The iPhone 5c and the “Cheap” Plastic Case
September 18th, 2013So I saw a headline from an online pundit Tuesday claiming that the problem with the iPhone 5c is that it has a plastic case but not a cheap price. The implication from the writer in question is that using that material rather than metal is a way to, as they say, cheap out and shortchange customers.
It’s all about the plastic, so how dare Apple use that material in building a mid-priced smartphone? Clearly they aren’t paying attention to the market or the competition. Or so they say.
Typical of uninformed bloggers who try to rain on Apple’s parade in such a pathetic fashion, the writer in question is just plain uninformed. Plastic doesn’t necessarily mean cheap. Consider the construction material used to fashion the first iPhones, and they were most assuredly not inexpensive, nor did they look cheap. Consider millions of Apple MacBooks and PowerBooks fashioned of polycarbonate.
More to the point, take a look at Samsung’s flagship Android smartphone, the Galaxy S4, which is made of, shall I say it, plastic. Do you think it’s cheap? Well, if you want to buy one unlocked at Walmart, they have a “special buy” offer for just $649. Want to buy an unlocked Apple iPhone 5s, which is fashioned in metal? Apple’s price is $649, and, no, that’s not a special buy. It’s just the regular price.
So because Samsung uses plastic instead of a sophisticated machining process to build a metallic Galaxy S4, does that make it a cheap smartphone? Certainly it doesn’t appear to have impacted the price, at least if you buy a new one. If you actually want to sell your Galaxy S4 in advance of moving to an iPhone 5s or any other smartphone, you’ll get quite a bit less than an iPhone 5. Remember, the iPhone 5 was introduced a year ago. The Galaxy S4 was released in late April of this year.
But that only goes to show that an iPhone holds its value better than a Samsung, and not because the latter is made of plastic.
Sure, the iPhone 5c is little more than a clever repackaging of the iPhone 5. You get multiple colors, plastic construction, with interior metal framing to keep it rigid (Samsung doesn’t offer that), a somewhat better FaceTime camera, and up to 20% longer battery life. All this comes at $100 less than last year’s model. All right, in other times, Apple would have continued to sell the iPhone 5, but the iPhone 5c carries the prestige of being one of the new models, rather than something left over from a previous year. So I presume Apple will sell more of them.
However, the criticisms over the choice to use plastic simply don’t make a lot of sense. Sure, Apple may conserve costs that way. But as a practical matter, so long as the product feels solid, looks great, and works reliably, it shouldn’t matter what materials Apple uses to build them. It’s doubtful that Samsung loses many sales because of the decision to stick with plastic.
Besides, Samsung can still rightly claim that it’s easy to open the case, in case you want to swap out the battery or install an SD card. They do have a point, although the inability to easily replace batteries doesn’t seem to have hurt Apple to any noticeable degree. If the company was losing loads of sales because of the sealed case syndrome, you would expect Apple to change the designs. Indeed, they would if that’s what customers really wanted.
Now I cannot tell you how many copies of the iPhone 5c will be sold by next Monday. There are concerns that Apple has yet to release the total of preorders received the first weekend, though with two new models available, perhaps those numbers won’t be compelling until people can actually take them home.
In saying that, don’t expect it to be easy to get the iPhone 5s. There are published reports, though admittedly unconfirmed, that supplies will be extremely constrained. You’ll be able to place an order on September 20, at 12:01 AM Pacific time, and I am willing to suggest Apple’s site, and the sites run by carriers and dealers, will be slammed within minutes.
You can also depend on the fact that, regardless of how many sales Apple records for the new iPhone lineup, the media and financial community will probably not be satisfied. This is in keeping with last year’s bout of “Apple Derangement Syndrome,” where Apple reported five million iPhone 5 sales the very first weekend. But some members of the media pulled numbers out of their hats, or some dark portion of their anatomies, and suggested Apple must sell ten million or be unsuccessful.
Yet, sales of the Galaxy S4 were said to be off the charts even though Samsung claimed it took four weeks to ship ten million. Shipped! There’s no indication how many were actually delivered to real customers, and it has been reported that overall sales weren’t quite what some expected. But did you see Samsung’s stock price take a huge dive as a result?
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It doesn’t matter how many iPhones are sold this weekend. It will be considered a disappointment by Wall Street and it won’t be enough to boost Apple’s share price very much. High sales of the iPhone won’t change Wall Street’s opinion of Apple no longer being able to innovate or that Apple is in deep trouble without Steve Jobs. There are forces working against Apple that don’t even seem to make any sense. Why do I think that? Because the daily bad news runs counter to even facts that Apple is certainly doing well. Microsoft still maintains a higher P/E ratio than Apple and institutional investors remain faithful to Microsoft while they’ve dumped Apple despite share buybacks and dividends. There has to be something seriously wrong with Apple for the institutions to stay away in droves.
It was hard to digest the amount of bad news that ensued right after Apple’s iPhone keynote. How everyone seemed to be upset about how boring and out-of-date the new iPhones were. How everyone was sure the 5c was priced too high to sell in China. It’s hard to imagine how these people went out of their way to denigrate the company over just a simple iPhone announcement. Since when do analysts downgrade companies over product pricing before a single product is sold? Apple has really made some terrible enemies and I think that is going to keep Apple shareholders in deep pain. Now that iPhones have finally been talked about by actual reviewers and consumers things are starting to look favorable for Apple’s iPhones. I’m just saying there is some force out there that is trying desperately to bring harm to Apple as a company and deflate Apple’s share price.
Wall Street has always favored companies that march to the beat of Wall Street’s drum. Apple, as far as I have always known, marches to the beat of its own drum. Wall Street can’t handle that.