The iPhone 5s and 5c hit Australian shelves – but has Apple lost its way?
Friday, September 20, 2013/
The latest iPhone has hit the streets, and the fans have shown up in force with lines appearing at Apple stores and other major retailers across the country.
But the queues are shorter than in recent years (partly due to more retailers selling the device), and the iPhone 5s is dealing with a very different marketplace. While Apple might own the profit, Samsung has a much bigger slice of sales and market share.
Expectations are so high for Apple that whenever the company announces a new version of iOS or a product, shares go down.
Which raises the definitive question – is Apple simply losing its cool?
Foad Fadaghi, the head of research at Telsyte, argues Apple is simply dealing with a market saturated in smartphones.
“Innovating in a mature market is clearly harder than innovating in one that isn’t,” he says.
There’s another major problem with today’s iPhone release. The colourful iPhone 5c is a replacement for the iPhone 5, but it comes with some confusion. Reports had indicated Apple would show off a ‘budget’ phone, to help boost its growth rate in various markets – specifically Asian nations such as China and Korea.
The iPhone 5c is anything but budget. It remains cheaper than the high-end 5s model, but it still costs several hundred dollars outright.
In Australia, the cheapest model is $739.
Cue the confusion. Why would Apple ignore growing markets where cheaper phones are more likely to increase its growth rate, and instead focus on its same premium category?
Fadaghi suggests Apple is playing the long-term game.
“Apple has been quite clear it doesn’t want to go after the low-end market, and Tim Cook has made it clear they’re going to be pricing phones in the premium space.”
This approach comes at the expense of market share, but ensures Apple will hold on to its premiums and remain profitable even as competitors such as Samsung have a wider reach.
In a new interview with BusinessWeek, Tim Cook says he tries not to pay too much attention to the share price.
“I don’t feel euphoric on the up, and I don’t slit my wrists when it goes down,” he says. “I have ridden the roller coaster too many times for that.”
Nevertheless, Apple shares are down 10% for the year, and Cook isn’t happy. But his defence is this:
“And so that’s what I focus on, instead of letting somebody else or a thing like the market define how I should feel.”
However, as Fadaghi says, there are plenty of other smartphones in the premium space which Apple needs to consider.
“They have more features, bigger screens, longer battery life and various other functionalities.
“It’s easy to say they’re just going after the top end. But they need to bring that innovation and competition to the top end too.”