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Budget iPhone not budget enough: IHS

Analysts poor cold water on iPhone 5C’s price tag

The iPhone 5C does not have a low enough price point to entice sub-premium buyers, analysts say.
The iPhone 5C does not have a low enough price point to entice sub-premium buyers, analysts say.

Apple has unveiled two new iPhone models, the flagship 5S and the lower-priced 5C, but failed to address the lower echelons of the smartphone market to the extent that many analysts had expected.

The iPhone 5S, which is 7.6 millimeters thick and weighs 112 grams, includes some new features including a fingerprint identity sensor built into a redesigned home button, a newly engineered 64-bit chip, and a camera that boasts 33% greater light sensitivity.

The most distinctive feature of the iPhone 5C, meanwhile, is its casing, which is available in various bright colours. Apple stressed that it had no interest in "imitating the typical, fragile plastic phone" and so built the 5C around a steel-reinforced frame that also acts as an antenna.

But the unsubsidised price of both devices failed to impress analysts. Francis Sideco, director for consumer electronics and communications technologies at IHS, said that the new devices were unlikely to help Apple expand its reach to "lower income buyers".

"At an unsubsidised cost of $549, the iPhone 5C remains at the same price point as the existing mid-range model in Apple's smartphone line, the iPhone 4S," he said. "In light of this pricing, the 5C appears to be a midrange product that cannot significantly expand the available market for the iPhone line to lower-income buyers. As a result, the arrival of the 5C will not spur a major increase in iPhone sales in the second half of 2013 compared to previous expectations."

Based on an analysis of Apple's product announcement, IHS said that it had chosen not to upgrade its forecast of overall Apple iPhone shipments in the second half.

"IHS at this time is maintaining its prediction of 86.1m iPhone shipments in the second half, up 25% from 68.7m in the first half and a 15% increase from 61.1m in the first half of 2012.

"If Apple had hit a $350 to $400 unsubsidised price range for the iPhone 5C, as some had speculated, the company might have had a chance to expand its smartphone shipments beyond what we originally expected in the second half. Even at a subsidised price of $99 with a two-year contract, the 5C will not spur sales because it does not materially expand Apple's addressable market past the level we had already taken into account."