Apple cuts production of iPhone 5C in half amid weak sales, report claims

“Apple seems to have overestimated the appeal of colored plastic,” Patrick Seitz reports for Investor’s Business Daily.

“The Cupertino, Calif.-based consumer electronics maker reportedly has slashed production of its midrange iPhone 5C smartphone amid weak sales,” Seitz reports. “Chinese website C Technology on Thursday reported that Apple has cut iPhone 5C production capacity in half. It has reduced average daily production to 150,000 units from 300,000, the website reported.”

Seitz reports, “Apple’s new flagship handset, the iPhone 5S, is outselling the lower-priced 5C by 3-to-1 or 4-to-1 margins in subsidized markets, Canaccord Genuity analyst Michael Walkley said in a report Oct. 3. This, despite the fact that the iPhone 5S has been in short supply. Both phones hit the market on Sept. 20.”

Read more in the full article here.

MacDailyNews Take: If true — and we need more proof than a Chinese website and a handful of analysts (who are probably basing their forecasts on a Chinese website) — then iPhone 5c is accomplishing its true mission well: To upsell those who can afford it to iPhone 5s. The 5c will sell well to the more, uh, “price conscious buyers” as they exit their carrier contracts.

As MacDailyNews’ SteveJack explained the day Apple unveiled iPhone 5s and iPhone 5c:

Apple’s iPhone 5s costs $100 more than an iPhone 5c — or $4.17 per month over the life of a typical two-year contract or, in other words, a completely negligible amount if you’re actually in a financial position to be able to buy and use a smartphone.

Let’s get real: If $4.17 per month means anything at all to you, you really can’t afford a smartphone to begin with. Over a two-year contract, the difference between the two iPhones is less than 14-cents per day!

The iPhone 5s is separated from iPhone 5c in many ways: Touch ID fingerprint recognition, materials quality, the camera’s larger 8MP sensor with 1.5µ pixels, ƒ/2.2 aperture, dual LED True Tone flash, Burst mode, slo-mo video, improved video stabilization, a 64GB option, and, of course, the A7 chip with 64-bit architecture and M7 motion coprocessor.

iPhone 5s vs. iPhone 5c

Unless you’re allergic to aluminum and/or fine craftsmanship, there is no reason why anyone who can afford an iPhone would not buy an iPhone 5s (unless you’re buying a first iPhone for your son or daughter). Even then, if you want a brightly colored polycarbonate phone or some feeling of extra protection from drops and dings, slap a plastic case on the iPhone 5s. There, it almost weighs as much as the 5c now.

The bulk of any smartphone cost is the data, not the phone.

Am I missing something or is the price difference between the iPhone 5s and the iPhone 5c too insignificant to ever consider opting for the 5c?

Why the hell would anyone buy an iPhone 5c instead of an iPhone 5s?

It seems to me that Apple is using the iPhone 5c as a tool to push buyers to the 5s (well, at least those buyers who can grasp a simple value equation).

Once Apple gets the customer to the websites or into the stores and the prospective buyer can see and/or hold both phones and learn that they’re only separated by a mere $100, my guess is that Apple figures they’ll have plenty of upsales occurring. Upsales that will boost Apple’s iPhone margins nicely.

Oh, BTW, Apple’s going to sell a boatload of both models (and millions of 4s units too)!

Are you listening, margin-loving Wall Street?

Related articles:
iPhone 5c price war! Walmart, Radio Shack best Best Buy with $45 iPhone 5c price – October 4, 2013
Loss leader: Best Buy drops the price of iPhone 5c to $50 – October 4, 2013
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – September 10, 2013


    1. With the release of the iPhone 5c in dozen( s) of additional countries soon–I’m sure production is being cut–what a bunch of bullshit once again–pure stock manipulation !!

      1. I think you hit on a good point. People in the developed countries can afford the 5s or get the 5c if they think they’re budget conscious or maybe for their kids (down to $50 now at walmart). 5c is for areas of the world where money is a serious concern (probably be a free phone eventually there).

    2. It’s not $199 for the 5S vs $99 for the 5C.

      It’s $650 for the 5S 16gb with far superior specs


      It’s $650 for the 5C 32gb with far less specs.

      As I said, Apple will have to adjust their price soon or just right the 5C off and kill it during the next cycle.

    3. It’s been my opinion that the reason 4s sales were so high last year was the dock connector, not the $100 discount. I think apple made a big mistake when they ditched the old connector and divorced us from all our old accessories, losing a part of their ecosystem advantage. 5c therefore has no appeal at this price point.

    1. So true.

      The funny thing is that 150,000 units average daily production is a mind-blowingly huge number.

      (and if it’s true that this is half the original production rate, it’s likely they’re just scaling back from coping with the launch.)

  1. Ok, so $100 ÷ 24 months is $4.17 per month and free after the 2 years.

    So, why for $4.17 a month would anyone buy down to a 32 bit slower older technology without the new photo and bio identification features? Only the talking heads think this is a good deal.

    1. And Apple keeps running the “Colored iPhone” adds. Why? The 5C got Apple away from older iPhones that the courts keep screwing with over patents. Yes, some kids (and some silly adults) will buy the 5C but Apple needs to shift their add focus to the iPhone 5S. Has anyone seen any iPhone 5S commercial on TV yet? So, when will Apple get someone with a little advertising and PR skills?

        1. True. But advertise both. Does Apple not advertise the iPhone 5S because they can’t make them fast enough? How many retiring employees would rather have an engraved iPhone 5S with a 2 year prepaid contract as they hand in the old company cell phone on their last day of work? No one wears gold watches anymore. Hello PR department. Is anyone there?

      1. Tim Cook closed the big iPhone 5S and 5C event with the “Colored iPhone” ad. Tim did not understand the market at that time. He believed the cheaper colored iPhone 5C would be what would sell BECAUSE EVERY TALKING HEAD THINKS THE SMART PHONE MARKET IS ABOUT LOW COST CRAP. Now, the same talking heads are talking about the need for Apple to sell a cheap iPad. Anyone see a pattern yet?

        1. Do not underestimate Apple’s marketing department. I think they know exactly what they are doing. YOU do not know what their strategy and goals are.

          If Apple has to take a writedown to account for millions of unsold 5Cs, only then can you say they don’t know what they are doing.

          Personally, I don’t think they care if the 5c doesn’t sell. Apple does not want the low end of the market. They will be happy with any 5Cs they sell as they carry a significantly higher profit margin than they would have had with the aluminum iPhone 5 if they would have just carried it forward.

          BTW, I bought 5Cs for my kids, and the build quality for the “plastic” iPhone is a hell of a lot better than any of the high-end Galaxys I have looked at.

        1. Which is why & how a “journalist” just recycles his stories from the Carribean and his editor doesn’t know crap about anything other than that his journalist is turning in the words on time.

  2. I love this website, don’t get me wrong. But sometimes I feel as if it’s the pro-Apple equivalent of the North Korean daily news. Nothing the great Leader does is ever wrong and can ever be doubted or questioned. The North Koreans have nothing on the unswerving propagandistic spin pervading this website.

      1. … oh look, silverhawk opens his mouth to prove Rick’s point!

        The name of this site is “Mac Daily News” and well over half the articles are about iOS, mobile devices, and US extreme right wing politics. All articles are attended by the echo chamber uncivilly attacking anyone who doesn’t nod in absolute agreement with their religion. Rick is absolutely right.

    1. Absolute authority from above, absolute obedience from below. Yea, we’re just mindless Apple zombies who can’t think for ourselves and pray to our great god, The Jobs. Or maybe, we know quality, and have no tolerance for mediocre knockoff want-a-be products from greedy, thieving, soulless assholes. Bought my first Mac in November of ’84, and have stuck with Apple since. Best decision I ever made.

    2. I’m guessing you have missed the fact that the defense of Apple is in terms of analyzing the accuracy of the “news” reports. People don’t just defend Apple to be fans, they defend Apple from the flawed analysis of poor journalism, poor data gathering, and biased reporting.

      Though, the truth is, while Apple makes the occasional mistake or mis-step, they make far fewer mistakes than most companies, yet get hammered mercilessly for those, far out of proportion from what other companies gets, and far out of proportion for the severity of the mistake.

      Most of the journalism is just bashing Apple through whatever means possible.

      MDN is unabashedly pro-Apple, but comparison to a communist propaganda publication, which likely has no reasonably open reader feedback to fact-check, is somewhat disingenuous.

    3. rick,
      If you can’t understand Apple Doom stories form the real truth and just think mindless people by the millions buy Apple products and then blindly stand up for them when they make a mistake.

      You haven’t been on this site very long, Calling out something you may think is as bad as anyone not standing up and correcting false information in the media that’s just put on a site to get clicks to pay the bills.

      Do some research and see that most ALL Apple bashing is just click bait to feed angry people that want to hate for one reason or another.

      Then some will turn away and look for any excuse to not want to prove the indifference, Really depends on the type of person you are and if any hate will cloud the truth.

  3. I’ve often said it loud & clear here in this forum that Apple deserves all the brickbats that it gets. Hubris in the face of overwhelming evidence that the nature of the smartphone market has changed. People have more choices now and are wiser to what they buy as their smartphone of choice.

    It is often said that Android is behind iOS in development but since they introducted the truly turd-like iOS 7, the gap between Android and iOS has irretrievably closed. There’s very little to distinguish iOS from Android now. In fact they look virtually indistinguishable, both with washed out unappealing flat icons, cryptic symbols and difficult to use and navigate user interface. iOS 7 is one less reason to get an iPhone.

    Furthermore selling the old worn out iPhone 4S in this day and age is a travesty. They should have brought the 5C price down to the level that the 4S occupies now and reduced the product line to two – expensive and cheap. But instead Cook the manufacturing genius is trying to extend the life of tired old tech that no one in their right mind will buy, at least not at the current price differential of $100 between the S and C models.

      1. What, you work both sides, silverhawk? You’re the one here not offering reasonable discussion points. Everyone else seems capable of civilly discussing their observations and those of journalists who have a lot more data and insight than you do.

    1. Turd iOS 7? That’s your opinion, not mine. I’ll say again, when you buy an Android device, you’re stuck with whatever OS is on it at time of purchase. It’ll never change or get better until you purchase a new device. iOS is updatable and will only get better and more capable over time. I like the Apple paradigm a lot better. Try getting support for your non-Apple device, who do you call? Me, I call Apple and get phenomenal support.

  4. Have Apple released any sales numbers? The cut in 5c production might be an effort to boost 5s production. I know of a couple people with a 4 week wait for a gold 5s ordered at launch.
    I guess Apple under estimated the appeal of a gold iphone, as did I. Butt ugly if you ask me, my space grey suit me fine

    1. They also slow or stop lines to retool, this happens especially at this time since Previous production is in the supply chain.

      We have seen this before, Apple will slow or Stop production to add a new machine to the line that allows for better assembler friendly access or correct a flaw that is causing a quality control issue and we see this type of DOOM & GLOOM from the clueless masses.

      Let’s not forget that that this is the best time to retool while having enough time to ramp back up to not effect the Holiday furry for those new products.

  5. Apple’s iPhone 5s costs $100 more than an iPhone 5c — or $4.17 per month over the life of a typical two-year contract or, in other words, a completely negligible amount if you’re actually in a financial position to be able to buy and use a smartphone.

    why is MDN perpetually focusing on the subsidized price rather than the true price of the device?

    A better way to read the reduced sales of the 5C is that this device is only really attracting price-conscious 5s buyers. The high price of 5C does nothing to get more people in to the Apple ecosystem; it just cannibalizes sales from people who would normally buy the 5s.

    Apple can produce great products at lower price points (see iPod mini/nano, Mac mini, iPad mini). It’s a shame they choose not to do so in the phone market.

    1. I guess in that case we could reiterate the “real” price of all the other smartphones, including the ones that are frequent guests on the BOGO promotions. Reality is that they aren’t free either.

  6. Mr. Cook, what is the problem with Apple? on the day when Dow gains 2.18%, Nasdaq gains 2.26%, Apple only advances 0.66%,yet, losing 0.05% after hours.
    Mr. Cook, Apple shareholders needs your strong leadership now, to pull them out under the water.
    Consumers love AAPL iPhones, but, the market does not like Apple company.
    Please have a strong public relation team, to promote a positive image for the company,so that the institutional investors, hedge funds would love AAPL again, so that the share price of AAPL would rise.
    Mr. Cook, please act now.

    1. My question is… What exactly CAN Tim Cook do to boost Apple’s share value? I can’t pinpoint the exact reason why mutual fund investors don’t like to buy Apple but would rather buy Google or Microsoft. Since Apple can’t bring it’s overseas reserve cash to the U.S. without getting tax-bombed, I’m not sure what Tim Cook can do. Maybe raise dividends to the point where mutual funds can’t resist not buying Apple? There’s something about Apple that big investors don’t like and the closest I can figure is the uncertainty that surrounds the stock. It’s possible if Apple could make a big enough push into the enterprise it would remove some of the uncertainty of Apple’s future.

      Apple’s hardware business just doesn’t seem to be cutting it as far as Wall Street’s expectations go. I think only acquiring a search engine or becoming a lending company to remove the uncertainty will move Apple’s share price considerably. The reason I say that is because Wall Street doesn’t trust Apple’s hardware business. I’m certain it sees Apple’s hardware as a hit or miss proposition and maybe it actually is. Why else would mutual fund investors stay away from Apple?

  7. Everyone, please think carefully about this story:

    – 150,000 Per day x $700 per unit x 6 days a week* x 4 Weeks = 2.5 Billion dollars.

    – $2.5 Billion per month, annualized is around $30 Billion. The “failing” 5c phone would, on it’s own, be larger than 80% of the Fortune 500.

    Cutting back production from initial demand highs to lower normal production to meet long-term sales expectations is perfectly reasonable and standard for every business.

    * assumption – Do they manufacture 5, 6, or 7 days a week?

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