Apple throttles back iPhone 5c production by 35%, increases iPhone 5s production by 75%

“The diverging fates of Apple’s iPhone 5s and 5c have been widely reported, and our latest channel checks confirm that Apple indeed has cut back 5c production by 35% and increased 5s production by 75%,” Tina Teng and Shawn Lee report for DisplaySearch.

“The disappointing performance of the 5c can be attributed to two factors. First, Apple is a profit-driven company, and decided to raise their price in order to hit its profit target when Chinese carriers cut their subsidies on the iPhone 5c,” Teng and Lee write. “Second, the market’s expectation of what the iPhone 5c would be was very different from how Apple wants to position itself. It was not Apple’s intention to develop a product targeting the “low-cost” smartphone segment. However, rumors about iPhone 5c being ‘cheap’ were circulating as early as Q3 2012. The fact that the iPhone 5c is nearly identical to the iPhone 5 – and is not cheap – disappointed some consumers.”

Read more in the full article here.

MacDailyNews Take: Anyone, other than Tim Cook, Phil Schiller or Peter Oppenheimer, who calls iPhone 5c “disappointing” is an idiot. Nobody outside of those three has the data to make such a determination.

We’re going to make this so simple that even a Droid settler might be be able to understand:

Without knowing how many units Apple made prior to launch, you cannot infer anything – good or bad – based on limited “channel checks” of production orders at this point. You simply do not have enough data to gauge the success of iPhone 5c – or iPhone 5s for that matter.

The following numbers are made up. The actual numbers do not matter. They are for illustrative purposes only:

If Apple made 8 million 5c units upfront, sold 6 million in the first week, then adjusted future production based on that data and Apple also made 3 million 5s units upfront, but sold 3 million in stores and received 3 million online orders in the first week, then adjusted future production based on that data, which iPhone model sold the most units?

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

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

38 Comments

  1. Ramping down production of the 5C by 35% because of the need to ramp up the higher margin 5S by 75% is the opposite of disappointment. How can this possibly be difficult to comprehend?

  2. Thank you for the sage perspective.

    The most dubious aspect of all pundit analyses is the consistent belief they understand not just what’s going on, or even what is or was expected (both are folly as this article points out), but that they understand WHY Apple does what it does. Huh? What a joke!

    Apple is none other than an enigma to all but a very select few. Pundits’ theories that the 5c was envisioned ‘as a way to expand market,’ or ‘to reduce price points,’ etc, aren’t just merely wrong … They’re likely a red herring!

    By producing the 5c Apple has achieved three incredible goals that have gone unreported heretofore. First, they created a lower-production-cost, faster ramp-up version of the iPhone 5 to sell to those 25% of buyers wanting last year’s product. Second, they freed up valuable and limited (shell) production capacity needed for the 5s (and other products?). And third, they did really create a whole new set of reasons to select iPhone. Ok I can actually envision about a dozen more reasons for the 5c but … Really I’m not one of the elite few who can do any more than theorize.

    A new marketing message. A new mass of noise with which to fill the airwaves until they, expectedly or unexpectedly, change the world again in ways too simple for any of us to anticipate.

  3. Apple was not wrong on production of the 5c… got mine free with Sprint contract in 4 business days.
    Apple underestimated 5s desires bigtime or was late getting production rolling…my wife’s gold one came for $99 Sprint with contract in 27 days. 5s is noticeable lighter than 5c…can’t see any gold after case…color is really not important…ring around the home button is only giveaway.

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