The iPhone 5C is being proposed at $99/$199 (16Gb/32Gb) on contract, but most importantly, it will carry a price of $549/$649 (16Gb/32Gb) off contract. And what this means, is simply that the 5C is not a “cheaper iPhone”. It will actually cost the same as what one would expect the iPhone 5 to cost with the introduction of the iPhone 5S. But while the iPhone 5C shares most of the iPhone 5’s specs, it’s decidedly a much more downmarket device! And it’s also certainly much cheaper to make than an iPhone 5.
This has significant implications. It means that it won’t cannibalize the iPhone 5S as much as feared. Indeed, it might even reduce the already-existing cannibalization from the previous iPhone models. This will be helpful for Apple’s margins.
However, on the other hand it will also mean that Apple will continue not to have a cheaper iPhone in the market, able to do battle with the legions of cheap Android and Windows Phone smartphones.
In short, the true objective of the iPhone 5C turned out not to be expanding Apple’s presence in the market — instead, due to its high price and weak image it’s looking like the objective is simply to contain the already existing cannibalization between iPhone models while improving margins on older/cheaper models.