Apple Increasing iPhone 5s Production by 75%, Cutting iPhone 5c Orders by 35%

[mozumder]

Then you are following the wrong company.

You are wrong. Apple isn't a computer company. They even changed their name to reflect that.

Is there anything else you want to be wrong about?

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are you serious? lol...........

lol!

This is what's going on with all the cheap android phones - people use them for phones, they don't use them for their computer. That's why their web use stats are so low.

 

[ToroidalZeus]

Understandably, MacRumors posters don't have the best business sense But that's why I appreciate your post.

Apple sells a lot more iPhones because not only are the expected consumers buying the iPhone 5S, but some price sensitive consumers will now consider the 5C where as they wouldn't have bought the 5S anyway. Apple now has more customers, and therefor more revenue.

The risk they are taking though is brand integrity. If Apple starts dipping into "non-luxury" or "non-product-leadership" phone territory, that makes the phone less exclusive, luxurious, and masterful, which lessons the meaning of owning the iPhone brand. They are starting to muddy up their brand message a bit but they may be able to pull it off with pre-emptive messaging (eg. "un-apologetically plastic"). It's also an attempt of clarifying that their iPhone 5S is masterful, and saying their iPhone 5C competes with Samsung/HTC phones when it comes to customer intimacy (ie., the many colors you can choose and customize to your personality needs).

It's a brand marketing judo move. Subtle, subliminal, and it may work over time. We'll see what they do next year.

Same to you too. You are overthinking this.

Apple did the something they have done for the last few years. Release a new iPhone, drop the old phones price by $100.... except there is one slight difference. The lower end model now has a plastic shell. The question is why?

The answer is quite simple. The metal-shell of the iPhone is "relatively" expensive to make. Furthermore it requires very expensive and sophisticated machinery. Now every year Apple sells more and more iPhones. If all the iPhones Apple sold this year were metal-shelled iPhone 5/5s style it would require more machinery to make. By changing the 5 into a plastic shell able is able to reallocate all that manufacturing capacity to a single line (i.e. the 5s). Better yet since the plastic is cheaper to make Apple's profit margins on last year design increase too.

That's the whole reason of the 5c. To transfer manufacturing capacity to the 5s without needing invest so heavily in infrastructure as well as increasing the profit margin on the lower-end device.

 

[jkichline]

This is good news

I'm tired of people talking about how Apple is doomed because they are cutting 5c orders. First of all, stop trying to read the tea leaves of the supply chain. It's complex.

Next, let's take a look at the percentages... 5c goes down by 35%, iPhone 5s goes up by 75%. See that math there? Apple is selling more iPhone 5s than they thought they would. Or maybe they knew this was going to happen, we don't know and really don't care. The fact that there are still lines for Apple's flagship phone indicates the massive demand. This is GOOD news.

I still believe that the 5c is going to have an awesome holiday quarter. Last year's iPhone 5 is still a better phone than most of the crap on the market today. If you can't cough up $99 for the cheapest phone, you're not Apple's target market and you don't value the VALUE that Apple brings to the table EVERY TIME.

 

[lord patton]

Same to you too. You are overthinking this.

Apple did the something they have done for the last few years. Release a new iPhone, drop the old phones price by $100.... except there is one slight different. The lower end model now has a plastic shell. The question is why?

The answer is quite simple. The metal-shell of the iPhone is "relatively" expensive to make. Furthermore it requires very expensive and sophisticated machinery. Now every year Apple sells more and more iPhones. If all the iPhones Apple sold this year were metal-shelled iPhone 5/5s style it would require more machinery to make. By changing the 5 into a plastic shell able is able to reallocate all that manufacturing capacity to a single line (i.e. the 5s). Better yet since the plastic is cheaper to make Apple's profit margins on last year design increase too.

That's the whole reason of the 5c. To transfer manufacturing capacity to the 5s without needing invest so heavily in infrastructure as well as increasing the profit margin on the lower-end device.

This is what I was getting at, but Zeus said it better Dead on, man.

 

[Portal83]

Everyone with a brain expected a $0 with contract $499 w/o phone. People don't go gaga for the iPhone 5 with $99 off and looking more like a toy. Tim Cook better wake up to reality rather than playing the MBA school of economics or Apple will be overproducing things quicker than Blackberry can say Z10.

 

[TallManNY]

Of course not. That was the whole point of my post. For a while, Apple can increase sales 5% year over year. But eventually, the loss of market share will reasch a threshold where Apples settles into it's comfortable spot as commodity player in the smart phone market like it did in the PC market.

But Apple is not a commodity player int he PC market as evidenced it having a huge portion of the high end PC sales.

 

[ohbrilliance]

What MAN would walk around with a 5c with its girly colours

I would. I don't need a phone to define my manhood.

 

[heimo]

What MAN would walk around with a 5c with its girly colours

Girly men ("metrosexuals") will. Real men ("Chuck Norris"-type) are waiting for "Gun Metal" option (*.


*) We will donate $10 for every "Gun Metal" purchase to buy more guns in 3rd world countries.

 

[6749974]

Same to you too. You are overthinking this.

Apple did the something they have done for the last few years. Release a new iPhone, drop the old phones price by $100.... except there is one slight difference. The lower end model now has a plastic shell. The question is why?

The answer is quite simple. The metal-shell of the iPhone is "relatively" expensive to make. Furthermore it requires very expensive and sophisticated machinery. Now every year Apple sells more and more iPhones. If all the iPhones Apple sold this year were metal-shelled iPhone 5/5s style it would require more machinery to make. By changing the 5 into a plastic shell able is able to reallocate all that manufacturing capacity to a single line (i.e. the 5s). Better yet since the plastic is cheaper to make Apple's profit margins on last year design increase too.

That's the whole reason of the 5c. To transfer manufacturing capacity to the 5s without needing invest so heavily in infrastructure as well as increasing the profit margin on the lower-end device.

What's wrong with you? I was responding and agreeing with the guy for saying Apple makes a higher margin with the 5C. Then you tell me I'm overthinking, that they are doing it for the higher margin. If you're saying the same thing as the guy I'm agreeing with, then I'm agreeing with you (at least on the profit margin part ).

Do.you.not.see.that?

Also, I'm not overthinking anything. I do this for a living, understanding how brand strategy works. If anything were all oversimplifying because this is macrumors, not Harvard Business Review.

iPhone 5S is a halo product to a 5C. They can use the halo product to control the brand image, while also dip into more customer intimate product lines that by traditional nature sell in high volumes because the price is lower. Taking last years model and offering multiple colors is a play into the need to express personality and satisfy preference (customer intimacy).

People don't buy Beats headphones, for example, to hear audiophile music. They buy it because on top of it playing good/decent sound quality it's primarily a social proof and means of personality expression. Although there's obviously a range there in which a person will make that buying decision.

There is a gap with the iPhone 5 in that it only came in black or white. Sure it expressed mastery and luxury, but not personality. (Like a green Kia Soul expresses more personality than a white BMW, usually personality expression is less expensive, and mastery is more expensive but less about personality expression and more about purpose and importance.)

To conclude this: I agree with you, and more so the original poster I was responding to before you became so confused. But on top of that, know that Apple isn't just playing a "operational efficiency" game, they are playing a psychological one in which a percentage of the population will always value options and personality expression above mastery. So Apple can dip into that customer segment as well.

We'll see how this slight venture plays out.

 

[MellowFuzz]

I respectfully disagree. Plastic is fine but the price was not justifiable. They cannibalized sales and resources from their own product line... and for what?

They could have made the 5c a very inexpensive phone for emerging countries and off-contract folks but they chose to price the thing almost the same as their flagship phone. That is why it is failing... has nothing to do with plastic.

Amazon has been selling Kindle's for cost, or below, for years now. Why? To get into people's homes and push their closed OS and content system. Apple could have sold the 5c for cost and reached 10's of millions of new people all over the world and made "bank" with iOS/iTunes revenue.

Tim Cook failed miserably on this one. The only people stupid enough to buy a 5c are the ones that are not aware of the millions of colored cases you can add to a 5s

With respect to Apple's core competency i.e. product, this was Tim Cook's Browett moment - a screw-up that's screamingly obvious to everyone else but him.

 

[ToroidalZeus]

What's wrong with you? I was responding and agreeing with the guy for saying Apple makes a higher margin with the 5C. Then you tell me I'm overthinking, that they are doing it for the higher margin. If you're saying the same thing as the guy I'm agreeing with, then I'm agreeing with you (at least on the profit margin part ).

Do.you.not.see.that?

Also, I'm not overthinking anything. I do this for a living, understanding how brand strategy works. If anything were all oversimplifying because this is macrumors, not Harvard Business Review.

iPhone 5S is a halo product to a 5C. They can use the halo product to control the brand image, while also dip into more customer intimate product lines that by traditional nature sell in high volumes because the price is lower. Taking last years model and offering multiple colors is a play into the need to express personality and satisfy preference (customer intimacy).

People don't buy Beats headphones, for example, to hear audiophile music. They buy it because on top of it playing good/decent sound quality it's primarily a social proof and means of personality expression. Although there's obviously a range there in which a person will make that buying decision.

There is a gap with the iPhone 5 in that it only came in black or white. Sure it expressed mastery and luxury, but not personality. (Like a green Kia Soul expresses more personality than a white BMW, usually personality expression is less expensive, and mastery is more expensive but less about personality expression and more about purpose and importance.)

To conclude this: I agree with you, and more so the original poster I was responding to before you became so confused. But on top of that, know that Apple isn't just playing a "operational efficiency" game, they are playing a psychological one in which a percentage of the population will always value options and personality expression above mastery. So Apple can dip into that customer segment as well.

We'll see how this slight venture plays out.

Like I said, you are way over thinking this.

 

[Bensalama21]

I respectfully disagree. Plastic is fine but the price was not justifiable. They cannibalized sales and resources from their own product line... and for what?

They could have made the 5c a very inexpensive phone for emerging countries and off-contract folks but they chose to price the thing almost the same as their flagship phone. That is why it is failing... has nothing to do with plastic.

Amazon has been selling Kindle's for cost, or below, for years now. Why? To get into people's homes and push their closed OS and content system. Apple could have sold the 5c for cost and reached 10's of millions of new people all over the world and made "bank" with iOS/iTunes revenue.

Tim Cook failed miserably on this one. The only people stupid enough to buy a 5c are the ones that are not aware of the millions of colored cases you can add to a 5s

No, I think we are on the same page.. I agree. Why would anyone buy a plastic iPhone, when they can get a 'luxurious' model for a $100 more?

 

[6749974]

Everyone with a brain expected a $0 with contract $499 w/o phone. People don't go gaga for the iPhone 5 with $99 off and looking more like a toy. Tim Cook better wake up to reality rather than playing the MBA school of economics or Apple will be overproducing things quicker than Blackberry can say Z10.

It would be a bad move to have a $0 (with contract) iPhone 5, so close to their main phone, because it takes away from their main phone appearing like a luxury product. They just hired the CEO of Burberry who sells luxury. Apple doesn't want to take away from being a luxury brand. The iPhone 5C is a compromise and attempt to swat at their lower price competition but should they offer it at free (which psychologically reads as cheap) then their brand is hurt. So you see the needle hole they are trying to jump through. It's an experiment. Time will tell.

 

[Count Blah]

But Apple is not a commodity player int he PC market as evidenced it having a huge portion of the high end PC sales.

I'm talking the low point, not right at this second.

 

[6749974]

Like I said, you are way over thinking this.

I get paid to think. CEOs and the whole executive team, including Chief Marketing and Chief Brand Officers get paid to think. And think. And think. To know every option. To see every angle.

Consumers don't educate themselves on the psychology of need. Strategists do.

And posters like you don't care. That's fine by me.

 

[512ke]

The 5C is a brilliant product. It will sell way more than the 4S it replaces as Apple's mid price point phone. Way more.

Apple's reducing production of the 5C at this time does not necessarily indicate low sales for the 5C. In fact the 5C is selling well around the world. It's near the top of the sales chart for instance at many of the major US cell carriers.

I have used the 5C. It has a great fit and feel.

People who wish to slam the 5C and Apple will be unable to do so, after Apple enjoys unprecedented holiday sales.

 

[captain kaos]

Well, its not surprising, it wasn't cheap. I for one would want the 5c to stay as i was looking forward to next years one, i.e., the 5s innards in the colour case.

 

[6749974]

The 5C is a brilliant product. It will sell way more than the 4S it replaces as Apple's mid price point phone. Way more.

Apple's reducing production of the 5C at this time does not necessarily indicate low sales for the 5C. In fact the 5C is selling well around the world. It's near the top of the sales chart for instance at many of the major US cell carriers.

I have used the 5C. It has a great fit and feel.

People who wish to slam the 5C and Apple will be unable to do so, after Apple enjoys unprecedented holiday sales.

Right on. This is a scientific experiment for Apple and so far it can still be a huge success, especially for the gift market come Holidays. There is a huge "early majority" and a huge "late majority." Early majority buys their phones in the first few months of release. Late majority buy theirs during holidays, sales, and contract renewals. That's when the 5C will shine, for late majority. There is a bell curve for markets, and different product lines play differently for different segments throughout different moments of time (a lot of differents).

Unfortunately for Apple, they may have over expected the early majority to rush the 5C. That's what metrics are for...adjustment.

 

[Klae17]

Because the growing markets aren't areas where the current price point is feasible. So yes...lowering the price would absolutely make business sense, especially in the long term (and if they can maintain quality).

The real money is where there's growth. That's one of the simplest rules of business. LET ME REPEAT THAT. The real money is where there's growth.

Tell that to Android. Massive market share and low profits.

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Understandably, MacRumors posters don't have the best business sense But that's why I appreciate your post.

Apple sells a lot more iPhones because not only are the expected consumers buying the iPhone 5S, but some price sensitive consumers will now consider the 5C where as they wouldn't have bought the 5S anyway. Apple now has more customers, and therefor more revenue.

The risk they are taking though is brand integrity. If Apple starts dipping into "non-luxury" or "non-product-leadership" phone territory, that makes the phone less exclusive, luxurious, and masterful, which lessons the meaning of owning the iPhone brand. They are starting to muddy up their brand message a bit but they may be able to pull it off with pre-emptive messaging (eg. "un-apologetically plastic"). It's also an attempt of clarifying that their iPhone 5S is masterful, and saying their iPhone 5C competes with Samsung/HTC phones when it comes to customer intimacy (ie., the many colors you can choose and customize to your personality needs).

It's a brand marketing judo move. Subtle, subliminal, and it may work over time. We'll see what they do next year.

Your post made awesome sense. Thank you.

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Of course not. That was the whole point of my post. For a while, Apple can increase sales 5% year over year. But eventually, the loss of market share will reasch a threshold where Apples settles into it's comfortable spot as commodity player in the smart phone market like it did in the PC market.

That will happen when the market declines and Apple will jump into another market. Commodity player? Unlikely.

 

[TTile]

I respectfully disagree. Plastic is fine but the price was not justifiable. They cannibalized sales and resources from their own product line... and for what?

They could have made the 5c a very inexpensive phone for emerging countries and off-contract folks but they chose to price the thing almost the same as their flagship phone. That is why it is failing... has nothing to do with plastic.

Amazon has been selling Kindle's for cost, or below, for years now. Why? To get into people's homes and push their closed OS and content system. Apple could have sold the 5c for cost and reached 10's of millions of new people all over the world and made "bank" with iOS/iTunes revenue.

Tim Cook failed miserably on this one. The only people stupid enough to buy a 5c are the ones that are not aware of the millions of colored cases you can add to a 5s

Apple is not a content company. They're a hardware company. They make essentially all their money on hardware sales. Content offerings are merely a means to sell more hardware. Amazon is the exact opposite. They are a content sales company. They could care less about hardware sales. Its just a means to have people consume more of their content and lock them into their ecosystem (i.e. buying stuff on Amazon as opposed to Walmart).

The 5c was never made to be an inexpensive phone. It was meant to differentiate the 5s from the older 5 (as opposed to selling a 5 in its previous form). Everything is essentially the same (price of 1yr old flagship iPhone, hardware of 1yr old flagship iPhone). This isn't hard to understand.

 

[ToroidalZeus]

I get paid to think. CEOs and the whole executive team, including Chief Marketing and Chief Brand Officers get paid to think. And think. And think. To know every option. To see every angle.

Consumers don't educate themselves on the psychology of need. Strategists do.

And posters like you don't care. That's fine by me.

Thinking is good but overthinking isn't. You don't make multibillion dollar decisions based on brand image and halo effects. Come'on it's much more simple and logical. Manufacturing expensive, that is it.

 

[olowott]

Last year's phone in plastic - now that was not cool , i prefer iPhone 5 than iPhone 5c


its like buying an apple product and its not the best in the market for the next 12 months

even china was "no thank you, we only do premium"

 

[NOV]

I respectfully disagree. Plastic is fine but the price was not justifiable. They cannibalized sales and resources from their own product line... and for what?

They could have made the 5c a very inexpensive phone for emerging countries and off-contract folks but they chose to price the thing almost the same as their flagship phone. That is why it is failing... has nothing to do with plastic.

Amazon has been selling Kindle's for cost, or below, for years now. Why? To get into people's homes and push their closed OS and content system. Apple could have sold the 5c for cost and reached 10's of millions of new people all over the world and made "bank" with iOS/iTunes revenue.

Tim Cook failed miserably on this one. The only people stupid enough to buy a 5c are the ones that are not aware of the millions of colored cases you can add to a 5s

Apple works the other way around (compared to Amazon) > giving the software away but making big profit margins on hardware. That's not to say the 5c isn't a miserable failure. It should have had same internals as 5s and have the same price point as it has now. Business market could go after 5s, Other markets would be served with 5c.

 

[Pakaku]

What MAN would walk around with a 5c with its girly colours

A real man who isn't insecure about his gender, and doesn't need a phone to reinforce his gender, perhaps?

 

[BvizioN]

A wild suggestion to Apple is to make the iPhone 5c what it was rumoured to be: a low-priced iPhone.

Apple does not make products based on rumors. Consumer except products based on rumors.