18
Feb 14

Apple’s adventures in plastic

Many Apple-bashers find it easy to explain the company’s historic success: “it’s just marketing.”

To them, Apple products are overpriced and uninventive, but damn, those guys sure know how to sell.

Fortunately, from time to time Apple proves this theory to be as brain-dead as it sounds. It launches a product with a major ad campaign — and it’s not a hit.

Case in point: iPhone 5c.

Marketing has always played a big role in Apple’s successes, but — for any company — it all starts with a great product. Advertising can add momentum and generate buzz, but it can’t turn a bad product into a sensation.

So what’s happened with iPhone 5c? Now that we’ve lived with it long enough, we can probably draw a few conclusions.

First, Steve Jobs was right. Apple is a company that doesn’t do “cheap.” It makes products for people who care about design, simplicity, quality and a great experience — and are willing to pay more for these things.

For Apple to compromise in any of these areas would be a violation of the Prime Directive.

Was plastic a compromise on quality? Not necessarily. After all, iPhones were made of plastic before. However, as the device evolved to become more jewel-like, the plastic was left behind. So clearly a new phone made of plastic would create a marketing challenge.

This is where the plot thickens.

Contrary to what most people think, an ad isn’t just good or bad. An ad is the execution of a strategy — and that strategy can be strong or weak.

One of my former agencies (the agency for NeXT) used to cite this fact in its new business pitches. The agency claimed that 90% of the failed ads in this world failed before the creative team even got the assignment — because the strategy wasn’t good enough.

Clearly plastic was a big part of the iPhone 5c strategy. The launch ad was entitled Plastic Perfected. The launch video featured Jony Ive explaining that iPhone 5c was “unapologetically plastic.”

There was a strategic plan to head off the potential negative by boldly proclaiming it as a positive.

There was some risk there, given that Samsung’s plastic Galaxy phone was often criticized for not being as substantial as iPhone.

Unfortunately for Apple, creativity can be a double-edged sword. The “unapologetically plastic” line in the product video was so interesting and memorable, it got played back over and over in articles about the lackluster demand for iPhone 5c. Not exactly what Apple intended.

Apple hasn’t broken out sales figures for the 5c. In the most recent earnings call, Tim Cook only noted an unanticipated demand for the 5s without mentioning the 5c at all — which is telling in itself.

If the iPhone 5c is struggling, is it because it’s plastic? Or because Apple made plastic a major selling point? Or because it wasn’t significantly more affordable than an iPhone 5s?

I unapologetically leave that conclusion to you.

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112 comments

  1. Yeah, nice try. Apple has had three models of iPhones for a few years now. All priced $100 apart from each other. Despite what you think, there are people only willing to spend $X when it comes to a phone regardless what they could get for $Y dollars more.

    When they first started building the 5 design they didn’t realize it would be such a pain to assemble. Even an executive from Foxconn said it was the most complex device they’ve ever had to assemble. Because of that yields were low. Building both the 5 and 5s wasn’t cost effective, they decided to dedicate current 5 lines for building the 5s and redesigned the 5 to make it less expensive to build – they didn’t waste a lot of time and resources, all the components are the same as the 5, all they did was redesign the shell for it.

  2. It’s a bit too early to characterize the 5c as a failure, but from most accounts, it did not meet early expectations, perhaps including Apple’s own. Mr. Segall’s post is entirely on point — as a premium/luxury brand, it is a challenge to introduce changes based on price, even if the product is adequately differentiated… and in this case, it may have also contributed to the miss…

    At the end of the day, most Apple customers did not want to buy into the obviously cheaper iPhone. Apple has always been strongly linked with identity and being seen on the subway with the plastic iPhone says something about you. There is a market for the 5c… but it pales in comparison to Apple’s core customer.

    As an aside, and Cook did reference this briefly during the call. Operationally, launching essentially two phones provided an enormous amount of perspective. This will be invaluable in the months leading up to this year’s launch where the mythical big iPhone will likely debut along side a normal-sized update. As sure as Cook will root for Auburn on Saturdays, the above lessons gained through the 5c will be informing their view on sales mix.

  3. A lot of consumers, particularly those of luxury brands, do not typically make buying decisions based on TCO. Also, most of global mobile is prepaid so 2 year sub issue is irrelevant.

  4. It wasn’t cheap. At all.

  5. At this point I’m almost certain that the iPhone 5c exists to get people who were going to get the year old iPhone 5 (had Apple done what it used to do) to get the new 5s instead. The iPhone 5 next to the 5s and it’s a tough choice—they look the same. But now that the 5c is next to the 5s, the 5s is perceived as an even better deal. A higher percentage of people will opt for it because that extra $100 seems well spent. This is just sales psychology at work and the data seems to support it.

    You know what we didn’t hear this year that we heard every time an “s” phone came out? All the media saying that “everyone” is disappointed with it (even though sales always did better anyway). That was all overshadowed by the iPhone 5c not being cheap enough or successful enough all the while everyone happily gobbled up the iPhone 5s.

    the iPhone 5c isn’t a failure. It successfully gets more people to buy the more expensive phone and when people do buy the 5c, Apple enjoys the higher profit margins since it’s cheaper to make.

  6. you are so easily able to list what makes the iPhone 5s better and that it’s the obvious choice to get. That wasn’t the case with the iPhone 4s and that is because the iPhone 4 was still on the market. The 5c makes it easier for people to spend that $100 more. You are happily pronouncing that. How can you say Tim Cook is making mistakes when even more iPhone 5s have been sold than expected (even in china) and when people do buy a 5c Apple makes more money off it since it’s cheaper to manufacture?

  7. this popped up in my twitter feed and I really think it’s worth a read when considering iPhone 5c’s role in the lineup http://conversionxl.com/pricing-experiments-you-might-not-know-but-can-learn-from/?utm_content=buffer7e2f4&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer#.

  8. Thank you for the kind words. Much appreciated!

    I, and many I know in advertising, have written screenplays and dreamt of moving into screenwriting. But then we hear from those take the plunge that you can work on a movie for three years and end up with nothing. So suddenly advertising starts sounding like a great career again. Projects tend to start and finish within the span of three months — and you actually have something to show for your work at the end.

    The hard part is finding an agency that shares your values, and getting lucky enough to find a client who lets you do work you’re proud of.

  9. Ha… Reminds me of something my old mentor Jerry Sherlock (he produced The Hunt for Red October) told me once: “So you got a script, huh? Son, EVERYBODY’S GOT A SCRIPT.” Lol…

    Yeah, movies are hard just as a creative endeavor, and like your buddies in advertising learned, setting up deals is just as hard. I’m still young enough that I haven’t quite despaired just yet, plus my love of cinema has made me irrational enough to persevere so far. I swear I’m not a status seeker (so many of those in this business). Thanks for your advice, sir!

  10. I don’t actually think the 5c was a bad product at all. When you compare it some of the other phones in its class, the phone was still a better build. I think just by launching a product like the 5c actually helped them sell more high end/higher margin 5s – after all like some folks say below – only a $100.00 difference. When people compare the two – they just opt for the pricier – it isn’t that much. As long as Apple sells more 5s, they don’t care – their supply chain is so good that it can draw down inventories so fast it wouldn’t matter. Maybe the play was simply to introduce the 5c just to sell more 5s. Apple never said the 5c was a failure – the strategy all along was to sell more 5s not 5c.

  11. I actually didn’t mean to imply that the 5c was a bad product. By most standards, it’s pretty good. When I said “advertising can’t turn a bad product into a sensation,” I was talking about the power of advertising in general, refuting those who believe Apple’s success is born solely of its marketing.

    Tim Cook did say that sales of the new models weren’t “as anticipated,” with unexpectedly high demand for the 5s. Reading only slightly between the lines, and considering in-store inventory, it’s not a stretch to say there was unexpectedly low demand for the 5c. Not a terrible problem, given Apple’s ability to adapt quickly as you mention.

    The point of my article, though, was the marketing — which has historically been an Apple strength. There are a number of strategies Apple could have chosen to to market the 5c, and in my opinion, glorifying plastic wasn’t a terrific one. It’s defensive in nature, and the negatives associated with the word “plastic” aren’t easy to overcome.

    Just as Apple’s supply chain is a thing of beauty, so is its “product launch” machine. More than any other company I know, Apple gets that every single element of a launch plays an important role: the product itself, the advertising, the media, retail materials, PR, the handling of the press, etc. In the case of the 5c, I don’t think the marketing helped as much as it might have.

  12. My take? I honestly don’t think Apple would have had the manufacturing capacity to manufacture TWO phones using the same incredibly precise enclosure with micron-level tolerances. I always figured the plastic was to help alleviate the manufacturing burden that I’m sure the iPhone 5 enclosure brings them. Remember the video from last year with Jony Ive talking about the photo matched glass inlays? Or maybe they just couldn’t build that at $550 and still keep their margins. As someone who works in sheetmetal and machine shop, my jaw dropped when I saw the assembly process for the iPhone 5. Truly a feat for mass produced goods, it’s unheard of to see these levels of precision in consumer products.

    Then again, they could have always created a less complicated metal enclosure.

    But the 5c is still doing quite well. Maybe not by Apple blockbuster standards, but it’s by no means a failure. Maybe people just found the colors too bright? I think they definitely could have sold some more if they have a black color as well.

  13. “I don’t think the marketing helped as much as it might have.”

    I follow Apple closely, but I have not come across a definitive unit breakdown for the 5C and the 5S.

    IMHO, the 5C represents a new iPhone strategy. Rather than continue selling “last year’s” top of the line iPhone, Apple is (mostly) re-packaging last year’s iPhone 5 and marketing it as a totally new product.

    This is more consistent with Apple’s product strategies in the past. The iPhone buyer, particularly in new markets to Apple, enters iPhone ownership knowing they’re paying for “current” model, rather than an iPhone that has been replaced. Given the price of iPhones, removing this stigma will likely do nothing but help Apple going forward.

  14. Janne Melander

    A lot of people is missing the iPhone model senario. Last year we had from top to bottom: iPhone 5 -> 4S -> 4
    Now everybody should expect the new lineup would be: 5S -> 5 -> 4S
    But the aluminum case of the 5 (and 5S) is expensive to make so Apple could not offer the 5 at the same price point as the 4S. So they had to find a way to make that technology easier (cheaper) to produce.
    Apple wants everyone to buy their top of the line model. That IS their current and best implementation of their vision. They want to get these new technologies in the hands of as many people as possible. The only reason for the second and third price points is to get first time buyers into Apples ecosystem. After You have become an iOS addict You’ll want the top model next time…
    So You should not compare the performance of the 5C with the 5S, but with the 4S the year earlier. It is actually an ‘upgrade’ over the 4S since it has slightly better specs then the original iPhone 5…

  15. I don’t think anyone is complaining about the specs for the iPhone 5c. As you say, it is the second-tier iPhone at this moment, just as the 4s was the second-tier last year. Its specs are perfectly fine for the “more affordable” iPhone.

    Tim Cook himself indicated that sales of the 5c were below expectations. Some point out that the 5c is doing just fine, and is selling in similar numbers to the 4s when it became the second-tier iPhone.

    Even if true, that point of view misses a major point: the 5c had (and still has) a multi-million dollar marketing campaign running in support. The 4s had nothing. It’s pretty clear Apple believed that with a fresh new design and big marketing push, the 5c would sell significantly better than the year-old 4s. Instead, sales remained about the same.

    Thus, Apple doesn’t have a terrible problem with iPhone 5c sales — but sales are below expectations.

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