Friday, September 13, 2013

Is the iPhone 5C the New Surface RT? $AAPL $MSFT

Is the iPhone 5C the New Surface RT? $AAPL $MSFT

Sure, the gap was a couple of months between Surface releases. It's just a week on the new iPhones. We're also only talking about preorders here, since both devices will be available at retailers a week from Friday. However, Apple's plan in putting out a slightly cheaper and less robust mobile device that may miss its mark as an entry-level product seems eerily similar. 
Microsoft thought it would be able to penetrate the growing market share of Google's (NASDAQ: GOOG  ) Android with the Surface RT, but it wasn't cheap enough at $500. Apple is also hoping to win back market share from Google's open-source platform, but its device -- starting at an unlocked price of $550 -- is also not cheap enough. A few analysts even downgraded Apple on Wednesday after digesting the price points and coming to the same conclusion.
Now, unlike the Surface RT, the 5C won't be a colossal flop. Apple has shown that there is a market for phones selling $100 less than the latest model, at least through wireless carriers willing to subsidize most of the cost. Verizon (NYSE: VZ  reported a few quarters ago that it was selling as many iPhone 4 and iPhone 4S handsets -- at $200 and $100 less, respectively, than the iPhone 5 -- so there's certainly something to be said for $199 vs. $99 under a two-year contract.

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