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Is Apple’s iPhone 5C a flop?

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The cheaper iPhone 5C ($99) is, largely, an iPhone 5 with a plastic casing. It's available in five colors: green, blue, yellow, pink and white. The cheaper iPhone 5C ($99) is, largely, an iPhone 5 with a plastic casing. It’s available in five colors: green, blue, yellow, pink and white.
When Apple unveiled not one but two new iPhones last month, it was the dawning of a new strategy for the company, which for six years had championed its single iconic smartphone even as competitors rolled out an array of shapes, sizes and features.

But a month later, there are questions about how effective this strategy has been, particularly in regards to the iPhone 5C, the cheaper, colorful plastic counterpart to Apple’s higher-end iPhone 5S.

Though some observers see a long game in which the “fun” version of the iPhone will still prove popular, others are skeptical, based on some early signs.

Apple has not released figures breaking down sales of the 5C versus the 5S (An earnings report on October 28 may change that). But independent analysts estimate that the fancier 5S is outselling its candy-colored cousin by 3 to 1 or, in some cases, even more.

Localytics, an analytics and marketing platform creators say samples apps on 1 billion devices, says the 5S is winning 3-to-1 in the United States and a whopping 5-to-1 (72% to 28%) worldwide.

Reports from generally reliable sources in China say Apple has cut production of the phone there, less than a month after it went on sale. C Tech, a Chinese site that ran accurate photos of the iPhone 5C and 5S before they were released, quotes insiders who say daily production of the 5C has been cut in half — from 300,000 to 150,000.

Part of the problem, some analysts say, is the price.

Although the iPhone 5C starts at $99 with a mobile data plan, many had predicted that it would need to be even cheaper to appeal to buyers in emerging markets like China and India.

In China, where phones aren’t subsidized by mobile carriers, the 5C is selling for 3,500 yuan, or about $560.

And though its style is all new, the 5C doesn’t sport features significantly upgraded from the iPhone 5, which can be had for as low as $199. The two-year-old iPhone 4S can be had for free with a data plan.

Sarah Rotman Epps, an analyst with Forrester Research, says that selling the more expensive 5S, which starts at $199, is good for Apple’s bottom line in the short term.

“But in the longer term,” she said, “it’s bad news.

“Apple needs new customers to keep growing, and the 5C was supposed to appeal to a new, more price-conscious consumer,” she said. “Turns out that acquisition is a lot harder than retention.”

Some retailers have responded by slashing prices on the 5C. This month, Best Buy ran a promotion offering the phone for $50. Walmart has discounted it to $45 through the holidays, and Radio Shack is giving customers who buy one $50 gift cards through early next month.

But some say it’s not quite time to write the phone’s obituary.

“Rumours on order cuts (or increases) from parts of Apple’s supply chain tell us absolutely nothing either way,” Benedict Evans, an independent analyst, wrote recently on Twitter. “Too many moving parts.”

In another post, he made light of people comparing iPhone 5S and iPhone 5C sales as an indicator of Apple’s success.

“iPhone 5S outselling 5C? Apple’s growth strategy a failure. Sell!” he wrote. “iPhone 5C outselling 5S? Cannibalisation and (revenue per user) collapse. Sell!”

This year, Apple CEO Tim Cook himself downplayed the amount of weight observers should place in supply-chain rumors.

“I suggest it’s good to question the accuracy of any kind of rumor about build plans,” Cook said during an earnings call. “The supply chain is very complex, and we have multiple sources for things. … There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.”

And there is something to be said for your top-end phone leading the way. The iPhone 5S has hit the streets to almost universally high marks from both reviewers and users. Apple announced last month that first-weekend sales of both phones combined topped 9 million, a record for the company.

Still, Apple does nothing accidentally. The iPhone 5C clearly was released to appeal to customers in a way that the iPhone 5S couldn’t. Only time will tell whether Apple will succeed, but it will need to see improvements before it does.

“Apple has more work to do to attract the next generation of iPhone customers,” Epps said. “The 5C isn’t resonating as Apple hoped it would.”

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Industry

THE FINTECH REVOLUTION IN INSURANCE

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Advancing technology has collided with longstanding customer issues to create a series of deep, lasting, systemic challenges for insurance. How will these trends impact insurers’ businesses and the industry overall?

The rise of fintech, changing consumer behavior, and advanced technologies are disrupting the insurance industry. Additionally, Insurtechs and technology startups continue to redefine customer experience through innovations such as risk-free underwriting, on-the-spot purchasing, activation, and claims processing.

The report from Deloitte Global examines forces that are disrupting the insurance industry and presents four possible scenarios for the future. We explore:

  • Changing the channel: Partnerships with product makers and distributors, and embedding insurance into other products and services may enable customers to select products that best fit their lifestyle.
  • Underwriting by machine: Technology advancements including AI innovations and algorithms will likely individualize risk selection and pricing, and customers can select products based on a wider range of price points.
  • Rise of the flexible product: Time-flexible, event-driven, modular and adjustable coverage may evolve to accommodate life stage, lifestyle, and wellness changes among consumers.
  • E-Z life insurance: Given the growth and shopping patterns in emerging markets, insurers who introduce flexible term products, and master digital distribution without compromising underwriting are likely to win in the marketplace.

Read the report to understand what the future holds for the insurance industry.

Key Contact

Neal Baumann

Neal Baumann

Global Insurance Leader

Neal leads Deloitte’s Global Insurance practice and is the US insurance consulting leader. He has 20 years of experience advising financial services and insurance company clients on corporate and comp… More

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Business

EUROPEAN INVESTMENT BANK RUNS BLOCKCHAIN HACKATHON

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A team from EY triumphed in a 48-hour European Investment Bank (EIB) hackathon designed to find ways to use blockchain technologies to redesign the transaction processing of commercial paper.

The EIB brought together 56 coders from 15 countries in 12 teams for the hackathon, run alongside the bank’s annual forum dedicated to treasury issues.

While the conference was running, the coders were locked in an adjacent room, trying to prove that blockchain tech can improve the transaction process of commercial paper – a short-term financing instrument that is used worldwide in treasury operations and still relies on an ‘archaic’ and complex process.

In the pitching session, the EY team won the contest with an effort that taps a combination of blockchain, robotics and business AI tools to optimise the issuance process and reduce the number of exchanges between the EIB and its counterparties while maintaining each one’s role within the ecosystem.

The EY team won a EUR5000 cash prize and a contract with the EIB to further develop its solution into a proof of concept.

Alexander Stubb, vice president, EIB, say: “There will be major gains from the use of new technologies such as blockchain, generated from the simplification and streamlining of existing financial processes. The new perspectives opened up by digitalisation and Distributed Ledger Technology must be assessed and we must all be ready to make use of them and embark on this new venture.

“As the EU’s financial arm, we decided to be on the active side, learn by experience and make things happen, to be a facilitator and join with our banking partners to pave the way for tomorrow’s financial industry.”

Separately, Barclays is planning a hackathon that will see coders use blockchain technology for post-trade processing of derivatives contracts. The event will take place over two days in September in London and New York, according to Coindesk.

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Industry

GOOGLE NEVER REALLY LEFT CHINA: A LOOK AT THE CHINESE WEBSITE GOOGLE’S BEEN QUIETLY RUNNING

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More information is leaking out about just how Google is planning to re-enter the Chinese market with a mobile search engine application that complies to the country’s censorship laws.

The Intercept first broke this story when a whistleblower provided them documentation detailing the secret censored search project (codenamed Dragonfly). According to them, an overlooked Google acquisition from 2008 — 265.com — has been quietly laying down the foundation for the endeavor.

In order to run a business in China, tech companies are required to obtain a Internet Content Provider license from the Chinese government. As it’s difficult for foreign businesses to obtain this license, Google has long partnered with Chinese IT company Ganji.com. Back in the early years of Google.cn, Google actually operated directly off of Ganji.com’s license, even claiming the Chinese company was temporarily running its search engine. Facing intense scrutiny from the Chinese government and the media over this license arrangement, in 2007 Google formed a legitimate joint venture company with Ganji.com — the Beijing Guxiang Information and Technology Co.

Because of the necessity of that license, Google has maintained that joint venture and has been operating in China under the name Beijing Guxiang Information and Technology Co. ever since. Even after the shut down of Google.cn, Google’s Chinese advertising enterprise has been operating under the joint venture company as well as, low and behold, 265.com. A whois search of the 265.com domain name, which provides a record of the current domain registrant information, pulls up Beijing Guxiang Information and Technology Co. as the registrant organization.

A significant number of Google employees are reportedly none too happy about Google’s project complying with Chinese censorship laws. This most recent news, that the company has long been collecting data for a moment just like this, surely won’t make morale among these workers any better.

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