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New iPhones fail to impress markets, analysts

New York, Sep 12, 2013, (AFP):
Reuters Image

Apple's launch of two new iPhones raised fresh doubts about its strategy to expand its smartphone market share, prompting a slide in the company's shares and harsh analyst comments.

Some analysts said yesterday Apple had failed to slash prices enough to make an impact in key emerging markets or with budget-conscious buyers, and did little to show it has regained its edge in innovation.

Shares slid 5.4 per cent to end at USD 467.71 in New York, a day after the technology giant presented the two new iPhones as part of an effort to regain momentum in the smartphone market.

While the new iPhone 5C is being offered to US customers at USD 99 with a subsidised carrier contract, the unsubsidised price will be USD 549 in the United States, and more than USD 700 in China.

Analysts at the research firm Trefis said the iPhone launch "turned out to be a dampener of sorts, as the company priced what was expected to be a significantly cheaper iPhone at a hefty USD 550 and did not introduce any new products such as an iTV or an iWatch."

"So much for the low end," said Credit Suisse analyst Kulbinder Garcha in a research note.

"We remain disappointed with Apple's decision to remain a premium priced smartphone vendor."

Garcha said that the new top-line iPhone 5S was "lacking real innovation" and that the lower-cost version may hurt sales of the premium product.

"The iPhone 5S has a new apps processor, improved camera functionality and new motion sensor functionality. However, these are not game changers and are more evolutionary rather than revolutionary changes," the analyst said.

Jefferies analyst Peter Misek said the new devices were "lovely phones" but that the launch "still leaves Apple with a product gap in the low-end."

Walter Piecyk at BTIG Research said Apple is not doing enough to target the customers buying phones without a carrier subsidy, which is the norm in many places around the world.

"The pricing on the iPhone 5C is simply not low enough to adequately address the significant global growth opportunity that we believe exists with unsubsidised prepaid customers that have not yet bought a smartphone," Piecyk said in a note to clients.


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