“Apple sold a record 51 million iPhones in the fourth quarter of 2013, but acknowledged it had underestimated the appeal of the flagship iPhone 5S, making some analysts question the new two-model strategy and arguing that Apple had erred in pricing the iPhone 5C,” Gregg Keizer reports for Computerworld. “‘Cook signaled a couple of things on the call,’ said Ezra Gottheil, an analyst with Technology Business Research, in an interview after Apple wrapped up its conference call with Wall Street on Monday. ‘He essentially said, ‘Oops, the 5C was a mistake.””
“During that call, CEO Tim Cook acknowledged, albeit in carefully-couched terms, that the mix of iPhones sold had included a larger percentage of the top-dollar iPhone 5S than Apple had anticipated,” Keizer reports. “‘It was the first time we’d ever run that particular play before, and demand percentage turned out to be different than we thought. We sold more 5S than we expected,’ Cook said, tacitly admitting that the other model, the lower-priced iPhone 5C, under-performed.”
“In September, Apple unveiled two new iPhones for the first time, the top-end iPhone 5S and the middle-tier 5C. The latter was a repackaged iPhone 5 in a colorful plastic case that was priced $100 less than the 5S,” Keizer reports. “While Apple never splits out iPhone sales by model, the jump in the ASP (average selling price) strongly hints that the mix tilted toward the iPhone 5S. The smartphone’s ASP jumped from $577 in 2013’s third quarter to $637 in the fourth and nearly matched Q4 2012’s $642. While that was good for Apple’s bottom line — it booked $13.1 billion in net profit, equal to what it recorded in the same quarter the year prior — it made some wonder about the iPhone 5C strategy… ‘I think that the next time they bring up a less-expensive iPhone, they’ll use a bigger price separation between that and the newest,’ said Gottheil.”
Read more in the full article here.
MacDailyNews Take: That Apple didn’t see this obvious issue with the iPhone 5c pricing/feature set indicates there may be a issue with Apple management’s vision.
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. — SteveJack, “Why would anyone buy an iPhone 5c instead of an iPhone 5s?” – September 10, 2013 (the day both iPhones were revealed)
Related articles:
Was iPhone 5c the cause of Apple’s woes? – January 28, 2014
MacDailyNews presents live notes from Apple’s Q114 Conference Call – January 27, 2014
Apple beats Street with record quarterly revenue, record iPhone and iPad unit sales – January 27, 2014
Why would anyone buy an iPhone 5c instead of an iPhone 5s? – September 10, 2013
Damage was done, nothing can turn back the O’clock. Apple’s board needs to find the way to stop call puts and options to stop AAPL upwards on Monday, down Friday, and also the marketing needs to research what the market needs and wants. What consumers like and dislike. Hope AAPL’s doing better next Quarter.
In a carefully worded part of his story, Gregg Keizer “essentially” makes up a quote that Tim Cook didn’t actually say.
” ‘He essentially said, ‘Oops, the 5C was a mistake.” ”
In the call Tim Cook mentioned that the 5C outsold the iPhone 4S, which was in the same category and priced at $99, from a year ago. In essence year over year sales for the $99 phone increased. If the iPhone 5 had moved into the $99 spot and sold as well as the 5C, I wonder if there would have been so much second guessing? Would they have sold the same or fewer 5S models?
I disagree with this take. If Apple didn’t introduce the 5c, they would still be offering the iPhone 5. It would have been last year’s news, kept around to satisfy a price point along side the now 2-year-old 4S. It would not sell as well as the full-on, latest and greatest 5S.
The 5C is simply the 5 with a colorful, polycarbonate body. It is last year’s news with a fresh coat of paint. It doesn’t sell a well as the 5S? Nothing to see here.
Apple made a mistake by trying the emporer’s clothes bit on a smart Apple consumer. Just because Apple puts its name on something doesn’t mean it doesn’t stink (see mighty mouse, square ipod nano/mini, bluetooth headset). The IphoneC joins the list as being a very overpriced piece of plastic. Apple spent years complimenting and video taping themselves and their advanced aluminum designs then gave us unapologetic plastic. Thanks God the consumers showed Apple what to apologize for. Stops with the plastic crap and build a bigger phone.
I think it is time for the iPhone invisa
If Apple didn’t make a “cheap” phone, why was the 5c available at a significantly reduced rate compared to the 5s? I have never seen _anyone_ dissect the pricing of the competitions phones as much as Apple’s phone prices get dissected. It’s time to accept that a generation of dipshits brought up on Microsoft’s “dominance” simply can’t be trusted to analyze Apple.
MDN is so full of it.
Didn’t they say that the 5C is a perfect way to lure people into buying the 5S?
Because the S is only $100 more than the C, people will navigate to the higher option thus the ‘perfect strategy’.
Now MDN is saying they made a mistake?
So full of it.
I wish MDN would just be honest and tell us what they really think instead of treating their takes like they’re issuing press releases for a political party. It’s all about coming up with the cleverest talking points to repeat day after day, and if the wind changes direction, they’ll drop their position and change, without any explanation.
You’re right: MDN fiercely defended the 5C ever since it came out. Now that Cook may have stated doubts about the device, suddenly it’s all “Apple has leadership problems” and “Apple has to get their act together and produce such-and-such a device”.
Apple is not a political party, MDN. Could you please stop treating it like one and just state your honest opinions?
——RM
I have no problem with a Polycarb iPhone as long as it was available in Black. The colors were almost as big a turn off as iOS 7 fugly UI.
Agreed. It should have come in black and the white one should have gotten the white front. And the other colors were off, simply not attractive enough. I personally find the red and yellow one particularly unattractive.
Overall the strategy of re-packaging the 5 was clever, but suffering most from bad design execution. This is clearly Ive’s fault. In addition, the pricing strategy should have been different, as it was a plastic iPhone and not the aluminum iPhone 5. So pricing should have been at least 150$, if not 200$ lower than 5s. This is Schiller’s fault.
As I said elsewhere, it would have been really interesting to see the success of an iPhone 5c with a larger display and the same pixel count (and the same reduced feature set compared to the 5s). Apple should start doing some conjoint / trade off analysis…
MDN appears to be changing its tune. But that wouldn’t be the first time.
Anyway, the relatively poor sales of the iPhone 5c had nothing to do with a lack of vision on Apple’s part. But they did err. I believe they used the wrong price elasticity curve in determining the price. They considered the curve using subsidized prices instead of using the full price. The subsidized prices are further part percentage wise than then subsidized prices.