lowering the price during the life a product model is not the same as the backtracking they did with the original iphone model. i hope we can agree on that
I agree, I was not implying that it isn't the same. Apple did backtrack, but that was as a consequence of a lack of experience in that product category.
what phones do they sell that costs under $400 unsubsidized?
None, and they don't need to. The vast majority of consumers buy phones as part of a subscription. Especially people with smaller pockets, because it enables them to spread the cost over a longer period of time. With the 4S, 5C and 5S, Apple covers the whole range of price brackets from $0 to $600. Most serious unsubsidized phones in the usability and functionality segment of Apple's iPhone are priced similar. With Apple's product strategy we shouldn't have expected a low quality product at $199 unsubsidized. I can recommend reading the Jobs biography for some good insight in how they set prices and differentiate themselves from the other manufacturers.
i said they have made pricing errors before ie with the original iphone and personally i feel they are making the same here. we will see how it unfolds.
please remember the original post you quoted merely said the phone would be more successful if it was cheaper. do you disagree with the statement that if it was $100-150 cheaper it would do much better than it will end up doing?
It depends on what you define as "doing better". In terms of consumer vantage point, it would sell massively better. No dispute there. Although at some point consumers will expect a lower quality product at those price-points and consumers that are less price sensitive will move to higher priced phones. It's price elasticity. I don't know where you live, but if you live in the USA, you should try to look beyond the borders a bit. It might not be the case that people in the USA are willing to spend loads of money on a phone such as the 5C, but this is different elsewhere. In emerging markets there are now massive middle and upper class segments willing to spend, and the 5C could be aimed squarely at those segments. And the 5C might become cheaper as carriers are willing to let go of part of their hardware margin in favour of securing the consumer as a subscription client.
The other vantage point is Apple's. Apple is known to have a high margin requirement, and it is logical that margins would erode at a price point that you suggest. And there might be room for lowering of the prices. iSupply estimated the component cost at $199 for the iPhone 5. Note that this doesn't include distribution and other operational cost. As the iPhone 5C is similar to the 5, we can expect their costs to be similar. Internals might be a bit cheaper now, but the redesign of the shell and reshuffling of internals might have increased the cost somewhat. So with all the costs added the phone should cost Apple about $300-$350 to make and sell. With the phone costing $549 off contract, the margin could be somewhere around $200-$300, and that's a quite hefty margin. These are just some back of the envelope calculations of course and I might have omitted some things.
The margin will be distributed between Apple and the carrier. We know that the carrier margin is likely not very big, but it should have improved with the increased competition that Apple is facing. The carriers might be prepared to let part of that margin go as I discussed previously.
As I said before, Apple now has a line-up that spreads the entire cost segment from $0 on contract to $800 on contract. A lowering of the 5C price would erode the 4S segment, before Apple has sold off all its 4S stock. It is possible that the 4S will be replaced by the 5C next year and that we will get a 5CS (or whatever) and a 6.
apple is losing marketshare in the smartphone market and unless they want that to continue that trend they imo have to look into the prices of the older/lesser devices
Apple will not be able to reverse that trend. It is simple market lifecycle dynamics. Apple had first mover advantage with the iPhone that held up quite well, but it eroded with increased competition from Android and others. The market has since matured and will continue to mature. There is enough growth potential in other market regions, so in total the smartphone market will continue to grow, but with the incremental innovations that each manufacturer is introducing there will be no big shifts in market share. Apple will need to focus on capturing a portion of each segment, which they are attempting by covering all price brackets, something that they have prepared slowly over the years. The advantage that Apple has is that it now has a premium smartphone that can compete on quality (hardware quality, software quality and usability) in all these segments. Remember that cheaper phones of competitors are buggy, laggy and do not receive software updates. Apple differentiates itself very well within those segments.
With regard to the post I commented on initially. The poster said that the 5C will be unsuccessful because it was priced too high. The poster failed to take into account that the device is not even available in the shops and that it is sold in other markets that the US. A lower price will sell more, I don't dispute that, but the question is whether we from outside can judge whether it is a good strategy for Apple, with the limited knowledge we have about its strategy in each of these regions and the cost basis and margin distribution between its supply chain partners. It's just not that easy.
