The iPhone 5C and the youth factor


Apple's iPhone 5C has suffered from a case of mistaken identity.
When leaks about the iPhone 5C started showing up earlier this year, tech industry observers started speculating that this was the long-conjectured "iPhone Mini." Those expectations were based solely on the previous success of the iPod Mini, which was smaller and less expensive than Apple's flagship iPod and went onto become the best-selling model in the product line.
The timing was perfect for such a product, the tech industry surmised, because Apple has been losing market share in emerging markets to sub-$300 Android devices. When Apple officiallyunveiled the iPhone 5C on Tuesday, it was not that device. It started at $99 on contract and over $500 without a contract. As such, the tech press and market analysts frowned. (Some actually sneered.)
However, evaluating Apple is a yin-and-yang thing. You have to look just as closely at what the company doesn't say and doesn't do because it says so little and is extremely calculating with every product decision since it releases so few products.
If you want to understand what Apple's doing with the iPhone 5C and why it could make sense, here are the two factors to think about:
1. Apple did not release a new iPod Touch
One of the regular features of Apple's annual September product event is the release of new iPods. It didn't happen this year. While Apple continues selling last year's iPod models (they are still available in the online store and at retail stores), the product is quickly reaching end-of-life.
In July, Apple reported in its earnings call that the number of iPod units sold was down 32 percent year over year, one of the largest dips in the history of the product line. That's significant because the iPod Touch has continued to be a strong seller during the past several years. As recently as 2011, there were quarters when iPod Touch sales rivaled iPad sales.
The iPod Touch was extremely popular among children and teens, who could use it to enjoy the benefits of iPhone apps over Wi-Fi. Apple sold more than 80 million iPod Touch devices from 2007 to the end of 2012. (During that same period, it sold 244 million iPhones, by comparison.)
While the entry-level iPod Touch never cost less than $199 -- the same price as the entry-level iPhone on a two-year wireless contract -- the appeal was that you didn't have to pay $70 per month for a smartphone contract with a data plan like you did with an iPhone. However, the economics of smartphones have changed drastically over the past 12 months.

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