The 5c is a bad decision. Since I'm convinced very few are willing to make the switch from Android to Apple's ecosystem (anyway they'll need glasses and tiny fingers to see and touch what's on iphone's screen coming from 5" phones) this basically is in competition with the 5s, a more powerful and clearly better device which is slightly more expensive. Plus, $99 for a two year contract with already old tech doesn't makes sense.
This is no different than what they've done since the iPhone 4S came out, except they cheaped out this time.
On contract pricing :
When the 4S came out:
4S flagship for $199/$299.
4 for $99/$199
3GS for free
When the 5 came out :
5 for $199/$299
4S for $99/$199
4 for free
With the 5S :
5S flagship for $199/$299
5C for $99/$199 (this is the 5, with a cheap plastic back)
4S for free
This is the weakest of the iPhone releases from a consumer view, although I think the 64 bit switch is very forward thinking from a technical perspective. It's going to mean nothing to the user for some time though.
Everything since the 4S has been weak, imo. The 4S brought Siri, dual-core, killer GPU performance. That was the last S. Jobs phone.
Meanwhile android closed the gap with ICS and Jelly Bean. Though the Android ecosystem still suffers from having 'too many' options many of which were/are crap, it's way better than it was 2 years ago.
Thinking Apple is in trouble here.