Apple Inc. (NASDAQ: AAPL) announced Tuesday that it would cut the price on its 9.7-inch iPad, but it did not announce that it was also lowering the price of its iPhone 5c in some markets. The change was made on the Apple Store websites without any fanfare.
The 5c is not only getting a lower price, but also less memory. The lower-cost version comes with 8 gigabytes of memory compared with the 16 gigabytes in the formerly lowest-priced version. In China, for example, the old low-price was around $730; the new low price is about $665. The other countries getting cheaper versions of the 5c include France, Germany, the United Kingdom and Australia.
It seems odd that the price break, with the possible exception of China, is going to developed countries. Why is Apple trying to get down to a lower price point in mature markets? Compared with Samsung’s Galaxy S4 model priced at around $555, the iPhone 5c’s new price in the U.K. is around $710. It is hard to see how the 5c’s lower price is going to result in a lot more buyers, given that kind of price competition. The 16 gigabyte version of the 5c costs about $745 in the U.K.
Apple continues to maintain the 4s as its low-cost option and clearly views the 5c as a mid-range option. If mid-range is supposed to appeal to an average buyer, consider this: A Chinese family’s average annual income in 2012 was about $2,100. How a price of $665 — one-third of an average family’s annual income — is going to appeal to that average family is more than a mystery, it is a miscalculation.
Maybe Apple has a real plan for attacking the low-cost smartphone market and it will reveal that plan when it introduces the next iteration of the iPhone. But don’t count on it.