Apple's Big Surprise: These Babies Are Going to Sell!
There's something really annoying about kids running around with the latest iPhone -- for starters, the idea of so much money being stuffed into a teenager's pocket. However, because kids having iPhones is inevitable, the 5c will take off like crazy with this market segment. The lower price point, plasticky polycarbonate, and differentiation from the 5s will lower the bar to entry with kids and their parents. It will sell.
09/12/13 5:00 AM PT
Apple's iPhone 5s and iPhone 5c launch event Tuesday was a small evolutionary step in its already proven game plan for product lines: Create something excellent and new one year, beef up the feature set the second year, and maybe -- just maybe -- rethink the overall design and start again in the third year.
There is also the option to throw some new paint and tires on the product to buy another year of sales. The iPhone 5c just happens to have the fanciest new paint job Apple has delivered yet.
If Apple seems to be moving too slowly, it's only because the world seems to be spinning faster. Few companies actually crank out as many excellent, successfully selling products at Apple's speed, and even fewer exceed it. You might argue that Samsung is producing more models faster, but not all models are clear successes -- and some are just plain dumb.
So this is business as usual for Apple, and despite the immediate drop in Apple's stock price, there is no consumer market pressure -- or looming competitive innovation -- that will prevent the iPhone 5s and iPhone 5c from breaking new sales records.
In fact, as disappointing as these new units might be to enthusiasts lusting after 5-inch screens and integrated wall projectors, they'll be extremely popular and profitable.
Top 5 Reasons the New iPhones Will Shatter Sales Records
As an Apple enthusiast, I'm sometimes disappointed by a paucity of wow, but pushing for the wow might actually be a dumb business strategy -- just like going for the long bomb touchdown pass in every play would be a dumb strategy for winning a football game.
Most games are won by a series of very smart shorter-gain moves that put the team in a position to win. The same goes for Apple, which is just a bit less interesting to watch on a Sunday afternoon. Here are the new reasons I believe sales will shine:
5. Touch ID Fingerprint Sensor
There are at least two reasons this is important: First, it gets you into your iPhone 5s faster, which makes your experience better. Over the course of a day, this impression, this "boom, I'm in" factor will start making PINs and swipes seem painfully slow. Similarly, you'll be able to buy from Apple (apps, songs, movies, etc.) using the sensor. This is an awesome secure time saver, which will improve your daily experience. If "pear" is your password, you probably don't care, but if your password is even remotely strong, you'll love the fingerprint scanner.
Second, I have a feeling the fingerprint scanner will start appealing to businesses with Bring Your Own Device policies. Many already require employees to use lock codes, and a more secure option has got to be welcome to many enterprises.
4. New A7 processor With M7 Coprocessor
I lump these together because they work together. The A7 chip is now 64-bit, which is a big leap forward. While the benefits of a 64-bit processor won't be fully realized until apps are written to take advantage of it, Apple is laying the groundwork for developers to create much more powerful apps.
Similarly, the M7 coprocessor measures motion data from the accelerometer, gyroscope and compass -- without engaging the A7 chip. That means less battery consumption while letting the A7 work harder on other applications.
Right now, not such a big deal. In the future, though, the Apple-focused developer ecosystem is going to be able to build some powerful and cool applications, which will keep the entire iPhone platform moving forward. Besides, when the A7 et al come to the iPad, suddenly it's easy to see a much more powerful tablet, aka Mac/PC replacement, or maybe even Apple processor in some future MacBook Air-like unit. These processors will start being a sales factor later in the iPhone 5s sales lifespan.
3. iTunes Radio
While you'll be able to use iTunes Radio on your Mac and on old iPhones and iPads, etc., iTunes Radio will keep Apple selling iPhones for a long time to come. Why? Spotify and Pandora are cross-platform offerings. This is cool but not for Apple. If users can get their music so easily elsewhere, it's very easy to make a (bad) decision to leap over to an Android smartphone.
If iTunes Radio is half as good I think it will be, iPhones will suddenly become even more sticky to regular customers -- more so than through simple iTunes song sales. Old iPhone users who upgrade to iOS 7 will find a new reason to upgrade to a new iPhone 5c or 5s, sticking with Apple.
2. Free iWork Apps
Speaking of stickiness, right now there's some risk that business users -- and everyday users -- might fall into the clutches of Google or Microsoft for their office-oriented applications. Apple is sliding a big fat knife right between its customers and these other highly used document editing and reading options.
Sure, Apple customers can walk around the knife, but why bother when you can open up Pages, Numbers, Keynote, iPhoto, and iMovie easily and stay in the Apple ecosystem? Besides, if you've been thinking about buying these apps anyway and you apply them to the cost of a new iPhone, there's another reason to upgrade now. Teenagers, take note: This is a nice "homework" tip to help get you into a new iPhone. Just saying.
1. iPhone 5c's Entry-Level Status
For parents who try not to spoil their teenagers too badly, there's something really annoying about kids running around with the latest high-end iPhone. It just pushes the bounds of parental common sense for so many reasons: entitlement issues; jealousy among peers at school; even the sheer cost of letting kids run around with so much money in their pockets.
I'm not saying it's a good thing for teenagers to be running around with iPhones -- just that it's inevitable, and the iPhone 5c will take off like crazy with this market segment. The lower price point, plasticky polycarbonate, and differentiation from the 5s will lower the bar to entry with kids and their parents. It will sell.
As for buyers on budgets, both in this country and abroad, the fact is Apple still doesn't seem to feel a strong need to offer hamburgers when its steaks continue to sell in increasingly profitable numbers each year.
Right now, the iPhone 5c is good enough for the entry level for Apple's purposes of profitability. For the next 12 months, Apple will rock and roll with the iPhone product line.