Recall how the iPhone 5c was thought to be Apple’s answer to China’s smartphone market dominated by inexpensive handsets? Turns out, the handset costs “significantly more” than expected and nearly as much as the full-featured iPhone 5s, also unveiled Tuesday. At $733 without a subsidy (in China), the iPhone 5C may not be so cheap after all.
“By any standards, it’s a premium price,” one analyst told the New York Times Wednesday morning. However, there still could be good news for Apple, as China approves the iPhone for China Mobile, the world’s largest wireless carrier…
At $549/$649 for 16/32GB off-contract models in the United States, the iPhone 5c costs almost as much as the unsubsidized iPhone 5s. But in China, according to Apple’s website, the iPhone 5c starts at 4,488 renminbi, which works out to approximately $733.
This is the price without subsidies from mobile operators. By comparison, the new flagship iPhone 5s starts in China at 5,288 renminbi, or approximately $864. Both phones evidently cost significantly more than the growing number of inexpensive homegrown smartphones, such as the $327 Mi3 from Xiaomi.
Many observers expected the iPhone 5c to carry a price tag closer to $400. The price of Apple’s new iPhone left one analyst grumbling that Apple was using sleight-of-hand.
“When you really look at it, they didn’t make a cheaper phone. They made a more expensive phone so that they could call the other one a cheaper phone,” Francis Sideco, analyst with research firm IHS, told the New York Times.
A HSBC analyst in Taipei described the iPhone 5c as “clearly a high-end phone, not a low- or even midrange phone.”
iPhone 5C is a $99 last year iPhone and as such a continuation of Apple’s strategy.
— Christian Zibreg (@dujkan) September 11, 2013
Although there is some sticker shock regarding the iPhone 5c’s unsubsidized price, new approval from China’s regulators could offer consumers some relief.
The Wall Street Journal confirmed today that the 5c was approved for China:
According to the website of China’s Telecom Equipment Certification Center Wednesday, Apple was given a ‘network license’ for a handset resembling the iPhone that runs on the mobile standards used by China Mobile for third and fourth generation cellular services.
The report likely signals the carrier with 700 million subscribers – more than all U.S. carriers combined – is about to offer the iPhone, a decision Apple CEO Tim Cook and others have sought for years.
The decision could also calm the nerves of those worried that the iPhone 5c cannot compete against low-priced rival smartphones in China. Unlike in the US, where carriers offer a subsidy to make handsets more attractive, China’s carriers tend to discount customers’ monthly bills, according to today’s reports.
It’s also possible that Apple is testing the waters with the current iPhone 5c pricing scheme.
“The fact is, Apple doesn’t know what demand for the iPhone 5C will be in developing markets,” Yankee Group’s Carl Howe told CNN Money.
He postulated the company could be looking to “start high and make adjustments later” as a way of preserving its industry-leading margins.