It will be too bad if people get their first smartphone because it is $100 instead of $200, but fail to realize that they are changing their 2-year mobile phone expenses from ~$1200 to ~$2400.
Illogically though, I suspect I would have less of a problem with what they are doing if they priced the 5s starting at $300.
The monthly plans cost the same, so the 5S versus 5C will cost you roughly $2300 versus $2400 over two years.
I think he means from a feature-phone plan to a smartphone plan.
I.e. people are more likely to get an iPhone 5C because it's cheaper and thus "only" $99 more than the free phone they'd get otherwise. But this is not specific to the 5C, since the same scenario was in place as soon as Apple started offering two kinds of iPhones at the same time.
The marketing angle is not cynical on the scale of, say, BlueHippo[1][2], or pay day loans, but it is different for Apple to be creating bad value proposition that will have to be dismissed as the customers' fault for not doing their research.
And sure, it actually is customers' fault, but I don't think Apple customers have had to watch out for being tricked by Apple as much in the past.
While, it is simple to say: you can use this phone for two years for $2500, or this phone for two years for $2400, and it will be obvious that you'd only choose the plastic one with half as powerful a CPU if you really like the colors, I don't think salespeople will be saying this in stores to potential customers.
The idea of a "budget" iPhone that looks like it starts at half the price, but actually only represents a 4% discount on the TCO, just seems like a departure from their past, and towards becoming a slimier company. (again, unless you just really like the colors)
[1] http://www.businessweek.com/stories/2007-05-20/the-poverty-b... OR http://web.archive.org/web/20070811233934/http://www.busines...
I will agree with the general premise that smartphone pricing in the US is fairly deceptive, with huge emphasis given to the up-front price of ~$200, and almost no attention paid at all to the whole-contract cost of ~$2,500. This is certainly intentional and intentionally deceptive. But, alas, it's not new, not even for Apple.
The industry seems ripe for disruption from someone, whether it's someone like T-Mobile or Apple/Google/Facebook buying itself a network and advertising in terms of the annual cost of ownership, perhaps even bundling the service with the device, like Amazon's Whispernet on a larger scale.
The biggest problem for me with what T-Mobile is doing is simply that their network coverage is not that great. Seems like it's kind of inherent when it comes to attempting to disrupt the industry: the smaller players will necessarily be those with the worst networks, and the large players with good networks have no incentive to make any changes.
The 5C doesn't make much sense to me beyond people that really want more choice in the color of their phone.
It's really hard to get the average smartphone buyer to understand the price isn't $100 vs $200, but really $2500 vs $2600 over two years.
If people spend that much, it is totally unnecessary. If you are going to budget $2500 for every two years, you could get an unlimited talk plan for $40/mo. and buy a $1540 phone every two years.
If you put it to most people that they should buy a phone for $1500 every two years, they would think it was excessive.
For example, the Galaxy S4 is $99.99 up front, and $21/month for 20 months totaling $519.99. At the end of 20 months your bill will be reduced by $21.