Why the Chic, Low-Cost iPhone May Cost Users More Than the iPhone 5S in the Long Run

In recent months, we’ve seen various leaks surrounding the more colorful hues of Apple’s lower cost iPhone model that is rumored to debut alongside the flagship iPhone 5S this fall. In regards to the flagship edition though, we haven’t heard any rumors that the aluminum-bodied beauty will be coming in as many rainbow colors, with Apple potentially adding a third color option for its flagship range extending the color options beyond the black and white iterations to date. The reason for this may be simply a matter of marketing demographics, with the flagship series’ intended target being the business crowd where more subdued tone are preferred and colors are aimed at the hip, fashionable crowd.

The Haute Couture of iPhone

Rendering of the low-cost iPhone in an assortment of colors via MacRumors

Rendering of the low-cost iPhone in an assortment of colors via MacRumors

If claims made that Apple is losing its appeal with the younger crowd due to lack of customization options are true, adding more color to the low-cost model may help Apple win back some of its lost customers. Recent studies cite the lack of screen size options, price points, and model varieties with other differentiating features as potentially damaging to Apple’s appeal to the younger crowd, and the introduction of both a low-cost iPhone model, and one that brings with it more color options, may make the iPhone chic again.

Its low cost pricing and color options may make the budget model the affordable haute couture of tech fashion where the iPhone is just as much a fashion item or accessory as it is a piece of technology. A blue iPhone with a contrasting orange dress? How about pairing yellows and purples together? Colors will make the iPhone a fashion statement, but as dramatic as the colors will be they will not make a long lasting statement.

As fashion trends–and the fashionable colors that debut with the trends–come and go, so will the iPhone’s colors change with the seasons. Pink may be in today, but the fast fashion world–which changes even more quickly than tech–may dictate that come tomorrow it will be a different color choice.

Pricing May Lead to Multi-iPhone Ownership

Thank goodness, then, that the budget model will cost less as users may want two or three iPhone colors to complement their fashion and to stay on top of the color trends.

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So while the low-cost iPhone may be look to be a value for many entry-level iPhone owners who want to add color customization to their tech, it may force these owners to consider buying multiple iPhone models over a two-year contract cycle to keep current. That’s the price of entry to be a fashionable and chic technologista. In contrast, owners of the flagship models upgrade every two years, with devoted loyalists and tech junkies upgrading every year when Apple upgrades the technology inside when it refreshes the mobile line.

Even at the $649 price of entry for the flagship model, a potential $400 low-cost iPhone could cost more in the long-run to those who care about fashion as they may have two or three different colors in their arsenal. This means that for owners who care about fashion, the price of entry for the iPhone could climb to $800, $1200, or higher.

Fashion Cycles

Apple had kept its tech cycle to roughly about a year before it introduces a new model. However, fashion cycles are much shorter and are seasonal. With four seasons to a year, we can see as many as four cycles per year. While the internal technology of the low-cost iPhone may still be the same through the four seasons, the colors may change with the season, spurring quicker refresh rates.

Technology is already disposable with hardware being a commodity. Adding fashion to the mix, and you have an even more disposable accessory.

But the key here is that refresh cycles will be different than that employed by rival Android-makers. Android phones typically have better hardware specs every few months with a new flagship release. Apple is keeping the hardware the same, likely, for a year, it’s just that seasonal colors may drive the upgrade cycle this time.

Given fashion is both expensive and disposable, Apple’s foray into this market may help drive more sales and increase its profit margins. The company had recently announced that it has hired the head of fashion house Yves Saint Laurent to report directly to CEO Tim Cook.

Market Segmentation

In fact, introducing color to just the low-cost iPhone may be a similar strategy to what Apple had done with the iPod. Both the iPod Touch and the iPod Classic were only available in black and white hues, while the younger, hipper, flashier iPod nano with its flash storage and lower price point came with a Skittles-like combination of colors. The iPod touch recently gained color options we well in its latest generation, but the strategy helped Apple carve out different target markets.

Younger kids want colors while older generations, business users, and those who prefer the timeless, classic look of the iPod stuck to white or black.

A Flagship That Reflects Timeless Beauty

Having color may be important in reaching a hip crowd of younger users, but there is a timeless beauty behind Apple’s monochromatic black and white hues for its more expensive products. For one, colors are fads and change with the seasons. This means that while hot pink may be in for spring, come fall customers may be clamoring for a rusted orange color. It’s more of a seasonal thing, just like the fashion of the season. This may be acceptable for a more inexpensive product, like the low-cost iPhone model.

On the other hand, customers who have invested in a more “luxury” iPhone flagship, particularly the rumored iPhone 5S model, may not want to have to re-invest in a new model or color option every time the season, or their sense of fashion, changes. They’d want something that’s more timeless and will go well regardless of the color trends, the fashion tastes of the day, or what is deemed en vogue by the latest magazines. Black and white colors do just that, and it’s wise for Apple to keep its premium product limited on the color palette to appeal to a more broader, if not more conservative, audience.

Second, Apple’s business class customers may not be able to replace or upgrade their iPhone purchases every few months or every year. In a two-year period that the iPhone 5S will be in its owner’s business class hands, there would have been 8 seasons–assuming four seasons to a year for most regions. That means it would have had to age through 8 seasons of hit colors. The timeless elegance of black and white will help the iPhone age with grace.

Apple’s segmentation here is that the low-cost model is about lifestyle whereas the flagship is about pure technology.

A Broader Appeal for Colors

Still, while the fashion of fad of colors may drive more expensive fashion habits for Apple junkies in first-world countries, in the emerging markets, the option of having a cheaper, mobile computing experience from Apple is very much welcomed. For these users, it will bring Apple’s technology to more people as the iPhone becomes increasingly affordable.

  

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