“iPhone 5 was instantly the most loved iPhone ever … iPhone 5 helped take our iPhone business to an entirely new level, becoming huge. In the past, we’ve lowered the price of the current iPhone, making it accessible to more people. This year, we’re not going to do that. The business has become so large that we’re going to replace the iPhone 5, and we’re going to replace it with not one, but two new designs. This allows us to serve even more customers.“
Tim Cook September 10, 2013
This could be pure spin, but if you take Apple’s words at face value it would indicate that Apple anticipates a problem producing enough parts to meet the demand for iPhone 5 and iPhone 5s, and this new plastic body will help them meet that demand. Indeed by only offering preorders for the 5C, it would seem they are actively pushing users toward the 5C.
So Apple is now pushing customers to the $99 phone, while competitors are pushing a $299 Note or a $199-299 Galaxy S4. There are clear cost advantages for trying to undercut a bigger phone with a smaller one.
Will it work? We probably won’t know until January’s earnings call.