Monday saw many rumors about Apple potentially releasing an 8GB iPhone 5c, the colored plastic and less equipped version of their current iPhone line. A day later and Apple confirmed most of those rumors, the iPhone was released and is priced lower than the higher memory versions, £40 lower to be exact. However, the price shouldn’t be quoted in USD because the new iPhone 5c is only available in a five international markets, the U.K., France, Germany, Australia and China. Apple has chosen to snub certain markets like the US, instead intending the cheaper iPhone 5c for markets where LTE is burgeoning.
“The mid-tier iPhone segment is growing year-over-year and the 8GB model provides a more affordable option for markets where LTE is becoming more established,” an Apple representative told Re/code.
While Apple is quick to point to the emerging LTE network in these markets, offering the lower end iPhone 5c won’t necessarily help encourage adoption to the high speed data network. Instead, the 8GB iPhone 5c only serves to boost customers that have hesitated to purchase Apple’s expensive devices, as these markets don’t utilize the subsidy business model. Subsidizing smartphones allows carriers to incur some cost of the handset in trade for customers signing contracts with that carrier for a certain number of years.
One theory is that US customers won’t want a diminished iPhone 5c, when they can get a higher end device for not much more. As 9to5Mac has suggested, the 8GB iPhone 5c is very limited in its design. Apps are getting heftier, music, photos and videos take up a lot of space, and any user wanting to fully experience their device should go with the 16GB if not the 32GB version of the iPhone. Instead, the iPhone 5c offers users the status of owning an iPhone without bearing the brunt of the cost of high end features that the customer may never use.
But that doesn’t exactly answer why not in the United States? Perhaps it’s because the 16GB and 32GB versions of the 5c have not sold as well in the US as Apple had planned. Instead the iPhone 5s has done much better, even creating a shortage during the holidays. Apple may be banking on the fact that subsidizing an even cheaper iPhone 5c may not mean better sales, but rather shelves full of unbought stock. Even if that means that Apple could potentially offer the 8GB iPhone 5c for free.
While subsidies may be the standard for most carriers in the United States, T-Mobile is pushing the nation towards a no-contract business model, instead allowing customers to pay for their phones in installments. AT&T adopted a similar program called AT&T Next. So why then is Apple limiting their market exposure for this lesser device to international markets? Most likely it is due to limited production of the 8GB iPhone 5c. Apple is probably banking on the fact that the 8GB version won’t sell in high numbers, but rather, like 9to5Mac suggested, is intended for a niche group in those limited markets. Limited supply means they must limit where they sell the device, therefore no US sales.