that Apple was unlikely to grow its market share in the country.
The Moscow Times reports that Russian consumers who can afford the iPhone 5C are likely to just pay an additional $150 for the iPhone 5S.
"In addition to their sky-high prices, neither of the two new iPhones will operate on Russia's Long Term Evolution [LTE] frequencies at first, due to Apple's concerns that poor quality Russian service could discredit the phone in the eyes of users," the Oct. 25 report continued, citing a person close to one of Apple's partners.
"The function will only be enabled once the quality of LTE networks has been brought up to an acceptable standard," the source added.
In China, the world's largest smartphone market and a key market for Apple, which expects it to soon surpass the United States as its number-one revenue generator, the iPhone 5C has also been met with a lukewarm response.
Almost 90 percent of Chinese consumers said in an online survey that they believe the 5C is "still too expensive" and they "have no interest in the new gadget," China Daily reported Sept. 11.
Apple's Hardware Costs for iPhone 5C, 5S
Xbit Laboratories, according to preliminary results from a teardown analysis service at IHS iSuppli, reported Sept. 25 that the 16GB iPhone 5C likely costs Apple about $166 in materials, making its bill of materials just $20 to $30 less expensive than the iPhone 5S. Apple charges $549 for the phone without a contract, and $99 with a contract.
According to Xbit, the most expensive item in the phone is its 4-inch Retina display, said to cost Apple $41 apiece.
The next-most-expensive parts are the wireless components from Qualcomm, at $32, what Xbit calls the "mechanical/electro-mechanical" bits, at $20, and, at nine dollars and change apiece, the NAND flash memory and dynamic RAM.
Xbit called the iPhone 5C the iPhone 5 "in a plastic disguise."
"The combination of the design and component reuse—and the plastic enclosure—has allowed Apple to offer a less-expensive version of the iPhone, although it's still not cheap enough to be a true, low-cost smartphone," said Andrew Rassweiler, senior director of cost benchmarking services for IHS.
The Motley Fool's Adam Levine-Weinberg, in an Oct. 22 post, wrote that the iPhone 5C, despite popular opinion, isn't intended to be a low-cost iPhone.
"The iPhone's primary purpose is to boost Apple's margins by cutting product costs and minimizing cannibalization of the highly profitable iPhone 5S," Levine-Weinberg wrote. "So far, investors have every reason to believe that the iPhone 5C is succeeding in that task."