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Apple, faced with stiff competition from Samsung and others, is tweaking its offerings. On March 18, Apple reintroduced its fourth-generation iPad, at the price of the iPad 2 it will replace, as well as an 8GB version of the iPhone 5C that it will sell in the United Kingdom, France, Germany, Australia and China.
Apple introduced 16 and 32GB models of the colorful plastic iPhone 5C in September, at $99 and $199, respectively, with a two-year service contract. Without a contract, the phones are priced at $549 and $649, respectively. But in China and other price-sensitive markets where it was anticipated that Apple would begin selling a lower-cost iPhone (and where subsidies tied to service contracts are rare), the prices of the devices have been higher than in the United States and sales have been far short of expectations.
The new 8GB iPhone 5C will sell in the U.K. for $711, down only slightly from the $778 16GB model.
Unlike the iPhone 4S, which at a deeply discounted price has sold well in emerging markets, the iPhone 5C can run on Long Term Evolution (LTE) networks.
“The mid-tier iPhone segment is growing year-over-year and the 8GB model provides a more affordable option for markets where LTE is becoming more established,” an Apple representative told Re/code.
The 9.7-inch fourth-generation iPad features a Retina display, improved cameras, enhanced performance (says Apple) and a starting price of $399 for the 16GB WiFi-only model and $549 for the WiFi plus cellular model. All four major carriers will support it. The tablet runs iOS 7 and delivers 10-plus hours of battery life.
Apple discontinued the fourth-generation iPad—dubbed the iPad 4 by the media, trying to keep straight what Apple would seemingly rather make muddled—in October, with the introduction of the iPad Air.
“Now, for $399, customers can get iPad with a stunning 9.7-inch Retina display, fast A6X chip and 5MP iSight camera, offering a dramatic upgrade in power, performance and value compared to the iPad 2 it replaces,” Philip Schiller, Apple’s senior vice president of worldwide marketing, said in a statement. “The iPad line sets the gold-standard in mobile computing, and all iPads have access to the largest and best ecosystem of more than 500,000 iPad-optimized apps from the App Store.”
That Apple calls the device “iPad with Retina,” and never specifically mentions that it’s a reintroduced older product (though it does say “fourth-generation,” for those who are clear on which version Apple is on), seems to introduce a bit of unnecessary confusion to a brand that loves to promote simplicity.
“The ‘what’s old is new again’ iPad and iPhone 5C, not to mention the resurrected 8GB iPhone 4 aimed at consumers in India, is showing some cracks in Apple’s product strategy,” Jack Narcotta, an analyst with Technology Business Research, told eWEEK.
In the past, Apple dictated what customers wanted, but Android-supporting vendors have caught up and in some cases surpassed Apple, leaving Apple to play catch-up, Narcotta said, adding that Apple’s response has been to focus on what users do with their devices, instead of on the devices themselves.
“The challenge for Apple, then, is concocting the right mix of pricing, devices, software and services for the markets in which it wants to establish leadership,” said Narcotta.
“I find the 5C to be the really interesting page in this new chapter,” he added. “ I think it’s an example of Apple refusing to admit defeat.”
Ken Hyers, a senior analyst with Strategy Analytics, pointed out that although the “new” devices may not be innovative, they are likely to be profitable.
“The advantage of extending legacy device lifespans is that they are already fully amortized so profitability actually increases the longer they are sold,” said Hyers.
They also enable Apple to reach customers in emerging markets who otherwise wouldn’t be able to afford an Apple device.
“By making legacy products more affordable … it’s building a base that down the road will eventually be able to afford its newest devices,” Hyers continued. “The genius of Apple’s strategy is that it’s creating future demand in a profitable way—the 8GB iPhone 5C actually appears to be more profitable for Apple than the original 16GB iPhone 5C.”
As for innovation, that’s becoming harder to come by in smartphones, which these days receive tweaks rather than revolutionary upgrades. It’s wearables, said Hyers, where we’ll next see innovation. When Apple finally rolls out its rumored iWatch, “hopefully, some of that old Apple magic is still there,” said Hyers.