The Problem with The 5C: Be True to Yourself

Well, Apple finally released a lower cost iPhone, the 5C. Barely. Once off-contract, which is how most of the world (and this author) buys them, the price difference is ~$100.

On a discussion today, awaldstein said that “Apple may have lost touch with who they are.” Actually, I think Apple’s troubles may have stemmed from their inability to decide either to break from who they are or stay true to themselves.

What is Apple’s brand? Everyone knows what Dell was: affordable custom computers. We know Wal-Mart is “everyday low prices” while Tiffany’s is premium customer service. What is Apple’s? It is hardly affordability. Apple’s products are consistently expensive, although not significantly more than comparable products for the same feature set. And there is the key. Apple is a premium product, premium price brand. Apple doesn’t sell low-cost laptops or tablets. The cheapest WiFi routers come from Linksys or Belkin, not Apple Airport Extreme.

Apple, for its own reasons, felt the need to compete in a perceived lower-cost (or the poorly named “value segment”) of the market. It probably did so for 2 reasons:

  1. China. China is so huge, and modernizing so quickly, that demand for mobile phones is enormous, yet disposable cash there is far less than in North America, Europe or the developed economies of Asia.
  2. Ecosystem. Apple needs to maintain critical mass of users, because it needs the App Store to continue to be a center of gravity. It needs the ecosystem.

This leaves us with a company whose very DNA is “premium price for premium value” feeling the need to market products of “moderate price for moderate value.” This combination almost never works. There are only two ways to do it:

  1. Stay: Stay true to yourself and stick with premium price for premium value, but find other ways to keep developers enticed. Reducing Apple’s take on the App Store, free marketing, and making iOS development massively simpler are just a few ways.
  2. Recreate: Decide you need to go to the moderate value market but become consciously aware of it, and change your DNA first. That means hiring moderate users to use the phones and become part of the development process, hiring product managers who focus on the market, and possibly even expanding the brand. The classic example is Toyota to Lexus and Honda to Acura to go upmarket.

In retrospect, awaldstein is right. Apple lost touch with who they are, without consciously becoming someone else. As we say in Yiddish, “nisht ahein, nisht aher,” neither here nor there.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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