September 10th will prove to be a very important date for Apple, as it will set the stage for the next year. Apple has officially sent out invites for their next event, which will be for September 10th, and the iPhone will be the star of the show. The iPhone is Apple’s largest product by far and away, accounting for half of the company’s revenue. What ever is revealed on the 10th will determine Apple’s fate for the next year until the next iPhone event in the fall of 2014. The iPhone event isn’t just important on the 10th, the proposed availability date of the 20th, the rest of September, or just the rest of 2013, but rather the next 12 months from September to next September. Apple’s next four quarters are dependent upon the iPhone 5S and 5C appealing to as many people as possible.
With this in mind, we’re going to look at Apple’s plan of attack for the iPhone for the next year. What we expect at the moment is that Apple is going to launch two iPhones one with the top tier 5S, and one the new low cost 5C. The iPhone 5S is set to come in four colors with champagne and graphite joining white and black, each color offering a similar outward appearance to the iPhone 5. The main differentiators will be internally including the next generation A7 chip, 12 megapixel camera with dual LED flash, and a fingerprint sensor incorporated into the home button. The iPhone 5C on the other hand is expected to come in five colors with blue, red, yellow, green, and white incorporated into a rear plastic shell. The internals should mimic the iPhone 5, complete with A6 chip, 8 megapixel camera, and 4” retina display, but with a slightly thicker overall design.
Now, that we know what to expect it’s time to analyze the decision making behind these two new iPhones. For the iPhone 5S, Apple has a proven track record of alternating years between internal and external upgrades, with the S designation for the internal changes. The cycle is on the S this year to maintain the iPhone 5 design for two years, but with new enhancements. Apple has also proven the ability to get away with incremental upgrades allowing them to use similar parts and production processes while manufacturing the same iPhone body for two years. The 5S is set to stand out mainly with the fingerprint sensor adding a new level of security to the iPhone line-up. That includes software specific features for the iPhone 5S to take advantage of the new fingerprint hardware, similar to the 4S and Siri. Apple is also adding two new colors to their top-tier line with champagne and graphite with both offering subdued and elegant color schemes to add to the silver and slate lines the currently exist.
This is the first year that Apple is going to be releasing two new iPhones, rather than dropping the prices on previous generations. That means that Apple needs to establish the differences between the two models to up-sell the 5S line, while still selling as many of the 5C line as possible. The colors are the most obvious distinctions with the 5C offering candy colors that have more appeal to younger, lower income audiences. At the same time, the 5S has refined colors to appeal to more mature, higher income audiences. The metal of the 5S, and plastic of the 5C is another major difference, again with two different market types to appeal to. Currently, Apple dominates the high end of the phone market, but comes up short on the low end. The iPhone 5C is meant to appeal to low end consumers, mainly in international markets. It’s worth noting that Apple is likely to position the iPhone 5C similar to the iPad mini in that it’s not a cheaper model, but rather made for a different market. The iPad mini is still $329, and it’s likely that the 5C will be $400 – $500 off of contract, while the 5S will be like the 5, starting at $650 with no contract.
Apple is also set to discontinue the iPhone 4, 4S, and 5 in favor of just two models of the 5S & 5C. That also means Apple will no longer be selling a 3.5” iPhone, and instead you can only get a new 4” iPhone. The choice will still be clear thanks to the price and colors above all else, though it will be interesting to see if Apple can truly up-sell the iPhone 5S. The 5C sounds like it will sell like gangbusters, and it’s unclear if the 5S does enough to warrant the extra cost for a number of consumers. Apple is set to hit a whole new market over the next 12 months, and finally appeal to the low end of phone consumers, and many still hanging on the feature phones could upgrade to the 5C, while never considering the top of the line 5S. Apple may not make as much on the 5C, depending on the final pricing, but their market share should increase, especially in China, India, and Brazil. This is a major year for Apple, and it all starts on September 10th when the final, most crucial details are revealed of 5C price, and true 5S distinguishers.