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No Cheap iPhone Then?

So no cheap iPhones then?

Of course not, just like there were no cheap iPads when the iPad mini came out. Remember the wailing and gnashing of teeth that Apple must produce a cheap iPad mini to compete with the other cheaper loss making tablets, despite the success of the original iPad.

Well they didn't, and it didn't hurt iPad sales.

Looks like they also decided not to create a "cheap" iPhone yesterday.

However, what Apple did do was to pull off a marketing masterstroke.


New iPhone 5 at premium price - $199/$299/$399 on contract

  • Some spec upgrades
  • New form factor
  • Still a premium brand at a premium price

iPhone 4S at reduced price - $99 on contract

  • Probably some cost savings on manufacturing after 12 months but presumably still relatively high due to high quality components/casing and specialised manufacturing processes = less margin.
  • Still a good buy but stigmatised by being last years model.
  • No real attraction to potential new buyers unless you really wanted an old iPhone at a more affordable price point.

iPhone 4 - Free with contract


New iPhone 5S at premium price - $199/$299/$399 on contract

  • Only model with all metal case including Gold
  • Premium features - 64Bit, Touch ID, Improved Camera
  • The ultimate iPhone and recognised as such

iPhone 5C - A brand new iPhone but just $99 on contract

  • Same internals as the iPhone 5 but probably significant cost savings on manufacturing and parts - higher margins on basically the same phone and same price point as last year.
  • It's a brand new iPhone!
  • It's in lots of colours!
  • If you couldn't afford a brand new iPhone before, you can now!

iPhone 4S - Free with contract

So no cheap iPhone, but they've just opened up a whole new market and created a less expensive premium iPhone brand.