Apple Further Trims iPhone 5c Production as Customers Continue to Prefer iPhone 5s

[tdtran1025]

First phone product failure since 2007.
Make the 4S available to Chinese for $350. They only need to make $80 ea to be King of the world.

 

[9000]

Cut the price and not the production

That would probably put them into the zone of inelastic demand, not good.

 

[twoodcc]

no surprise here, really. but i bet apple isn't mad that people are loving the 5S

 

[kb12252004]

I think the 5c's problem is twofold: the price, and the hideous colors done with the black face. Here's a mockup I did of something simple to correct the latter:

Image

Awesome job! Much more appealing in these color schemes.

 

[giantfan1224]

This is obviously a major blunder by Cook. The 5c is way over priced Tim took a big gamble on the price and lost. He now has to humbly admit he did not see what is plainly obvious to everybody, i.e, the 5c is waaaay overpriced, and reduce it immediately.

Apple will then have an unbeatable pair of phones. This is going to be a big dent in Tim's ego. Can he do it? Probably not but I don't see he has a choice.

Way too many assumptions to agree with you on this. On trimmed production they're still making, what, 80,000 of these a day? That's 29 million a year at that rate. Hardly a "major blunder" or something that he will have to "humbly admit" is a failure. And if what was estimated to be 5C sales are cannibalized by 5S sales, I'm sure Apple and Tim are perfectly OK with that.

 

[iMikeT]

I think Apple may be catching on to the fact that intelligent people don't want a cheap repackage of last year's model.

 

[TC03]

I think a lot of folk are missing the point of the 5c.

The 5c isn't for early adopters. It's (generally) not for folks who frequent tech forums. It's for people who are renewing their contracts.

I suspect we'll see the 5c sales grow over the next year or two as normal people renew their contracts - in the UK it can be picked up for less than £50 on a new contract and for a lot of people that's an incredibly affordable price point which may be more attractive than the android equivalent.

There is, I think, a longer term strategy in place here which is being overlooked.

I could be wrong, but I wouldn't rush to judge at all.

Exactly! 100% agreed.

 

[HAMEYO]

Eh, I think this isn't necessarily by design, but not a problem for Apple. They gave the "analysts" and "pundits" what they wanted -- a low cost iPhone -- and the consumers aren't buying it. Now Tim and Co. can turn around and say, "See? It didn't work. Now let us get back to doing what we do best -- hyper focusing on a single product."

Absolutely You're RIGHT!!!!!!!!!

Apple's Executive Boardroom meeting:

"I just don't get it. People want the phone from last year with a few slight improvements way more than they want the phone from last year with a colourful plastic backplate... why is that?!"

Disclaimer: I LOVE the build of the 5C, but it's simply the wrong price for what it is.

More proof that the iPhone 5c is a failure. Apple have lost their way.

Great product. Wrong price point.

Price Point??????

Such Idiots and Ignorants like You are Trying to Jeopadize Apple !

Ya Even don't Know What Ya're Talking about.

i-Phone Users Are Different from Give-Away Cheap Android Users !!!!!!!!!!

 

[syd430]

Not surprising given the thing is a terd.

 

[TC03]

Do we know if the 5C is not selling? My guestimate is, the 5C is selling better than the 4S did at this time last year. Way better.

Localytics reported as much recently. The 5C is a strong seller.

Maybe Apple just ramped up production like crazy for the launch, filled the channel, and now wants its suppliers to focus on the 5S.

The ONLY people who are disappointed by the 5C are the people who unreasonably INSISTED that the 5C become a give-away phone to grow market share in emerging markets.

Apple never intended that. Instead, the 5C is a replacement for last year's 4S at this time, respecting Apple's existing pricing structure.

Given that Apple is selling record increasing numbers of high end phones while Samsung's high end phone sales report flat or negative growth, I don't think personally that it's reasonable to interpret this latest news as "5C fail"

I know, I know, everyone so badly WANTS to believe the 5C is a fail. They LONG for it to fail. But I will stake my Macrumors reputation on the 5C's being MORE successful than the phone it replaced, by a wide margin.

you nailed it

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I believe Apple completely missed a golden opportunity to capture the entry market. I worked in retail (outside the US, where all phones are full price and unlocked), and I can tell you that people have gotten fed up with cheapo Android phones. I've seen so many customers who want to make the switch to iPhone, but they're just too expensive. The 5c was so heavily rumored to be very affordable and compete with the cheaper alternatives from Android and WindowsPhone, but it turned out to only be slightly cheaper than the flagship iPhone 5s. The iPhone 5c could've shown the world that great smartphones can be inexpensive.

The off-contract price is ridiculous. Just to put it into perspective: The brand-new iPad Mini w/Retina Display with 16GB WiFi+LTE is CHEAPER than a 16GB iPhone 5c ($529 vs $549). The iPad Mini w/Retina Display has a much higher resolution display, the 64-bit A7 chip, and made out of more expensive aluminum, yet it's still cheaper than the iPhone 5c with year-old hardware.

If the iPhone 5c had similar iPod Touch hardware, and priced at $399 (still a great margin for Apple), it would've shaken the market. People who finally want to ditch their terribly cheap Android phones would've switched to the 5c, and yet there is still a huge market for the flagship "forward-thinking" 5s.

Agreed. Should have replaced the 4S last year, like the iPod touch which is also 16:9 and A5.

 

[lke]

Lower the price of the iphone 5C and people will buy it instead of a cheap Android phone, keep the same price as it is now and people will buy the iphone 5S instead.

Apple needs to set the price of the iphone 5C in $449 for the 32gb version and $349 for the 16gb version.

Also Apple needs to give the iphone 5C for free when you order it with Att or other company.

They could keep the iphone 4S as well by offering it with a 12 month plan or less.


I think that the iphone 5C is a very good idea but it needs to be cheaper so that people that want a cheap android phone choose the iphone 5C instead.

 

[Renzatic]

Since the only difference between last year and this year is the year-old-phone's design, I have to conclude that the design is the problem.

I agree with this. The 5c isn't half bad looking (maybe a little too bright colored), but it's not exactly very "Apple" looking, either. I think one of the major draws to the iPhone is the minimalist styling. It's not flashy and overly adorned, rather sleek and simple. The 5c is a little different from Apple's usual flavor, and their usual customers who expect that aren't taking to it because of that.

I'd also say it's because it exists in a pricing limbo between all the other iDevices. It's cheaper than the 5s, but not so much it immediately becomes the quality bargain choice. Why settle for it when you can go whole hog for just $100 more?

 

[Giuly]

I'm more interested in what's beyond that.

Obviously an iPhone 6.

Maybe an iPhone 5cs (if you have a BMW color, you might as well stick to BMW name schemes, no?)
Another iPhone 6 Mini between them?
Or the 5c below that?
5c Mini?
5cs Mini?
No Mini?
iPhone Air, then?
Or an iPhone Earth, Wind and Fire?
iPhone Normal, Rock, Ground, Steel, Electric, Flying, Psychic, Ghost, Fighting, Dark, Grass, Dragon, Fire, Water, Poison, Bug, Ice?
No iPhone at all?

 

[Jvanleuvan]

Okay, so lets compare:

in October 2011:
the Iphone 4s(the newly released phone) outsold the Iphone 4 (the newly "mid-Tier" Phone) 12.85-to-1


In October 2012:
the Iphone 5 (the newly released phone) outsold the Iphone 4s (the newly "mid-Tier" Phone) 2.96-to-1


So Fast Forward to October-Novemebr 2013

The Iphone 5s (the newly released phone) outsold the Iphone 5c (the newly "mid-Tier" Phone) Between 2-to-1 and 3-to-1


So, it appears that the Iphone 5c is doing on-par, if not better than would be expected for Apple's "mid-tier" phone.

Also, you may note that usually the Mid-Tier phone "picks up steam" over the following months after the new phone is relased. with the Iphone 4s, at it's peak, accounting for about 30% of new Iphone sales. But not until December.
http://cdn1.appleinsider.com/cirp-130722-1.jpg


I've seen reports that put the profit margin on the Iphone 5c about 10%-12% higher than estimates for the Iphone 5 (at this price point) So Apple could sell 10%-12% less of Iphone 5C than they would have of Iphone 5 and still make more money.

Also, it gets even MORE complicated than this.

The profit on the Iphone 5S is about 36% higher than that of the Iphone 5 (at this price point). So this 12% less Iphones 5c that Apple sells (compared to the hypothetical Iphone 5 sales at this price point), ltes say that 40% of those went on to buy the 5s. Apple would be UP 2% in profit.


So not only is the Iphone 5C selling okay its selling at a higher profit margin than the 5 would have at this same price point. And, in the end perhaps the new design cost Apple some sales, but did it cost them any money?

 

[inscrewtable]

Way too many assumptions to agree with you on this. On trimmed production they're still making, what, 80,000 of these a day? That's 29 million a year at that rate. Hardly a "major blunder" or something that he will have to "humbly admit" is a failure. And if what was estimated to be 5C sales are cannibalized by 5S sales, I'm sure Apple and Tim are perfectly OK with that.

Don't misunderstand me, I'm not calling the product itself a blunder, I think it's a pretty good idea. It's just the pricing. It simply does not make any sense at all to have such a small disparity of $100 between the phones when the 5s is so much more than 100 better. It looked wrong at the time it looks wrong now. I can only see it as a blunder in pricing.

I'm not one of those who think they should make a cheapo product and I think the quality of the 5c is the right way to do it. I think they would have been better off making the 5s a bit dearer. It's not the pricing per se that is the 'blunder', it's the non disparity in price.

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They need to lower the price of an off-contract, unlocked 5C.

Yes, absolutely.

 

[petsounds]

Of course it's only a different way of selling last year's phone, that's obvious. What's also obvious is that it's a significantly inferior way of doing so - Apple has replaced the iPhone 5 shell for a cheaper plastic case (and this is a fact - no sane person could possibly argue that the plastic shell isn't cheaper to make than the metallic shell of the 5C) in order to have bigger profit margins than if they just sold the iPhone 5 for a lower price. Meanwhile, customers are expected to pay a premium price for a cheaper, inferior phone.

What articles like this tell us is that Apple may have fooled the most gullible of the fanboys, but not everyone else is falling for the "unapologetically plastic" marketing gimmick.

Cheaper? For one, it's not a cheap plastic like Android phones use, and it surrounds a steel frame. Do you know the part costs between the 5 and 5c cases? I doubt it, so you're just full of conjecture.

If I could have gotten one of the 5c colors on my 5s, I would've gone for that. I don't need to justify my expenditures by flashing around a material that "appears" expensive. The 5c is a great design, and let's not forget the 3gs had a plastic back, and I don't remember many people complaining about that. It was also arguably a more durable phone. The aluminum frame is nice, if rather boring, but it scratches and dents fairly easily.

 

[iSayuSay]

BWAHAHAHAHAHAA

Customers prefer the 5S... That's what I thought

It's called "For $100 more you could get the latest and greatest iphone -gate"

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...
The 5c is a great design, and let's not forget the 3gs had a plastic back, and I don't remember many people complaining about that. It was also arguably a more durable phone. The aluminum frame is nice, if rather boring, but it scratches and dents fairly easily.

Oh you mean you don't remember 3G and 3GS back were prone to cracking scratching and looks so ugly in months?

You don't remember why Steve approved the iPhone 4 design? It's made of glass so it won't scratch or fatigue-cracked as easy as polycarbonate.
And you know what? It works! My 4S looks just as beautiful as day 1 after 2years! Can the 5C do the same? Meeh

 

[IbisDoc]

How many smartphone makers would kill for the sales volume of what you term an epic fail?

I'm sorry. I forgot that the delusion ratio is high on this board. It's a smashing success, just what the CEO expected, I'm sure:

"The report claims that Apple's main assembly partner ProTek (Pegatron) has slashed production from 320,000 units per day in October to just 80,000 units per day. Similarly, Apple's backup assembler for the iPhone 5c, Foxconn, is operating at only a minimum capacity of 8-9,000 units per day."

 

[Kar98]

Eh, I think this isn't necessarily by design, but not a problem for Apple. They gave the "analysts" and "pundits" what they wanted -- a low cost iPhone -- and the consumers aren't buying it. Now Tim and Co. can turn around and say, "See? It didn't work. Now let us get back to doing what we do best -- hyper focusing on a single product."

"Low cost."

 

[theelysium]

Well, duh... What did they think when they picked fruity famine colors?

 

[Robocopper]

Pricing and Windows Phone 8

I am totally Mac, or was until a couple of weeks ago (several Mac laptops in my family + 2 iPads and various iPods and others). A couple of weeks ago I bought a Nokia Lumia 920 Windows Phone. Why?

I hoped Apple would produce an iPhone without the huge Apple tax on it and that would compete with mid-range phones from other companies. Not so. I held out until after the phones were released in New Zealand to examine the pricing, and came out disappointed. So I bought a Lumia 920 at about half the price of an iPone 5c.

Since then I have followed the blogs like MacRumors that are focussed on Windows Phones and my guess is that within the next year Lumia sales are going to take off. Currently they have about 10% marketshare in Europe and are growing rapidly in the USA. There is a huge market and thus huge $$$ to be made on these devices. The apps are not as good as the iOS apps yet, but the platform and interface are really nice (and I say that as a hyper-critic of Microsoft).

It feels a little funny partially returning to Microsoftland after many years on Mac. I still strongly dislike so much of their software, but that said, Skydrive feels years ahead of iCloud (which I think is a mutt -- sorry to insult dogs) and the UI for WP8 is really polished with more upgrades and improvements to come shortly.

 

[petsounds]

Oh you mean you don't remember 3G and 3GS back were prone to cracking scratching and looks so ugly in months?

You don't remember why Steve approved the iPhone 4 design? It's made of glass so it won't scratch or fatigue-cracked as easy as polycarbonate.
And you know what? It works! My 4S looks just as beautiful as day 1 after 2years! Can the 5C do the same? Meeh

My 3gs looks as good as new, but then I take care of my phones. I've never heard of them cracking and certainly not scratching, but I guess if you drop it on concrete Bad Things Will Happen.

 

[koppen89]

So this means they will only sell like what, 20-25 millions of these?

There is a demand for the phone, I see people with it every day, and I am very happy with my own one.

People need to understand that the 5c was never meant to be a cheap phone.
Also we need to understand that production, for obvious reasons, were most likely at maximum capacity, something that was not needed. There could also be less demand for some colors, and that may be the reasons for the cut down in production.

Anyway, iPhone 5c is not, and it will not be a failure.

Apple has replaced the iPhone 5 shell for a cheaper plastic case (and this is a fact - no sane person could possibly argue that the plastic shell isn't cheaper to make than the metallic shell of the 5C) in order to have bigger profit margins than if they just sold the iPhone 5 for a lower price.

I think you are strongly overestimating the price for the cases of these phones.
Even if the 5s case was, say 50% more expensive than the plastix one, it would almost mean nothing for the profits, or production costs.

 

[thekev]

Eh, I think this isn't necessarily by design, but not a problem for Apple. They gave the "analysts" and "pundits" what they wanted -- a low cost iPhone -- and the consumers aren't buying it. Now Tim and Co. can turn around and say, "See? It didn't work. Now let us get back to doing what we do best -- hyper focusing on a single product."

Apparently you have forgotten that they already covered that price territory. It wasn't even their cheapest. Before you had the 4, 4S, and 5 on sale simultaneously. Most of the 5Cs internals are still from the prior generation, just like you had with the 4S and 5. It's still just $100 less. How was this giving the analysts what they wanted?

 

[AFDoc]

What? You mean people aren't flocking to the plastic neon kiddie phone? What a surprise? I wonder if Apple did any market research before embarking on this adventure? IF they did they need to fire who ever decided it was a good idea to produce the 5c.