Apple is missing an easy way to boost its earnings growth because the new iPhone 5C is too expensive to lure overseas customers who still don’t own a smartphone, according to Walter Piecyk, wireless analyst at BTIG Investments.
“Yesterday’s announcements were merely a slight modification on a phone release game plan that Apple has been executing on for years,” Piecyk said Wednesday.
Piecyk said the iPhone 5C’s splashy colors could generate more sales than the normal $100 price cut on the legacy iPhone 5. He said the second benefit of the 5C is the opportunity for higher margins by using plastic casings, but the price tag plus tax will have limited appeal in markets like Brazil and China.
It’s true the 5C is less expensive than the 5S, with prices starting at $99 versus $199, for the 16GB model. However, Piecyk points out that it translates into higher prices in many key emerging markets due to import taxes. “In comparison, the leading smartphone sold by Vivo, the largest wireless operator in Brazil, is under $200,” said Piecyk.
Emerging Market operators have just begun to look to drive more data usage on their 3G and 4G networks. Naturally, it would have been easier to get in on the market from the ground up, or gain market share early in order to establish a market ecosystem.
Piecyk has a “buy” rating on Apple. He said the unsubsidized prepaid market is not disappearing overnight.
Disclosure: Piecyk does not own shares of Apple.
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