iPhone 5C: A Margin Play

Now that the 5C is out, and it’s only $100 cheaper than the 5S, it’s clear that it’s a margin play by Apple.

Normally, Apple sells the previous year’s model at a $100 discount, so the 5 would be $100 less. But Apple isn’t selling the 5, anymore.

By making the 5C plastic (but otherwise identical to the iPhone 5), Apple lowers its cost by not having to make all those aluminum shells. This increases margins, and allows volumes to grow even more without needing as many aluminum milling machines.

An interesting way to increase margins and allow the expensive equipment to be used exclusively for the high end iPhone.

Advertisements
Standard