A week after Samsung unveiled their new tablet and smart watch, Apple revealed two new versions of its iPhone, including a lower-cost smartphone aimed at price-conscious customers.
Six years after it entered the smartphone market, Apple is shifting strategies to appeal to a more fragmented audience as a result of threats from low-cost competitors. With the introduction of the cheaper phone, the iPhone 5C, Apple is targeting a younger, frugal audience. It is also offering a traditional upgrade, the high-end iPhone 5S, for its core audience of gadget lovers.
The entire smartphone industry is grasping at ways to lure buyers for their most expensive and most profitable models as U.S. and Western European markets become saturated with established smartphone owners. “It’s not the same market it was five years ago,” says senior Deliana Acosta. In key markets Apple, which traditionally releases one smartphone model per year, has been losing market share to low-cost smartphone makers such as ZTE, Lenovo and Xiaomi. In the most recent quarter, Samsung picked up 31.7 percent of the global market, compared with Apple’s 14.2 percent.
The iPhone 5C will come in several new colors, including yellow, blue and pink, which should appeal to younger buyers. It will start at $99 on a two-year contract, the same price point that Apple used to offer for its older phones. But Apple’s downmarket strategy comes with risks. By offering a lower-cost version of the iPhone, Apple could cheapen its brand or cannibalize demand for its more expensive model, analysts have said. In this case, the iPhone 5C may not be cheap enough to attract true bargain hunters. In many overseas markets, wireless providers do not subsidize the cost of the phone, which will retail at $549. Still, because the phone, which is made of plastic rather than glass and aluminum, is cheaper to make, Apple should be able to boost its profit margin.
As for the iPhone 5S, which will start at a contract price of $199, Apple is offering several upgrades from its previous model, including new gold and silver colors. This phone comes with a chip that measures motion and environmental information, which Apple is using for health and fitness apps. It also includes a new fingerprint sensor known as “Touch ID.” Users will be able to teach the iPhone to recognize fingerprints and even use that information to authenticate App Store purchases. Apple is marketing the fingerprint technology as a step forward in security, an attribute that could help it appeal to business consumers.
It’s unclear whether the fingerprint sensor is any more secure than a four-digit PIN number, however, the new technology could also raise privacy concerns. Apple has said that it won’t store fingerprint data on its servers, only on the devices themselves. But consumers may still want to think carefully before allowing their phone, and Apple’s App Store, to gain access to such unique identifying information, said Jeff Chester of the Center for Digital Democracy. “When I heard about the fingerprint sensor button, I was impressed but more scared because we have been dealing with so many privacy issues including the ones with our emails not being as private as we thought,” says freshman Rose Saldana.
The new phones were announced Sept. 10 at an Apple event in California. They will be available for pre-order after Sept. 13 and available Sept. 20 in more than 100 countries and on 270 carriers.