Apple has made a habit of releasing a new ‘generation’ of iPhone on an annual basis each fall (and periodically, twice per year as was seen with the iPhone 4, and iPhone 4S). Historically, each release has seen an updated operating system, as well as physical and technological improvements, offered in black or white, and varying storage sizes. this differs largely from the iPod market, where Apple has established a variety of products, targeting different markets with diverse needs for the product. In contrast, on September 11th 2013, Apple released 2 iPhones – the iPhone 5s – the high-end product that technology community anticipated in addition to a brand new model called the iPhone 5C – a slightly lower quality, cheaper alternative.
The way I view the mobile market is on a 2 dimensional scale comparing differentiation/complexity with price. Naturally, high price and high differentiation is a a feasible place for companies to position their products (as is commonly seen with the Samsung Galaxy, and the Apple iPhones). On the other end of the spectrum we see low differentiation and low price positioning – more generic phones like the Nokia Lumia 1020 for those looking to meet the most basic needs. However, to me the iPhone 5C, which is only discounted by $100 from the premium iPhone 5S, appears to try to occupy a high price, lower differentiation category. A quadrant of this square that, for good reason, has no current competition in it.
Given their historical basis for success, Apple may not have the culture in place to be able to compete on a new basis. They have always been able to develop game-changing technology. The launch of the iPhone 5C earlier this month seems like an admission by Apple that they can no longer compete on this basis. After years of ‘Eye-to-Eye’ competition between Apple and Samsung, it appears that Apple just blinked.
