Apple fails to impress: Cut-price iPhone 5C isn't cheap enough and the upmarket 5S is gimmicky, claim industry experts
· Experts claim brand is in danger after 'failing to excite' with new iPhones
· One leading analyst believes Apple's pricing is 'way off the mark'
· IPhone 5C starts at $99 on contract but monthly prices weren't announced
· To buy the handset outright it costs $549 in the U.S and £469 in the UK
· The iPhone 5S fingerprint scanner has been dubbed 'a gimmick'
By Victoria Woollaston
PUBLISHED: 12:19 GMT, 11 September 2013 | UPDATED: 15:08 GMT, 12 September 2013
After almost a year of speculation surrounding what was expected, and hoped, would be a bargain handset from Apple, yesterday's event and the tech giant's iPhone 5C announcement fell a little flat.
Apple has been gradually losing market share to rivals - including Samsung - for months, which led analysts to predict something would have to give.
Experts believed Apple would either stick to its guns and continue to produce luxe handsets that appeal to the more affluent customer, or widen its reach and capture Android fans that demand better value for money.
But during last night's event, Apple attempted to do both: It unveiled what is effectively a cheaper iPhone 5, feature-wise, but one that didn't quite live up to the expectations the rumour mill had created beforehand.
BUT CUSTOMERS SEEM TO BE MORE POSITIVE THAN INDUSTRY INSIDERS
Although the pricing of the iPhone 5C and the features of the 5S have been criticised by analysts and experts, customer reaction on social networks was predominantly positive.
According to monitoring firm Synthesio, the UK reaction on Twitter, Facebook, blogs and forums was:
iPhone 5S
Negative: 6 per cent
Neutral: 26 per cent
Positive: 68 per cent
iPhone 5C
Negative:7 per cent
Neutral: 34 per cent
Positive: 60 per cent
Commenting on the findings, Catriona Oldershaw, UK managing director of Synthesio said: 'Some 12 per cent of all buzz about the iPhone 5C globally was related to price.
'Of those conversations, over half was positive about the phone's affordability, with only 8 per cent expressing disappointment at the price point.
'This contrasts with some of the views being expressed by high profile bloggers and pundits in the mobile phone space: and suggests that the person on the street is a lot less concerned about the price point than they are.'
It also introduced its high-end iPhone 5S handset designed to be a premium device at a premium price, complete with fingerprint scanner.
Phil Schiller, Apple's senior vice president of worldwide product marketing, announced that the iPhone 5C will cost $99 for 16GB and $199 for 32GB, both on a two-year contract.
The iPhone 5S costs $199 for 16GB, $299 for 32 GB and $399 for 64GB in the U.S and £549, £629 and £709 respectively in the UK.
Experts have branded this misleading because monthly contract costs weren't announced for either device.
The iPhone 5C, when bought outright, starts at $549 in the U.S.
In the UK, the iPhone 5C will start at £469 for 16GB and £549 for 32GB.
Although network operators Vodafone and EE have announced they will be offering the phone on its plans, neither company would confirm how much the monthly costs would be, or what was the cheapest offer.
Using an example of a current plan as an indication, Vodafone offers the iPhone 5 on a 24-month contract for £33 per month plus a one-off fee of £59. A customer on this plan would expect to pay a total of £851.
The iPhone 5C is expected to cost a similar amount.
'The bottom line for apple is that until they price match to compete with Samsung they are going to continue to fall in popularity,' said George Charles from Vouchercodespro.
'Consumers vote with their feet and you can have an all-singing-all-dancing, cook you dinner and say sweet things as you fall asleep phone, but punters will always, always go for the cheapest option.'
Markellos Diorinos from Upstream agreed and told MailOnline that Apple has made the wrong move.
'If Apple designed the iPhone 5C in order to capture emerging markets, then they've made a wrong turn.
'The iPhone 5C is priced significantly higher than analysts had expected and according to recent research we conducted, a third of emerging market consumers would pay only $100 (£63) or less for a smartphone.'
This research also found that only 15 per cent of consumers in emerging markets are willing to pay more than £280 for a mobile.
Farhad Manjoo from Slate magazine wrote: 'Neither of these phones is the cheap iPhone that people had been predicting. Indeed, Apple didn’t really change its pricing strategy in any meaningful way. Across the globe, it will still be charging the same for its phones as it always has.
Yet, Jason Jenkins, editor of CNET UK told MailOnline that Apple shouldn't be concerned in the short term because it makes more money per phone than its rivals.
'It it doesn't need to sell more mobiles than everyone else to win the smartphone war.'
He continued that up until now, Apple has relied on announcing one model while reducing the price of its predecessor.
However, with the launch of the iPhone 5C and a high-end iPhone 5S, Apple's strategy has shifted as the firm's CEO Tim Cook announced that it would be discontinuing the previous iPhone 5 model.
This may be because the 5C is almost identical in terms of features, but does represent a change in the company's approach.
The launch also means that Apple doesn't have to produce a handset at a lower price; it can continue to produce the same handset, add a colourful case, and charge the same.
Jenkins continued: 'At some point that strategy isn't going to work so well, and it's going to have to release a model that's specifically designed to tempt budget buyers.'
Manjoo agrees: 'By holding the line against lower-priced phones, Apple will be able to keep its profit margins high - and at Apple, profits are sacrosanct, considered more important than sales and market share.
'But refusing to give an inch on prices is also extremely risky. The next big phase of growth in the smartphone market is going to occur in places around the world where people don’t have a lot of money.'
Robert Sharl, senior lecturer in visual communication at Birmingham City University told MailOnline that Apple is unlikely to ever try and attract the low-end Android market because 'there’s little profit there.'
Instead, he believes Apple has made a 'serious mid-range push with a mass-market phone that offers everything the iPhone 5 had in a consumer-friendly package and at a lower price.'
'While Android may be on a billion devices it's massively fragmented across smart and not-so-smart devices, with lots of people running out of date versions.
'iOS is a serious platform for Apple, and there's little sign that they're going to let it diminish in the face of the strong competition out there.'
He believes that Apple is still the trend setter: 'If anything Google buying Motorola, and Microsoft buying Nokia, indicates that the industry at large recognises the advantage Apple has in making the whole device - hardware and software - and is having to play catch-up as quickly as it can.'
Sharl also explained that Apple doesn't have to target a low-profit market because it has its eye on wider markets. For example, the iPhone 5S will also be made available in China at the same time as other countries for the first time ever.
Traditionally, Apple's handset prices reflected the high-end materials and costs needed to produce them.
The iPhone 5 and now the iPhone 5S is made of aluminium and glass, for example. The iPhone 5S additionally comes with a fingerprint scanner and that technology comes at a premium.
The iPhone 5C is instead made of plastic. Apple's Brit designer Sir Jonathan Ive even said at the event that the handset is 'unapologetically plastic'.
Yet the device costs the same as the iPhone 5 did when it was first announced in September 2012.
In response to the criticisms, Tony Cripps, principal device analyst at Ovum, said: 'Anyone expecting Apple to come truly down market with the iPhone 5C was fooling themselves.
‘It indicates an acceptance that the consumers in the upper reaches of the smartphone mid-market are increasingly looking to distinctive devices of their own, and are not happy to accept cast offs or dumbed-down versions of former flagships.’
And Chris Griffiths from The Australian explained that its not all bad news for consumers: 'For those with existing iPhones and tighter budgets, the good news is the availability of the new iOS7 mobile operating system from 18 September.
'It's free and given the radical redesign offers a great opportunity to give your iPhone and iPad lots of new features.'
Research from Usurv found that 31 per cent of iPhone users would choose the new iPhone 5S and fewer people were immediately excited by the device than for last year’s model. The most popular feature announced at the event was the iPhone 5S' fingerprint reader.
But Stephen Ebbett, global director of gadget insurer Protect Your Bubble isn't convinced: 'As rumoured, Apple's iPhone 5S introduces Touch ID, utilising touch-based fingerprint sensors - but this could turn out to be more a gimmick than an impenetrable security measure at this stage.'
Guy Potter, director and market researcher at Usurv said: 'The brand is under pressure to deliver excitement and innovation at every launch and this time the initial mood indicates that in that sense it has failed.'
Research from We Are Social found that 19 per cent of people on social media made positive comments about the new iPhones, yet 45 per cent of comments about its design and 36 per cent of comments about the cost were negative.
Where Apple was criticised for its cost, commenters noted that its high price abroad might prevent it opening up new markets, as hoped by Apple.
Both devices can be pre-ordered on 13 September and the handsets go on sale on 20 September. The new handsets will be shipped with the iOS 7 software, first announced in June.