(NASDAQ:AAPL) stands in the smartphone market is clear: The iPhone is the one to beat. It's simultaneously a leader in specs and a vanity status symbol. The high end is its territory.
So when shoppers were given the choice between the latest iPhone and the ever so slightly cheaper iPhone 5C, they decided to go big or go home. Data from Consumer Intelligence Research Partners (CIRP) shows that the newest flagship iPhone 5S is outselling the cheaper one by more than two to one.
According to CIRP (via All Things D
), the 5S accounted for 64% of total handset sales for Apple in the last days of September. The 5C only took 27% of sales, and the now two-year-old 4S making up the rest.
In some ways, this is good news for Apple. The 5C is cheaper, and presumably comes at a lower margin. Analysts feared that if a lower-margin product ate up some of Apple's own market share, its profit margins would eventually suffer. IHS says
that the cost of building and shipping the iPhone 5S is only 30% of the sticker price. That's the gold mine that makes Apple shareholders rich. Then again, there was plenty of reason to accept the lower margins because the higher-end already bought them. Maps with pinpoints indicating which cell phones people use corresponds very well to a map showing income inequality
In the map above, made by data visualization expert Eric Fischer
, the red dots represent geolocated tweets from iPhone users; the green dots are from Google
(NASDAQ:GOOG) Androids. Manhattan and the well-heeled parts of Brooklyn and the New Jersey waterfront make up iPhone country. Central Brooklyn, Jersey City, and Newark have a much higher concentration of Android phones. Anecdotally, it seems like all of the beautiful, successful people in the world (even those
paid by Microsoft
(NASDAQ:MSFT) to hawk Windows Phone), are iPhone users already. Of course Apple realizes the need to grab some of the middle shelf.
So if a middle-class buyer decides to get an Apple product, he or she knows that the product is a status symbol. Why get a brightly colored one that advertises that you didn't go all the way?
Of course, this is still early days, a time when die-hard Apple zealots and early adopters buy stupid amounts of electronics.
When the holiday season comes and people give them as gifts, the cheaper iPhone might sell a little faster. For the geeks, however, you can't go halfway on a status symbol.
No positions in stocks mentioned.
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