Reactions are mixed as analysts start to digest the new product information shared by Apple Inc. at its latest launch on Tuesday.
In what were some of the worst-kept Apple secrets to-date, the company revealed that the iPhone 5 will in fact be replaced by the supposedly lower-end 5C (which comes in a variety of colours), as well as the 5S, a higher-end model boasting a fingerprint sensor security feature.
The look of the products might have been what we were expecting, but some were shocked to learn that the 5C, which was reportedly meant to help Apple break into emerging markets, isn’t as cheap as it might have appeared in the keynote presentation given by execs in Cupertino. On a two-year contract, you can get the 16GB 5C for US$99. But unlocked and off-contract, that device reportedly goes for $549.
In countries such as China, where smartphones can be purchased for $200 or even $150, the 5C doesn’t appear to be Apple’s answer to the low-cost phone.
“We think the phones are absolutely beautiful, but we’re very disappointed,” said Peter Misek, an analyst with Jefferies LLC.
“People were hoping [the 5C] was going to unlock the India-China market… and frankly it’s not going to do that.”
Misek was also hoping for much more from Apple in launching its fingerprint sensor, known as Touch ID. For now, the sensor (which to the consumer just looks like an extra metal ring around the home button), can unlock the phone and allows the owner to make purchases on iTunes. What should have been included in the launch though, according to Misek, was a partnership with a major credit card provider such as MasterCard or American Express, in order to cash in (no pun intended) on the iWallet craze.
He did acknowledge that Apple’s ability to create a 64-bit phone in the form of its 5S model is an important accomplishment, “but this is not going to change the tide.”
Tom Forte, an analyst with Telsey Advisory Group, had a more positive impression of Tuesday’s launch event, noting that the 5C may be sold at a low price in China for customers who sign a contract with China Mobile. Apple CEO Tim Cook first sparked rumours of a collaboration with the telecom giant when he visited the company’s offices earlier this year.
The $549 price is “materially higher” than what Forte would have anticipated, but until Apple makes its official launch in China, he’s not convinced that $549 is going to be the go-to-market off-contract price for the 5C in all countries. Forte also sees the fingerprint sensor as an important “catalyst” paving the way for other biometric-based software and tech products.
“I anticipate that there’s a lot of wonderful things to come as a result of this effort,” he added.
In addition to the new iPhone models, Apple also unveiled an update to its iOS software, and revealed that the 5S will carry improved camera features as well as a special M7 motion detection chip that will work in conjunction with a host of new health and fitness apps. Nike is already working on one such program based on its FuelBand technology.
Apple has been under an increasing amount of pressure as of late, with some critics arguing that the company seems to have reached an innovation ceiling. But Forte believes the company’s $60 billion share buyback program will provide a solid foundation for the company’s continued improvement.
So far, however, the new iPhones aren’t doing much for Apple’s shares, as the price dropped below $500 on Tuesday, a nearly 3% drop from the day before.
Both the 5S and the 5C will be available in Canada starting on Friday, Sept. 20. The 5C can be pre-ordered starting Friday, Sept. 13.