Fate of Apple’s iPhone 5c in question

“Sales of Apple’s iPhone 5c have been so disappointing that the consumer technology giant will likely cut the price of the device soon or even scrap the model altogether, according to analysts,” Alistair Barr reports for USA Today. “‘They just missed it. Demand has not been good,’ said Gene Munster, an analyst at Piper Jaffray. ‘They will discount it and use that as a lever to improve unit growth. I don’t think they will get rid of it completely.'”

“‘There’s more of a difference between the 5c and the 5s, so you can play with price a bit more,’ Munster said,” Barr reports. “Others on Wall Street wonder whether the 5c will survive, especially if Apple brings out larger iPhones later this year. ‘I would expect them to cancel the product after the iPhone 6,’ said Peter Misek, an analyst at Jefferies. ‘Price cuts are not what Apple does. They build products that they are passionate about and then charge accordingly.'”

“Apple reported disappointing results and lower-than-expected iPhone sales on Monday. CEO Tim Cook told analysts during a conference call that demand for the high-end iPhone 5s was stronger than expected,” Barr reports. “The 5s accounted for 59% of total iPhone sales in the fourth quarter, while the iPhone 5c accounted for 27% and the older iPhone 4S made up the rest, according to a survey of 500 Apple customers by Consumer Intelligence Research Partners. The 5c sold less well than the 4S did after Apple released the iPhone 5 in September 2012, CIRP also noted… ‘It wouldn’t shock me if it’s replaced. It was an interesting concept but priced incorrectly,’ said Tavis McCourt, an analyst at Raymond James. ‘A more fashion conscious phone with colors and plastic should have been lower priced.'”

Read more in the full article here.

MacDailyNews Take: Unapologetically plastic™.

Related articles:
Cook tacitly admits Apple blew it with iPhone 5c – January 28, 2014
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

59 Comments

  1. Apple will cut the price, because that was the plan all along.

    The previous iPhone lineup
    iPhone 5 – Top (a “new look” iPhone)
    iPhone 4s – Mid
    iPhone 4 – Low

    The current lineup:
    iPhone 5s – Top
    iPhone 5c – Mid (plastic case version of iPhone 5)
    iPhone 4s – Low

    The next lineup
    iPhone 6 – Top (a “new look” iPhone)
    iPhone 5s – Mid
    iPhone 5c – Low

    The next lineup
    iPhone 6s – Top
    iPhone 6c – Mid (plastic case version of iPhone 6)
    iPhone 5s – Low

    And so on… The “c” model is just a continuation of Apple’s successful and highly efficient practice of using previous models as the lower-cost choices in subsequent years. The only adjustment was creating better differentiation in the years where the new top “s” model looks like last year’s top model, by putting last year’s top model is a colorful case.

    1. Absolutely. The only question is whether/how they make a “c” version of the 5s or simply sell it as it currently is.

      27% and same share as the 4s did when the 5 came out is certainly not a failure.

      That said, it’s possible for them to increase profits by increasing volume via lower prices, but that’s an uncertainty that could only be seen by trial.

      1. The 5s continues “as is” in the next lineup, as the middle choice. The 5c continues “as is” too (maybe different color choices), and becomes the low-end choice. So the price cut DOES happen, by design.

        The new iPhone 6 will have a distinctive new look, whether the display is larger or not. So there will be good differentiation between the iPhone 6 and 5s. But the following year, the iPhone 6s will look mostly identical to the iPhone 6, so the iPhone 6 will get its colorful case for its “technically” second year, to be the middle choice as the iPhone 6c, with the 5s in its third year as the low-end choice (like the 4s is now).

            1. The record number of iPhone customers last quarter had no larger iPhone option Ken. Think about that for a minute. You can’t buy what isn’t available Ken. iPhone customers are going to buy iPhones. They’re not going to, at least most of them at this point, going to buy larger Samsung phones. So while your statement that a record number of customers bought iPhones last quarter is accurate, it is a flawed statement regarding demand for a larger iPhone. A record number of people bought Hondas last year. None of them purchased a 2016 model. There was no 2016 model Honda available. They all wanted a Honda so they purchased what was available Ken. They didn’t buy Fords or Chevys, they bought Hondas. You can’t buy something that hasn’t been manufactured yet Ken. And you can’t speculate about the sales of a larger iPhone, yet to be offered to the public, by using past sales of larger Android phones. Logic Ken.

            2. The comment I replied to was sarcastic. My reply was sarcastic, noting that NOT having a larger iPhone choice did not make iPhone customer run away and buy a Neanderthal-sized Samsung phone instead. No, a record-breaking number of customers did not care about bigger screen phones and bought an iPhone. Think about that for a minute… when you not taking the world too seriously. 🙂

            3. No, the comment you replied to was not sarcastic. Nor was your reply to it sarcastic. As to the rest of your last comment…… I’m sorry but it’s impossible to decipher. Mine was clear and to the point. And simply states the facts. Facts are sometimes difficult to accept.

            4. Wow, not only do you think you can do some mind-reading and know exactly what others are thinking, but you believe that your blabbering response as “clear and to the point.” LOL

              Delusional much…?

    2. I see it slightly differently. My prediction for the next line-up;

      iPhone 6 (2 sizes) – 4.7″ ($199) & 5.5″ ($299)
      iPhone 5s ($99)
      iPhone 5c ($0)

      All prices are contract prices.

      1. Well, that’s basically what I’m predicting, except I did not specify what “iPhone 6” would be like (intentionally). The top model always has different (higher) pricing based on configuration. Even this year, there are THREE prices for the iPhone 5s (based on storage). So, if there are two screen sizes for the top model (which I do not believe will happen), there will be something like SIX configurations (times three colors). Very Samsung-like… 🙂

    1. Exactly. The way I see it, the iPhone 5c only had to sell as many units (as a percentage) as the iPhone 4s sold in the previous lineup (when it was the middle iPhone choice), and the iPhone 4 did the year before. And I’ll bet the 5c did better as a percentage of total iPhone sales, because it is more distinctive. There are customers who like fun and colorful, over super-serious. I see them around the city, all the time. They really “pop out” compared to other phones.

        1. The difference is that I can’t easily distinguish iPhone models from a distance (or even care). When someone pulls out a 5c, it’s very obvious. I notice often when riding public transit, whether I want to notice them or not.

          As others have stated, about one quarter of new iPhones sold have been the 5c model. So if you haven’t seen any “in the wild,” maybe you need to get out more often… 🙂

      1. I do wonder about that, and have wasted precious moments speculating about what form their excuses would take if a larger screen iPhone failed to ignite a buying frenzy. Another splendid case study for my scrapbook of post hoc rationalisations in the Age of Hubris. I’ll be sure to mention you in the footnotes.

        1. Hello Hannah thank you again
          I must say I don’t know what you look like but I have some insight into how you think having read many of your posts

          One thing I’m sure of is that you always think before you put finger to keys

          I wish that was a prerequisite on this site

          Please keep visiting so that array of sunshine may occur once in a while in this sometimes dreary place

            1. truly my pleasure, to respond to thoughtful discourse as well as brighten someones day it seems i have had double my pleasure, double my fun

              santa cruz ca is my turf, and here i feel at home, as weird as i am…

            2. Santa Cruz.

              I flash back to Summer 1989. With children in my care my group went out on the boardwalk all day long, with unashamed sensory indulgence, and spent like drunken sailors on the rides and fattening but delicious foods. There was an afternoon concert by Jan and Dean. That thrilled me as I had always loved “Dead Man’s Curve.” You don’t hear that golden oldie too often! And I guess they had made a deal of some kind with the Beach Boys, where they could play each other’s surfing songs without legal hassles. So I got to hear stuff like “Help Me Rhonda” too. Mozart himself would have been in musical ecstasy, I thought with a big grin, recalling the critics’ neurological comparisons of him with Brian Wilson.

              Later on we all walked back to the car and I stopped beside a plate glass window in one of the several antique shops, having spotted a wonderful little 1930s wooden radio, of the sort I like to collect. But as the hour was getting late I passed it up, secretly resolving to acquire the prize on a future trip.

              It was not to be. Continental plates can demonstrate far more contentiousness than any mere human altercation. The planet itself, experiencing another nagging itch from its San Andreas scar, erupted violently and inhumanly in the Loma Prieta earthquake of 17 October 1989.

              I went back there months later, to the still settling dust. My shop and little radio were gone. Entire blocks were gone. People I encountered in the town spoke breathlessly about their shock, their loss, their sorrow—and their determination to rebuild.

              End flash back.

            3. I was Under the car tranny on my belly bench pressing it into place and a couple of Bumps and I got up just fast I could then notice down the valley the golf course was waving like Jell-O

              When I drove past the liquor store in Boulder Creek the water was flowing out of it stores like wine or should I say vice versa

            4. I remember another time in Berkeley just lying down and reading and at once sensing an approaching train crunching as the wave lifted pavements and dropped them in a cadence of sickening inevitability, passing through me and going on to toss other helpless human puppets about

            5. by the way, i meant ray, not array, but it seems almost more appropriate, since you come from many angles and perspectives.

              gosh speed in your endevours for all eternity

    2. Exactly. And there is only one simple little thing they need to do to see truckloads of plastic 5S’s next year: Offer it in BLACK! it was the color choices that turned some people off on them.

  2. Reality is I have found far more people desiring the Iphone 4s than the 5C and it has nothing to do with price. The comments I have heard are not positive for the IphoneC. Most people in the stores simply don’t like it. The colors are repulsive. People may like to listen to Katy Perry but they don’t want the colors on their phone. The 4S feels like a quality device, the IphoneC feels like cheap Samsung plastic. Better lineup would be Iphone 6 (New body) and an option for a larger screen, the Iphone5S and an updated Iphone4s with more ram, LTE and better processor. A lot of people still like the original tiny size of the 4S no one likes the candy painted IphoneC

    1. The question is, how does the 5c compare to Android phones?

      If people feel that the 5c is equivalent to the best Android phones, and then see that side-by-side the 5s has a lot more value, then having the 5c around serves a purpose.

  3. They’re selling so badly, they’re outselling the equivalent model from last year’s lineup, when the 4S was the 2nd-tier phone and they still feature in every major carrier’s top 5 phones.
    I may quit my job so I can go into a business selling such a failure of a product…

  4. 27% of 51M is 13.8M. If that number is correct then can that be called a failure?
    If Apple want to increase sales of the 5C to add pressure on the competitors then a price drop is warranted. But be warned the margins will go down as a result.
    A bold move would be to drop the price by $100 to $99 for the 32GB and the 8GB for free and see if the product picks up more volume. Note that Apple will need to sell ~25% more to make the same money assuming the cost to retailers is $500.

  5. I love my iPhone 5c. I got the green one. I have heard people talking about them being plastic and feeling cheap. It is then that I know that person has never held an iPhone 5c. It does not feel like plastic and it certainly does not feel cheap. I like the feel and weight of it. It feels more like a metal frame wrapped in warm, smooth acrylic. It is nothing like those light and hallow feeling Samdungs.

    1. My daughter loves her yellow 5c. They certainly do not feel cheap and are every bit as solid as my 5s. I agree anyone saying they feel cheap has never used one. There very solid.

      1. They simply need to look less cheap. The build quality is superb, but they need to change the “plasticky” look somehow. Also, along the same lines, I think they could do a rethink for some of the colors. Also, I think the inclusion of Touch ID will be a major positive selling point. If they can include Touch ID in the next mid-tier and keep the 5C as then low-end device, I’m sure they will have a successful year. They also need a higher-end device. There is room in the upscale end of the market.

  6. “They will discount it and use that as a lever to improve unit growth.”

    Of course, if they had done this from the beginning, they wouldn’t be in the situation they find themselves today with respect to the 5c. Funny, if they’re not careful, the 5c could be a runaway hit.

  7. Jesus Christ MDN can you quit linking to this shit. No one outside of Apple knows how many 5Cs were sold. The only thing Cook said was it is selling better than the 4S did this time last year. Isn’t there anyone on this site that can sift through the BS? Or is this just an agenda on your part, just like your constant ranting about a larger screen iPhone.

  8. Use all the cheaper tech of the 5c to make a cheaper iPod!
    A $100 cheaper iPod is a lot more attractive than a $100 cheaper phone because of the monthly telco fees.
    In fact, a $100 cheaper iPad mini with plastic back wouldn’t be a bad idea either. Again, without the two-year monthly telco fee lock-in, a $100 cheaper iDevice is much more interesting.

    And Apple still needs that cheap gateway drug into iOS nerdvanna.

  9. No one but Apple has the incredibly complex problem of figuring out how many to make of each model when each sells *tens of millions*. Other brands are lucky to sell a few million of one model — and that’s only during a launch quarter. They don’t have this problem — we can’t even tell if they predict wrong because they don’t sell enough for there to be a lack of supply in the first place!

    Can you imagine if Apple messed this up and had tons of leftover phones because they’d gauged the market wrong? They played it conservative with the 5c and 5s — it didn’t work out quite as well as they planned, but it wasn’t a failure. This was just a test. I bet next fall they’ll have several new models — one with a bigger screen, one with the same specs but the same size we have now, and they’ll move the older phones down the line.

    With more distinctive features to differentiate the lineup, the multiple model thing will work better — but it will still be a complex problem that’s almost impossible to solve. How can they know months in advance which models will be most popular? Apple’s moving in that direction, but very cautiously. That’s wise.

    1. If they are confident in the larger version (which I assume will basically be a different product than the 4″ iPhone), then they should make both an expensive and lower end version just like 5s and 5c. I would price the large high end phone $50 to $100 more.

      4 – $150-200
      4S – $250-300
      5C – $350-400
      5S – $500 (of those that remain)
      6 – $600-650
      6LE – $700-750

      They could even do some interesting things for the smaller form factor, like kill the bezel to make it even smaller/sexier. I know some girls with smaller hands who would love to have a smaller 4″ version.

  10. Based on those numbers (59%, 27%, and 14%), Apple sold about twice as many 5s units as 5c units, and about twice as many 5c units as 4s units. Out of 51M units, that is roughly 30M, 14M, and 7M units, respectively, in one quarter. Yet analysts are calling the 5c a failure and not the 4s.

    Now I agree that the 5c was overpriced in comparison to the 5s. Its entry price should have been $100 lower. In the interest of economy of scale and the elimination of older designs, I recommend that Apple reduce the price of the 5c and phase out the 4s. But the panicky FUD being tossed around by analysts is total not Scottish.

  11. Apple sold a cheaper phone (the 5C) instead of just continuing the 5.
    However, the extra volume DID NOT compensate for the lower margins. So Apple’s profits remained flat Y/Y in spite of record revenue and unit sales.
    Therefore, Apple wasted a lot of time, energy, marketing & money developing a second phone line when they probably could have just bumped the 5 down to their 2nd tier model.

    All of us Apple fanatics have always said that unit sales/market share would never be the driving factor of Apple product development, yet Apple obviously developed the 5C with the idea that unit sales would explode–but it was a “meh” product.

    That’s the problem.

    (Don’t ask me why this logic doesn’t seem to apply to Amazon.)

    1. My guess is the 5C is easier to manufacture than the 5 was. And that was one of Apple’s goals. This year I expect the 5C to get new colors and a price drop and then i expect it will sell really well. The phone got good reviews, people who own it like it. It’s just more expensive than the market was predicting so people that could, opted for the 5S instead.

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