Apple doesn't play well in the shallow end of the pool

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

It appears that the iPhone 5C, Apple's colorful low-end phone, is not selling well as Apple expected, and I have to admit that my article from last month suggesting the iPhone 5C sales strategy was going to according to plan, might have been a tad optimistic.

During Monday's Apple earnings call, Tim Cook admitted that there was a shortage of iPhone 5Ss because they expected the iPhone 5C to sell better than it did. They spent the rest of the quarter trying to catch up with demand. As an aside, Apple sold 51 million iPhones last quarter, which shattered its previous sales records, but was short of the 54 million that Wall Street expected. Imagine if everything had gone according to plan.

Why hasn't the colorful lower-priced model caught on?  Perhaps it's because -- as Cook suggested -- people simply liked the high end finish and features of the 5S better, particularly Touch ID. Given the relatively small price gap between the two, most people seemed willing to pay the extra money to get it.

The 5C might have been "unapologetically plastic," but colorful plastic is apparently better suited for the Moto X and various Windows Phones. That's what Palador co-founder Benjamin Robbins, whose firm helps companies define their mobile strategy, thinks.

"Budget is not their brand. They historically have been a top tier brand. Their clientele has never responded well to cheap. Their customer loyalty is driven on the exclusivity of the brand. This is a manifestation of platform war whereby they won't gain Android users by going cheap, they will only lessen their brand and diminish that elite status that their clients love," Robbins told me.

That fits with another post I wrote prior to the release of the 5S and 5C in August when rumors were rampant of an even lower end iPhone. Going cheap has never been Apple's style. The company resisted even during the deepest depths of the 2009 recession, when everyone expected them to come out with a low-end Mac to accommodate the reality of the economy.

They resisted it then, but the 5C was at least a nod to the low-ish end of the phone buying spectrum. I remember people joking about it on Twitter when it was first announced. The 5C, like the 5S only cheaper and plastic, or here's the phone I got because I couldn't afford the 5S. 

Apple sold 51 million iPhones in the last quarter. Android may be the leading platform in terms of market share, but Apple is still selling more smartphones and growing faster than every other smartphone vendor except Samsung (according to the latest IDC figures). If it wants to continue to do that, it looks like it needs to stay out of the shallow end, because it's clearly not welcome there.

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