Caitlin Fitzsimmons Online editor

Caitlin covers social media, marketing and technology and is BRW's social media editor. She has worked as a journalist in Sydney, London and San Francisco, writing for titles including The Guardian and The Australian Financial Review.

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New iPhones: Apple sticks to premium strategy with iPhone 5S and colourful iPhone 5C

Published 11 September 2013 07:18, Updated 12 September 2013 07:32

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New iPhones: Apple sticks to premium strategy with iPhone 5S and colourful iPhone 5C

Apple marketing chief Phil Schiller introduces the new iPhone 5 models and US pricing at an event in California. Photo: AP

Apple has launched two new iPhone models but its long-awaited budget model is still priced as a premium phone, especially in the Australian market.

The new phones, shown at an Apple launch event in California, will be available in Australia on September 20 through Apple, Telstra, Optus and select Apple resellers.

The new high-end iPhone 5S is made of aluminium and glass with a metallic finish and will cost $869 for the 16GB model and $999 for the 32GB model.

Apple also launched the new iPhone 5C, which comes in blue, green, pink, yellow and white at an RRP of $739 for 16GB and $869 for 32GB. The US price is $US549 for the entry-level model to buy it outright.

The phones will compete in the high-end smartphone space with Samsung’s Galaxy S4, which launched in Australia in April with RRP of $749. The Nokia Lumia 1020 Windows phone will also go on sale in Australia from September 17 for an RRP of $899.

A new iPhone 4S 8GB model will also be available for $529 RRP. There is no news yet on whether the trade-in scheme launched in the US would be extended to Australia.

No shift in strategy

Before the launch, the iPhone 5C was discussed as a strategic shift for the company because it is made of plastic and the lower price point should make it more competitive in emerging markets, particularly in Asia, where cheap Android smartphones are popular.

Apple had a 16.1 per cent share of the global smartphone market in the first half of 2013, according to analyst firm Gartner.

With a plethora of competing manufacturers, entry-level Android phones cost under $300.

The assistant professor of strategy at Warwick Business School, Dr Ronald Klingebiel, says the lower-end iPhone is to address price competition in what is becoming a commodity market, but the likes of Lenovo and ZTE achieve sufficient quality at much lower cost.

Apple has not gone down this low-end route, keeping the materials high and the phone feature-rich, in keeping with the iPhone brand.

Gartner’s lead Apple analyst Van L. Baker told BRW Apple was sticking to its strategy of playing in the premium space and not compromising quality.

As had been widely expected, the new iPhone 5C comes in five colours and is housed in a metal-framed plastic case. Photo: Reuters

“They basically took the existing iPhone 5 and put it in plastic case and that saved them $90 to $100, so they took that out of the price,” Baker says. “They don’t want to erode their margins too much but made the choice not to do any compromises on quality and features so it’s basically the iPhone 5 but with a better front-facing camera and a plastic case.

“Is it the price point they need to gain a lot of share in the Asian market? I don’t think so. Will they gain some share by offering the functionality of the iPhone 5 at $100 less? I think so.”

While the 5C is made of plastic, it is still high-quality materials. The body is a single piece of hard-coated polycarbonate with a steel reinforced frame that holds the internal components and doubles as the multiband antenna.

Baker points out that Apple has never played at the low end. In the PC space, the majority of the notebook market is below $US1000 but Apple has made its market share gains with notebooks that cost a minimum $US1000.

“It’s a model they’ve adhered to a long time and it’s served them well,” he says.

The one thing that surprised Baker was the inclusion of a fingerprint sensor in the high-end 5S, as he didn’t think the technology was ready yet.

Apple also announced its new iOS7 operating system, available for iPhone, iPod Touch and iPad would be available from September 18. The iOS7 will include integration with Microsoft’s Bing for the first time.

Implications for apps

Klingebiel says the business model for high-end smartphones is likely to change because of a shift in control over the lucrative app market.

“There is a chance that the majority of value capture, which had migrated from the handset to the combination of OS and app store, will move on to apps themselves, reducing the cut for middle men,” he says.

“New entrants are gearing up to prise open the tight lock between handsets, operating systems, and app stores: Sailfish, Ubuntu, Firefox, and even Tizen offer next-generation operating systems that support the trend towards interoperable HTML-based apps. This could lead to an unbundling of the industry value chain and reduce Apple’s possibility to extract value from the iOS-app store nexus.”

New iPhones: Specs and Australian pricing

iPhone 5s iPhone 5c iPhone 5
Size (height/width/depth) 124mm x 59 mm x 7.6mm 124mm x 59mm x 9mm 124mm x 59 mm x 7.6mm
Weight 112g 132g 112g
Screen size 4 inches @ 1136x640 pixels (326 ppi) 4 inches @ 1136x640 pixels (326 ppi) 4 inches @ 1136x640 pixels (326 ppi)
Camera (rear) 8 megapixels / 1080P video 8 megapixels / 1080P video 8 megapixels / 1080P video
Camera (front) 1.2 megapixels / 720P video 1.2 megapixels / 720P video 1.2 megapixels / 720P video
Processor A7 64-bit A6 A6 1.3GHz
Capacity 16/32/64 GB 16/32 16/32/64 GB
Colours Champagne/Silver/Black Blue, Green, Pink, Yellow and White Black & Slate / White & Silver
Price $869/$999/$1129 $739/$869 $799/$899/$999

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