Apple recently introduced a 8 GB iPhone 5C model in five countries (U.K., France, Germany, Australia and China and not in US) for a slightly lower price than its 16 GB counterpart [ref]. Now many of the blogs and analysts in US are bewildered by this move from Apple and have deemed an 8 GB memory capacity as too low to be of any use. While I completely agree with their thinking if you are used to American living and markets, it is totally a different world if you are in say some developing countries like India or China. There are a lof of reasons for this and as somebody who was born and brought up in India and still have parents living there, I have the advantage of first hand experience in this field. Here is my take on this move from Apple.
Indian smartphone market like many other countries around the world, unlike USA is a contract free post/pre paid market. You buy a phone for its full price (that includes discounts and promotions) and then choose your carrier to pay a monthly post paid fee for usage or use a prepaid account with that smartphone. When I was growing up it was normal to pay around Rs. 3,000/- (approx $50) to buy a Nokia phone like 1100 and eventually some phones like Sony Experie costed around Rs. 4,500/- (approx $75), all contract free. This was around 8 - 10 years back. My parents still live in India and during a recent visit earlier this year, I found out that my dad had paid around Rs. 10,000 (approx $180) for a Samsung 'smartphone' (not any of the Galaxy ones). He had another similar cost 'smartphone' six months back and recently purchased this one. So he had spent close to Rs. 20,000/- (approx $330) in the last year on smartphones and still was unsatisfied with his experience so far using a smartphone.
Now the first thing he mentioned to me about this phone was that it sucked, only after a few months of buying it. The reasons; bad battery life, frozen while making a call, bad reception, etc. And worse he did not even know that there was Google Maps service on his phone, though his company was paying him for unlimited data usage, he had not once used the 'smartphone' to browse the Internet. The reason is because the phone had a paltry 2" - 2.5" screen with really bad resolution. His previous 'smartphone' was pretty much the same. When I first showed him the iPhone 5 (that I was using) he was astonished at how big the phone was, how light it felt, how fast the response time was and most importantly how easy and intuitive it was to use. Ok then, I thought I just have to convince him to buy one.
It was not as easy as I thought it would be as the price of an unsubsidized iPhone 5S in India is Rs. 54,000/- (approx $900) and an iPhone 5C is Rs. 42,000/- (approx $700). His laptop costs less than that. So the other alternatives are used iPhones and even older generation iPhones, like the iPhone 4s and iPhone 4. Also notice the difference between the iPhone 5S and 5C is around $200, whereas in US it is only around $100 (more than that with more aggressive discounts towards iphone 5C, apparently due to lower than expected sales [ref]). Also a 32 GB iPhone 5C costs the same as 16 GB iPhone 5S (similar to its US pricing). So though the 8 GB iPhone 5C has not been released in India yet, let us do this math for India as I am more familiar with the market situation there. Going by the pricing Apple has traditionally followed in India, the 8 GB iPhone 5C will cost around Rs. 32,000/- (approx $530). Also a lot of sellers in India are pitching for a lot of discounts for iPhone 5C than the 5S, like 10% off on Credit Cards from certain banks and more cash back, etc. Let's say all that brings the price of the 8 GB iPhone close to Rs. 27,000/- (approx $450). Now that is twice more than the price my Dad had paid for his 'smartphones', each of whom costed his around Rs. 10,000/-. However he had terrible experience with them and he had to buy two of them for Rs. 10,000/- each within a year. So say if I can convince him to pay more than twice the cost of what he used to pay for a smartphone, but end up with a more satisfying experience using it (after all user experience is one thing we can count on Apple for!) and have it for potentially more than two years at least, I would say it is a win-win situation, wouldn't you?
Now coming to one last point about 8 GB being unusable, it is just a first world problem, believe me. My dad never stores anything on his phone (like music or any other data intensive Apps like games) and he hardly takes pictures with his smartphone. So leaving alone the fact that iPhones generally have more usable memory space in them that any other phones [ref], 8 GB (of which 4-5 GB is user accessible) is more than sufficient for majority of the users a 'lower cost' iPhone is targeted for. All my dad needs from a smartphone is a consistent experience while making calls, messaging (including Facetime), Google Maps navigation, occasional Internet access (while waiting at the Doctor's office for example) and probably use one or two Apps for playing his favorite card game - Bridge. And for all this 8 GB iPhone will be more than a blessing for him and many tens of millions of new smartphone users like him in India and other developing markets. However I do agree on one thing, though Solid State memory prices are not scaling as much as processor or mechanical memory prices, they are scaling down and Apple needs to one level up its Memory for the cost it is charging for, i.e. price the 32 GB iPhones on par with the current 16 GB ones.
Apple might have disappointed the market and some of the 'traditional' ill-informed (about Apple at least) analysts when it did not release a 'cheap' iPhone, but is definitely thinking about that market, just in its own way! I am not definitively saying that this is what Apple had in mind (it could be other reasons like having a more affordable LTE enabled iPhone [ref]) when they released an 8 GB iPhone 5C (it is not even available in India yet), but there is definitely a case to be made here.