“Apple Inc has told manufacturers of its new iPhone 5C that it will cut orders of the smartphone for the final three months of the year, a source familiar with the supply chain situation said,” Clare Jim and Paul Carsten report for Reuters.
“Pegatron Corp, a major manufacturer of Apple’s new phone, had 5C orders reduced by less than 20 percent, the source told Reuters on Wednesday, declining to be identified because the information is sensitive,” Jim and Carsten report. “Hon Hai Precision Industry Co, Apple’s other manufacturer of the 5C, has had its orders for the same period reduced by a third, the Wall Street Journal reported.”
Jim and Carsten report, “The cut in 5C orders will reinforce investor sentiment that the phone was overpriced and would not be well-received by consumers, some analysts say. ‘This reflects a failure in Apple’s pricing strategy,’ said Bevan Yeh, a Taipei-based senior fund manager at Prudential Financial Securities Investment Trust. ‘The price differentiation between 5C and 5S is too small. It’s an iPhone 5 with plastic casing and isn’t worth the price.'”
“Some analysts caution against correlating the cuts to Apple’s supplier orders with poor sales, because of the complexity and opacity of the company’s supply chain,” Jim and Carsten report. “‘We’ve seen this several times. There are too many moving parts in the supply chain to draw any conclusions,’ said Benedict Evans, who covers mobile and digital media at Enders Analysis, a research consultancy in London. ‘We don’t know what other suppliers they use or what inventory they already have.'”
Read more in the full article here.
MacDailyNews Take:
I would suggest it’s good to question the accuracy of any kind of rumor about build plans and also stress that even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business because the supply chain is very complex and we obviously have multiple sources for things, yields might vary, supply performance can vary. The beginning inventory positions can vary, I mean there is just an inordinate long list of things that would make any single data point not a great proxy for what’s going on. – Apple CEO Tim Cook, Q113 conference call with analysts, January 23, 2013
That said, as our own SteveJack wrote on September 10, 2013, the day Apple unveiled the iPhone 5c and iPhone 5s:
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.
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?
SteveJack is a long-time Macintosh user, former web designer, multimedia producer and a regular contributor to the MacDailyNews Opinion section.
Related article:
Apple ups iPhone 5s orders, ramps down iPhone 5c production, sources say – October 16, 2013
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – September 10, 2013
