“Apple Inc. has notified its two assemblers for the low-cost iPhone 5C that it is reducing orders of the smartphone for the fourth quarter, people familiar with the situation said, raising concerns about weaker-than-expected demand and its pricing strategy for the device,” Lorraine Luk and Eva Dou report for The Wall Street Journal. “[At launch] customers’ attention focused on the company’s high-end phone, the iPhone 5S, which offers faster chips and new features including a fingerprint sensor despite being about $100 more expensive than the iPhone 5C. Demand for a new gold-colored version was particularly high during its initial debut, causing Apple to increase orders for that device.”
“Apple told its Taiwanese assemblers Pegatron Corp. and Hon Hai Precision Industry Co. that shipments of the iPhone 5C in the fourth quarter would be cut, the people said,” Luk and Dou report. “Pegatron, which analysts say assembles two thirds of the iPhone 5Cs, was told orders would be cut by less than 20%, said a person familiar with the matter. Hon Hai, which assembles the remaining low-cost iPhones, was told orders would be cut by a third, said two people familiar with the matter.”
“Apple notified the suppliers it was reducing iPhone 5C orders earlier this month, the people said. Hon Hai has also stopped hiring additional workers to produce the iPhone 5C due to order cuts from Apple, an executive said. In September, a Hon Hai executive had said the company would be beefing up its workforce, anticipating strong orders for the iPhone 5C,” Luk and Dou report. “At the same time, Apple has also raised orders for the high-end iPhone 5S for the fourth quarter, two executives at Hon Hai said. While Apple’s Asian supply chain is widely interpreting the cuts as proof of slack demand for the iPhone 5C, component orders don’t correlate directly with end demand. Apple has also previously cut component forecasts to suppliers over the past years.”
Read more in the full article here.
MacDailyNews Take: iPhone 5c is simply not “low cost.” Why the WSJ and others insist on describing it incorrectly is baffling.
And, Ben Bajarin is correct:
Despite what we hear about the 5S vs. the 5C, I maintain that the time for the 5C is early to mid 2014. When the late majority move.
— Ben Bajarin (@BenBajarin) October 16, 2013
Related articles:
Apple cuts iPhone 5c orders for Q4, says source – October 16, 2013
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – September 10, 2013
The 5c might not be ‘low cost,’ but they are certainly ugly. Perhaps if Apple had expanded the visual appeal of the phone beyond the narrow age range of one gender? Just asking what if.
They did that. It’s called the 5s and it’s only about $100 more. And people are flocking to them.
(That’s a good thing.)
And thus limiting their total sales and once again ceding a market segment to Samsung. If the strategy is to put out a phone no one likes to the better won sells than I guess thats a strategy. If you want profit and share then how does this help? Would have been better to release the iPhone plastic at a lower price point so people could replace their iPhone 4 or 4s to something they can afford vs putting something in the middle for teenage girls.
I don’t get what the big deal is about. I think I’d be happy if people were opting for my high end model over my lower end model. With a difference of just $100, can anyone say they’re surprised?
Plus, it was stated that production demand for the 5S is higher than expected and below expectations for the 5C. Sounds like a wash to me, or even a slight advantage for Apple, because they can make more money on the 5S selling fewer phones.
Let’s face it, the 5C is a niche phone targeted to teenagers. I bet they sell like hot cakes come Christmas.
I think iPhone 5s sales will be front- loaded (people line up at the beginning, and later in the year will start to wait for the next super phone from Apple).
The 5c will sell consistently throughout the year as contracts come up (or as you say, at Christmas).
5C will sell just fine thank you. 5C is for the good enough consumer. 5S is for those who know what they really want. Those who understand the difference. But both will sell very well.
Not enough of a price difference between the 5C and the 5S. I knew that the second I watched the keynote. This is like buying a brand new car: Do you want the nice model for 30k or the higher trim level for 31k?
It’s just my opinion but I think if Apple was unable to come out with substantial differentiating price points they should have just stuck with the 5S.
Your numbers are wrong. The 5S is double the price of a 5C. In your statement the higher trim level car would need to be 60k.
Mathematically, yes. Psychologically, no.
It’s all about the psychology. Anyone with a shred of tech knowledge would never choose the iPhone 5c.
SteveJack laid it out nicely here:
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – MacDailyNews, Sept. 10, 2013
And the number of people with a shred of tech knowledge who buy phones is a very small percentage. I don’t know where you live, or what field you are in, but you are not really in touch with reality. I work in construction. For the overwhelming majority of the people I work with $100 is a huge difference. The claim is that over the life of the contract the cost difference per month is not that much, but most carriers don’t let you pay for the phone monthly, it is an up front payment. So while it makes perfect sense to you who is tech savvy and have disposable income to purchase the more expensive phone, don’t assume that everyone is in the same category as you…
The $100 difference on purchase is minuscule compared to the overall price of the 2 year contract. Apparently, most people are able to see this when making their purchasing decisions.
ZOMG! DOOMED!.
I was on the Train in NY the other night, iPhone 5C and iPhones in everyones hands. I own a 5S, but the C looks AWESOME in person, makes you want to lick it like candy! LOL
My youngest daughter bought a pink 5C too and it is terrific and astonishingly well made. A solid beautiful device. And she loves it coming from an Android phone.
The sales of the 5C are likely better than many phones on the Android side.
My guess is they are making a color change, keeping them fresh. Hopefully adding a black one. A black C and including more sophisticated “adult” colors would go a long way.
Adult colors, you know, the 64 box of Crayola Crayons.
What a HORRIBLE problem to have – people demanding and preferring your most high end, higher priced and profit engorging models! (So Apple is doomed…?)
Absolutely right about the 5c not being low cost. It is mid range. The 4s is low cost, in China they still sell the 4. This is not new to Apple. No one talks about the 4s. Including 4s sales would give the real number of sales. Perhaps that is why analyst are off on iPhone sales number, they don’t even realize the low cost exisit. Is Apple increasing or decreasing their orders? That would give a real picture.
The iPhone 5C may not be ‘low cost’ but it is obviously ‘overpriced’ regardless.
Since Apple has never disclosed the strategy behind the introduction of the 5C any discussion about the success, or otherwise, of their strategy is just hot air.
But the application of a little commonsense leads to some obvious conclusions:
1: The 5C was released in lieu of retaining the 5 at a reduced price. The 5C costs less to manufacture than the 5 and is slightly better equipped.
2: Looking ahead to next year, the 5C will likely be retained at a reduced price, the 5S will be given the C treatment (plastic case, minor upgrades) and given a new name and the 6 will have new high-end features. The 5C, at the reduced price, will still be profitable.
3: Market share has never been a priority at Apple. At this stage, the market has not been commoditised and high end products still command high prices and high margins. Innovation by Apple at the high end still drives the market.
4: In mature first world markets iPhone is increasing its market share anyway, particularly in the US.
5: Samsung and Google’s strategy to base their product development on stolen IP has come unstuck in patent courts around the world. A new strategy is required – the cost of defending their theft of Apple’s technology (and the bad publicity) means they won’t so easily steal further Apple innovations. Neither company has produced anything “out of the box” on their own merits so one would expect Apple to regain a significant lead in the technology/usability stakes.
If Apple wanted greater market share they would reduce the price of the 5C, but they are (if the rumours are true) cutting production instead.
Why is this even a story? The real comparison for the 5c is how it compares Y-O-Y with the 4s at this juncture last year. Yes, it’s a “new” model, but it fills the exact same spot in the lineup that the 4s did last year. If Apple simply moved the iPhone 5 into the $549/$99 w/contract slot, no one would be hearing anything about this.
If anything, the 5c was a supply chain and capacity move. Keeping the iPhone 5 in production would have constrained capacity for the 5s, since both models use basically the same CNC machined aluminum shells. The 5c uses a plastic shell and steel frame inserts — presumably less expensive and time-consuming to make.