Apple's iPhone 5C strategy is working just as it was supposed to

Credit: Photo by Janitors on Flickr. Used under CC 2.0 license.

It's always a tricky proposition trying to figure out why Apple does anything, but it's fair to say that when they introduced the candy-colored iPhone 5C earlier this fall, the goal was to expand its market beyond the typical high-end iPhone buyer. If some recent research from Kantar, a UK data analysis firm is correct, the strategy is working.

A lot of writers have focused on the fact that the 5S is selling much better than the 5C. If you think that its lower price should have given Android a run for its low-end money, you might reasonably think 5C is failing out of the gate. In fact, the Telegraph, citing Kantar's numbers, claims the iPhone 5S is outselling the 5C 3 to 1 in England.

So why do I think the strategy is working?

If you take a deeper look at who's buying those 5Cs, it becomes clearer. While 80 percent of 5S purchases came from people who previously owned an iPhone, Kantar reported that almost half of those buying iPhone 5Cs were switching from Android phones, particularly from LG and Samsung. (The latter is a company Apple would dearly like to stick it to.)

Apple is also reaching a less affluent group with the 5C, with 42 percent of US buyers reporting an income of less than $49,000. All of this data suggests that while iPhone sales overall have gone down in the UK and held flat in Europe, Apple is starting to capture some of the competition's market.

As Apple expands into China, as was widely reported today, that should further drive 5C sales. Even relatively modest market share in China can translate to huge absolute numbers. 

Android is different from iOS: It's a broad operating environment for all kinds of low-powered computing devices, one that can be customized at every level from the manufacturer to the provider to the end user. It has a substantial market share lead, but the iPhone is still growing: Apple reported for the most recent quarter ending September 28, 2013, they had sold 33.8 million iPhones, up from 26.9 million the previous quarter. This was before the iPhone 5C was announced and at a time when it was widely known there were newer iPhones on the way, which tends to depress sales a bit.

Remember: Apple was never going to release a super-cheap Android competitor at the expense of quality. That's not in the company's DNA. The goal with the iPhone 5C was to offer a brand new model of iPhone -- not a year-old model -- to customers who previously thought the iPhone was a luxury item out of their reach. If the 5C can can continue to reach customers outside of traditional Apple buyers, it could make that 33.8 million figure from last quarter look like pittance in future reports. 

Correction: Apple's share in Europe has held steady. We originally confused market share in Great Britain with the EU. Apologies for the error.

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