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Apple to expand, recast iPhone portfolio today

Gregg Keizer | Sept. 10, 2014

Apple will restructure its 2014-15 iPhone portfolio today, analysts said, by dumping the iPhone 5C experiment but keeping the three-year-old iPhone 4S to sell at even lower prices in markets such as India.

"Apple will take the iPhone 5S and drop it into the iPhone 5C price range, or below," said Ben Bajarin of Creative Strategies in a Monday interview. "I wouldn't be shocked if the 5C disappears. The question is, what happens to the 4S? It should not go away. It's doing quite well in India, and starting to get traction there."

Until last year, Apple's annual line-up was simple to figure out: When it released a new iPhone — say, the iPhone 5 in — it dropped the price of the previous model, call it "n-1" where "n" is the newest, by $100 and then shifted the model that had been "n-1" to "n-2," which was priced another $100 lower.

Where subsidies are commonplace, as in the U.S., that meant a 16GB iPhone "n" cost $199 with a two-year contract, while an iPhone "n-1" cost $99 and an iPhone "n-2" was free.

In 2013, however, Apple changed that practice: It rolled out two new iPhones, the 5S and 5C, with the latter priced $100 less than the former. Apple dropped the previous year's model, the iPhone 5, from the line-up entirely but retained the iPhone 4S — in the formula, "n-2" — to sell at the lowest price of the portfolio.

With a repeat of last year in the offing — virtually everyone expects two new iPhones today — Apple will again modify the line-up.

Bajarin's take was that Apple would have a four-iPhone cast: iPhone 6, the new 4.7-in. iPhone to replace the iPhone 5S as the standard bearer; the larger, premium-priced 5.5-in. iPhone; the iPhone 5S; and the aged iPhone 4S.

Call that portfolio "n+1" (5.5-in. iPhone), "n" (iPhone 6), "n-1" (iPhone 5S) and "n-3" (iPhone 4S).

"The question is, what happens to the iPhone 5S and 5C? Will it be plastic again?" asked Jan Dawson, chief analyst at Jackdaw Research, referring to 2013's iPhone 5C, essentially an iPhone 5 stuck in a plastic body. In a video shown at the September 2013 launch of the 5C, Jony Ive, Apple's top designer, called it "unapologetically plastic."

"[The iPhone 5C] meant what you could get a brand new device, one with a different design [at a lower price]," Dawson added. "It was one of the ways Apple kept sales up the last couple of quarters and it did best in Europe and North America. So it's useful for them to keep a device like that in the market.

 

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