Economics of Apple's iPhone 5C

As the whole world is probably aware of it now, Apple's newest generation of iPhone was released last Friday and quickly sold out across many countries. This morning, the company reported a staggering 9 million units sold of both the 5C and 5S flavors. Very impressive for any company but, especially for Apple, it demonstrates that despite all the competition from Google's Android platform, its own iOS and iPhone devices still command a massive following.

What's interesting about all this is the attention and ridicule at Apple's decision to release a cheaper companion to their flagship iPhone. For the current (seventh?) generation, this means the iPhone 5C. The general opinion was that without a cheaper version of the flagship iPhone, Apple would be surrendering a significant portion of the market to Android handset makers like HTC and Samsung. After all, the $650 unsubsidized price for a top-of-the-line iPhone is beyond what most of the world's population can afford. One popular rationale is that the letter "C" in the "5C" represents China, a country in which iPhones have unsupported by its carriers until recently. In short, not pursuing this lower-tier market segment is akin to throwing away good money -- something unacceptable to any rational corporate executive.

Returning to the topic of the new iPhones (5S and 5C), let's review the differences between the two. The infographic below from CNET does an excellent job of comparing the two. In short, the 5C is akin to the previous generation with the exception of being a bit cheaper, lower build quality (e.g. more plastics involved) and available in different colors. Essentially Apple rebranded the previous iPhone 5 into an iPhone 5C, and released an upgraded version known as the iPhone 5S. Nothing too confusing, right?

As an economist, my insight on this strategy of releasing a lower-tier device to go along with a flagship device is simply: it's a very shrewd business decision. People, be them technology critics or the general populace, may whine and scorn Apple's decision to release the iPhone 5C, but they overlook the behavioral element that Apple is targeting.

In economics, this behavior is known as "relatively". One of my favorite economists, Dan Ariely, presented the case so well in his book "Predicably Irrational". Relativity refers to the human tendency to compare their environment or a good relative to another. However, the caveat is that we prefer to compare things that are easily comparable. Ariely first observed this phenomenon in an advertisement to subscribe to the magazine "The Economist", when he was presented with 3 different subscription options: a standalone mailed copy, a standalone online copy, or both a mailed and online copies. I forget the exact number he reported, but the last option was presented as much cheaper than the first two combined. The result is that "The Economist" probably sold the combination option much higher than the first two. (There's also a really good example about honeymoon options from the Wikipedia link above.) The bottom line is, when one is presented with comparable products but one is clearly superior, the superior product tends to get purchased.

Do you see why Apple released the iPhone 5C now? I get that its cheaper price allows greater market penetration than otherwise, but the iPhone 5C also indirectly (yet very effectively) promotes the purchase of the iPhone 5S. This is especially given that the 5S is only $100 more and provides essentially double the performance of the 5C. When your average consumer is presented with the choices of, say, a Samsung GS4, an iPhone 5C, and an iPhone 5S, the 5S would probably win out. Curiosity, it also dissuades any current iPhone users from jumping the ship. Apple ultimately may not move as many units of 5C but the company still wins in the end, regardless. And as the late Steve Jobs puts it so well, "If you don't cannibalize yourself, someone else will".

Review: Acer Iconia W510 Tablet

After considerable complaints, anger, and time, I finally receive the Acer Iconia tablet that I previously ordered from the Microsoft Store online. I found it sitting outside my front door on Thursday night, again without requiring any signature or other security permissions. Maybe the delivery guy just decided that the hassle wasn't worth it (as I had already file claims for missing package). Anyway, at this point I'm glad I received the tablet at last. I've decided to write a brief review of the device since there doesn't appear to be any reviews for it anywhere.

To save time and space for this review, I'm assuming that you know the basics of a tablet and, in particular, the specifications for this Acer Iconia W510. My version is the 32GB one, sans the additional keyboard attachment -- in addition to 2GB of RAM and full version of Windows 8. Other specifications can be found here and here.

Contents of the packaging box were as follows:

• W510 tablet
• micro-USB to USB connector
• charging cable (proprietary) 
• Instructions manual
• Backup DVD

The Acer Iconia W510 (image courtesy of Engadget)

Design
After opening the packaging, I was immediately impressed by the size, weight, and look of the tablet. The W510 is wider and narrower than a standard iPad, but also slightly lighter. The construction material is plastic, but of a studier type and dual-toned with a "white-on-metallic silver" look. It neither looked nor felt cheap -- although perhaps also not a premium feel like the iPad. With respect to weight, it was comfortable to feel on one hand at around 1.2 lbs.

Connectivity is where the Acer W510 shines: 1 micro-USB port, 1 mini-HDMI port, a proprietary charging/connector, and microsd card slot. The inclusion of the micro-USB to USB connector makes it very easy to plug any USB devices to the tablet. In addition, the microsd card slot enables one to cheaply double the system memory to 64GB with a 32GB microsd card. Internally, there is also Bluetooth and NFC (WiFi should be assumed, and here it is the N-type variety).

Display
The Gorilla-glass covered 10.1 inch screen has a standard resolution of 1366 x 768, which I believe gives it a dpi measure of around 150 (don't quote me on this though). To the average eye, it's a good-looking screen with a high level of brightness. Compared to a third generation iPad however, it clearly is not as sharp nor high-detailed. But I think for general purposes like reading documents and surfing the internet, the W510's display is more than adequate. At very least, it doesn't appear that Acer cheapened out on the display.

For touchscreen devices like tablets, the display is more than just for looks -- it has to perform too. After considerable time spent with it, I can happily say that the touch-sensitivity is good. I didn't experience any lag or glaring inaccuracies whether selecting or swiping on the device. The only issue I saw was when drawing on it using Sketchbook Express -- I had to keep my strokes slow as otherwise there would be skipping.

Performance
The Acer W510 is powered by Intel's new Clovertrail dual-core processor (Z2760) with its complementary video graphics cores, in addition to 2GB of RAM. Although the consensus from benchmarks out there indicate sluggish performance for the Z2760, it seemed adequate for everyday tasks from my usage. I experienced minimal lag while using a variety of apps on the Windows 8 "Metro-UI", even after having 7 apps concurrently open. The only indication of the Z2760's dearth in processing power came when operating in the "desktop" mode. But even in this latter case, it was not as glaring as feared.

The power consumption of the W510 is impressive. I was easily able to hit the 9-hour estimated battery life through a combination of app usage, video-watching, and internet browsing. Although real-world's usage may be lower than 9 hours, my experience with the device means it shouldn't deviate too much. More impressive was the fast-charging times for the device -- it took about an hour to charge 50% of of the battery.

For those interested, the overall Windows Index score for the Acer W510 was 3.4 -- with the lowest denominator being the CPU measure. The graphics was around 3.5 and the hard drive was unsurprisingly an outlier: 5.9 due to the flash-based memory.

Software
Although I use Windows everyday, using the Acer W510 was my first experience using the Windows 8 operating system. In short, it's a mixed bag. The bad news is that even for a veteran Windows user like myself, there was a considerable learning curve -- especially with the Metro-UI. For example, there are a variety of swipe-motion gestures that one has to learn to become acclimated: one has to swipe from the top of the tablet quickly to the bottom to close an app, or swiping from the left to open the so-called "app drawer" of all open apps. In addition, the absence the classic "Start" button from the desktop mode was an inexcusable mistake made by Microsoft. This made it very hard to use the desktop mode without digging through a few layers of files. Last but not least, there is clearly a lack of available apps at the moment -- the irony of posting a picture of the tablet onto my Facebook page when there is no official Facebook app available was not lost on me.

The good news is that, as previously mentioned, performance is very good when sticking to the Metro-UI "Start Menu". Apps install quickly and are quick to open. I've become a huge fan of the native Windows 8 apps like "Finance", "Travel", and "People" as the close integration into the whole OS feels very natural -- and useful. For example, articles on "Finance" are already presented in tablet-friendly format when you click on them.

Verdict
Overall, I really liked the Acer Iconia W510 -- particularly for the sale price I ordered it at $399. Even for the current price of $499, it is a good buy for all the things you get: a full-fledged Windows 8 OS, lots of connectivity options, and great build quality. You even have an option to enhance the experience by purchasing a matching keyboard plus battery dock that essentially converts the tablet into a laptop (or netbook).

At the end of the day, this device is what you make of it. If you are looking for a powerful device from which to run Microsoft Excel and perform video encoding, then this is definitely not what you are looking for. It simply does not have the graphics nor processing power. But, if you are an average user curious about the Windows 8 OS and a tablet capable of running your legacy Windows software, then you can't go wrong with this tablet. It does so much for so little a price. While its performance resembles that of a netbook (the Intel Z2760 benchmarks closely against an Intel Core 2 Duo), that comparison is unfair as it is a tablet competitively priced against the Microsoft Surface and the Apple iPad. Without a doubt, I would spend $499 on the Acer W510.

Tech Review: Canon PowerShot SD1300 IS

As promised in a previous post, I am here to review my new camera: the Canon PowerShot SD 1300 IS. Let me preface this review by noting that, despite the sometimes torrid thoughts I share on tech products, my experience with digital cameras is very limited. I never really owned my own camera -- did not know about photography when I was younger, did not have the urge to take photographs in high school and college, and now I am too busy to take it up as a hobby. This admission being made, I will attempt to construct as thorough and unbiased a review as possible...

First of all, let's get the specs out of the way. The Canon PowerShot SD 1300 IS features a 12.1 megapixel sensor, 28 mm wide-angle lens, 4x optical zoom, and a 2.7 inch LCD screen. Its other noted features are the capable low light mode and a "Smart AUTO mode [that] intelligently selects from 18 settings". All in all, it is a powerful point-and-shoot camera -- perhaps one of the best in its class. At least the specifications on paper are quite impressive.

What do you do get in the box? The contents are pretty standard in my opinion: the camera (duh!), a wrist strap, battery charger (yes the Canon PowerShot SD1300 IS uses rechargeable batteries), the battery itself, AV cables, instructions manual, and installation software. Admittedly the only items I've touched are the manual, the camera, and the wrist strap.

One of the first things you notice when holding the Canon SD1300 is just how small and compact it is. The camera is about the width of a first generation iPad (assuming you have one of those to compare to) or double the thickness of my Nokia e71x smartphone; weight-wise, it is listed at 5 ounces but feels much less. I think the Canon SD1300 is skin to one of those bigger smartphones -- except of course, it can only take photographs or video. The build quality is also impressive: full-body aluminium build makes the camera feel very solid on hand.

Appearance aside, I like what I've seen thus far from the Canon SD 1300's performance. The camera starts incredibly fast, taking roughly 5 secs from the press of the power button until it is ready to take pictures. This will come in handy for those special yet short-lived moments (hasn't happened here yet). The interface is easy to use. For newbies like myself, the "Smart AUTO" mode is very helpful to automatically select the best mode for certain situations. I have not tested out the entire breadth of the image quality, but so far so good. The images come out sharp and colors very natural. I have only taken pictures of food (self-made fried chicken rice, which I will blog about soon) and a couple of pictures at a recent Washington Nationals baseball game. The photographs came out well.

When I look at tech gadgets, one of the most important things to me is the battery life of the device and versatility (storage-wise). The Canon PowerShot SD 1300 IS takes the standard-sized SD card. I am happy to declare that I have yet to charge the camera -- although I've only taken about 5 pictures thus far. Based on what I have read, a single charge should yield at least 300 photographs; some owners have stated they've taken around 400. In other words, the battery life is solid. One concern I do have is the fact the battery is rechargeable, which means you have to monitor your usage when recharging stations are not readily available. This would apply to long road trips or photograph-intensive events (e.g. a wedding).

In sum, I really like the Canon PowerShot SD1300 IS thus far. It is compact, battery-efficient, and gets the job done. I would recommend it to anyone in the market for a basic point-and-shoot camera. Otherwise new camera technologies like the micro-thirds (?) could be attractive alternatives. Cameras like the Sony NX-3 are said to pack the power of a SDLR in the shape of a point-and-shoot.