Making sense of the latest iPhone phenomenon

My household suffered a minor catastrophe this week: my husband dropped his iPhone 4 and since then has been unable to make any calls because he can't hear the person on the other end of the line. Efforts to rectify the problem have been in vain, despite a plethora of helpful tips on the Web (this is not an uncommon occurrence it seems), and his phone has thus become a text and Internet device only.

However, although this seemed a minor catastrophe at first, a quick look at how much one of the latest iPhones would cost in France has turned the situation into a full-blow hand-wringing exercise on what device to get next.

iPhones really are fairly expensive, and despite hints that the iPhone 5c would be the "cheaper" option to the iPhone 5s, it is not that cheap. If you are on a no-contract plan such as Orange's Sosh, you are looking at spending over €800 ($1,082) for the 64 GB iPhone 5s, while the lowest-spec 5c still comes in at a hefty €539 without a contract.

Yet despite the high prices, Apple sold a record-breaking 9 million devices over its launch weekend of Sept. 20-22, though many of which will of course be subsidised, which that means a relatively high mobile bill for around 24 months. There were reports of Chinese buyers gleefully relaying how they spent a month's wages on a gold iPhone 5s, and the queues at Apple Stores in Paris, London and Frankfurt am Main also attested to the magnetic pull of these phones.

BlackBerry may have been given the nickname of "CrackBerry" because of people's earlier addictions to its messaging system, but it seems a whole new term is need to describe the phenomenon of people willing to risk perhaps even going hungry to buy a high-end device with an Apple name. Any suggestions for such a term are welcome!

I know, for example, that €800 is a ridiculous amount of money to spend and completely out of proportion to its value to me, but I have a sneaking suspicion that I will still go ahead and buy one when my own iPhone 4 finally gives up the ghost, even though there are some perfectly good and attractive devices out there at a much lower cost.

The fact that Apple has not produced a much cheaper device with the 5c has come as something of a disappointment to many. Francis Sideco, director for consumer electronics at researcher IHS, recently told Bloomberg that the iPhone 5c may not be cheap enough to attract lower-income customers in Europe. So while there have been discussions about the "democratisation" of smartphones to enable more people to buy them, this is certainly not applicable to Apple. And the company does not hide the fact that it is not in the market for cheap phones.

In fact, if you want to see why the 5s and 5c are so similar in price, teardowns by IHS reveal that the 5c has followed Apple's familiar formula, combining premium pricing with a hardware design almost completely identical to the original iPhone 5.

According to IHS, the 16 GB version of the 5c carries a bill of materials (BOM) of $173, based on a physical dissection of the production.

"Many expected Apple to take an affordable strategy with the iPhone 5c, producing a lower-cost smartphone that would be priced at around $400 in order to address developing markets, such as China," said Wayne Lam, senior analyst for wireless communications at IHS. "However, the reality of the iPhone 5c is completely different, with Apple offering a phone with a $173 BOM and manufacturing cost, and a $549 price tag-without subsidies."

The teardown of the 16 GB version of the iPhone 5s reveals that the device has a bill of materials of $191, which is really not that much higher than the 5c. When the $8 manufacturing expense is added in, the cost rises to $199. That compares to a $197 total cost for the original iPhone 5, based on the completed IHS teardown analysis from one year ago.

While the 5c may be slightly cheaper, the reasons for the lower price could be enough to make most people decide in favour of the 5s, such as the better camera in the 5s and its more future-proofed design in terms of processing power. Apple has not broken down sales between the two devices as yet, but at my mobile operator in France, there are plenty of iPhone 5cs available, but the 5s version are all "unavailable" right now, showing a clear indication as to which way user preferences lie.

There are some pretty cheap Android and Nokia devices on offer though.--Anne

Suggested Articles

Moving subscribers to 5G networks will help carriers manage network traffic, but they can't do it until customers buy 5G-ready smartphones.

The adoption of consumer eSIM services/devices remains low, despite major hype.

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.