iPhone 5s Demand Higher Than Expected, Took Time to 'Build the Mix' Customers Wanted

[Rogifan]

I don't know why anyone would be shocked that the 5c didn't surpass or even meet expectations. You can't repackage last year's tech & then try to pass it off as a fresh new shiny toy. Apple marketing is genius but even that's impossible for them. The buying public isn't that stupid, at least most aren't.

The thing is there are other smartphones on the market that don't have the latest and greatest or best specs but they're not labeled as last years tech. IMO the problem with the 5C is all the rumors that the "C" stood for cheap and Apple never did anything to quell those rumors. Second, this is the year they should have done away with the numbering scheme. Call it iPhone color or something else, anything but iPhone 5. Don't let the meme be its last years phone repackaged in a colored shell. I doubt the average consumer knows or cares whether their phone has "last years tech".

What's interesting is the 5C actually got good reviews. Even here most 5C owners are happy owners. It seems like one of those products where the people who hate it are ones that never had any intention of owning it in the first place. Who knows if Apple will keep it around. I actually think they should keep it as the 4S replacement and reduce the off contract price if necessary. But they may decide to scrap it. It's not like this is the first dud from Apple since Jobs 2.0. We had the buttonless shuffle, and the fat nano. And of course the cube. If nothing else perhaps the 5C experement told Apple that customers prefer metal over plastic and we won't see future plastic products from Apple. That's not a bad thing is it?

 

[tkermit]

The 5C did not sell well because the colors of the devices are AWFUL.

So pretty...

 

[kerrikins]

why is it that i seem to keep regularly reading things to the effect of "demand was higher than expected" since Cook took over? i thought he was supposed to be some kind of supply chain expert. yet this keeps happening over and over...

'Demand was higher than expected' has been a normal thing for Apple to have to say since 2007. It's not just since Cook took over from Jobs. I remember the lineups back when I got my 4, and that was before Jobs had stepped down.

 

[Risco]

Price sensitive people buy Android not iPhones. It was a good experiment, but it is clear people don't like second best when it comes to Apple.

 

[Gwonam]

The 5C did not sell well because the colors of the devices are AWFUL.

Get the colors right, Tim and more people will buy it. Let me make this easy for you:

Red
Black
White

You know, non-Barbie/girly colors. I can't believe how wrong all the analysis is of the 5c.

Yeah, only the white one and (kinda) the blue one were good. But there's no red option, only some weird red-pink?! What the heck?

 

[lk400]

How many other things also surprised them? How about a lot more people prefer the gold color than they anticipated? How about bigger screen iPhones? It seems there is no more visionary left with Apple; they build things by committees that are out of touch with changing consumer tastes.

Because changing the color or screen size is...visionary?

 

[Nicky G]

I really like the 5c, bought my mom one, she loves it. However, I always thought it was really designed to be the bottom "free with contract" offering of the lineup, and that when the next revision hits, and the 5c occupies that slot, it is going to take off, and destroy the remaining non-smartphone portion of the mobile handset market.

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And why Apple didn't offer a black 5c is beyond me. I think it would have done quite well.

 

[Rogifan]

How many other things also surprised them? How about a lot more people prefer the gold color than they anticipated? How about bigger screen iPhones? It seems there is no more visionary left with Apple; they build things by committees that are out of touch with changing consumer tastes.

But when the rumors of a gold iPhone first surfaced everyone went "eww" and a wondered WTF Apple was thinking. Now we're supposed to knock Apple for underestimating demand for the gold iPhone? The same gold phone that everyone knocked as tacky before it came out?

 

[osx11]

Hoping to see more variety in screen sizes... Imagine if they just sold the MacBook is one resolution. One size doesn't always fit all.

Rumors are pointing to more screen diversity in 2014, which will be a good thing.

It's funny how Apple always tries to minimize their offerings, only to end up caving to demand and releasing a lot of versions within a product category:

iMac: 2 x (21.5" iMac, 27" iMac)
MacBook: 5 x (MBP 13", MBP 13" w/Retina, MBP 15" w/Retina, MB Air 11.6", MB Air 13.3")
iPod: 4 x (Shuffle, Nano, Touch, Classic)
iPad: 2 x (iPad Air, iPad Mini)

iPhone: 1x? (iPhone)

Only a matter of time!

 

[Count Blah]

Considering Apple's manufacturing history, I'm surprised people are so shocked at the colours - look at the iPod nano lineup, or in smartphones, look at the colourful Blackberries and Razrs people used to rock... I honestly think it had more to do with the price difference not being that appealing more so than the colours.

The colors were/are hideous. There is no denying it. I have ZERO interest in any of the 5c colors.

 

[Rogifan]

Because changing the color or screen size is...visionary?

Apparently for Android it is.

 

[KiwiAdventure]

If the 5c was black then they would sell more but the existing colours are not for guys so what did Apple expect. The price was too expensive as well. Apple never has enough iPhones at launch and it takes months for Apple to catch up.

I wish Apple would spend more time fixing ISO as I'm getting sick of all the crashes.

 

[Rogifan]

I really like the 5c, bought my mom one, she loves it. However, I always thought it was really designed to be the bottom "free with contract" offering of the lineup, and that when the next revision hits, and the 5c occupies that slot, it is going to take off, and destroy the remaining non-smartphone portion of the mobile handset market.

----------

And why Apple didn't offer a black 5c is beyond me. I think it would have done quite well.

One would assume that changing colors is easy enough. And if Apple has survey data that says I like the phone but not the colors, they'll update it with new colors.

 

[mantan]

The 5C did not sell well because the colors of the devices are AWFUL.

Get the colors right, Tim and more people will buy it. Let me make this easy for you:

Red
Black
White

You know, non-Barbie/girly colors. I can't believe how wrong all the analysis is of the 5c.

I agree with this completely. My 16 year old daughter saved up and bought the C...but she loved the pink color. (she liked the green and yellow as well.)

My son wanted to get a C....but he hated it only came in 'girl colors'. If they had a black, dark gray, navy, red, etc - he would have bought one in a minute.

The biggest problem with the C is that it was mostly offered in colors that appealed to younger females. Even a black one would have probably sold well...

 

[IbisDoc]

"It took us some time in order to build the mix that customers were demanding" = "We didn't realize that customers wouldn't fall for our cynical attempt to sell them an obsolete phone in order to boost our profit margins"

 

[KPOM]

I don't know why anyone would be shocked that the 5c didn't surpass or even meet expectations. You can't repackage last year's tech & then try to pass it off as a fresh new shiny toy. Apple marketing is genius but even that's impossible for them. The buying public isn't that stupid, at least most aren't.

It depends on what Apple's expectations were. If they were that the 5c would sell as well as the 4s did a year ago, then they were reasonble, and a "miss" would be unexpected. If they expected a massive increase, then they were unrealistic. My guess is that they expected something in between, but that reality was closer to the typical "last year's phone" sales.

Apple isn't going to make a "cheap" iPhone. Sure, they made a cheap iPod, but back in its heyday, people would buy a second or third iPod. Since a phone for most people = contract and people don't swap SIM cards routinely, most people have just one phone (maybe 2 if work is paying for one, but decreasingly so as enterprise embraces BYOD). So a $300 "cheap" iPhone 5c wouldn't work (it would just destroy Apple's margins). Maybe a $450 iPhone 5c would work (still risky, though), but evidently not a $550 iPhone 5c.

 

[Nicky G]

"It took us some time in order to build the mix that customers were demanding" = "We didn't realize that customers wouldn't fall for our cynical attempt to sell them an obsolete phone in order to boost our profit margins"

You do realize that the 5c sitting in the "middle slot" of the iPhone lineup was simply the same strategy as they've done for years now, at the same price point, right? The middle slot has always been "last year's top of the line phone" and the bottom slot has always been "two years ago's top of the line phone." I know it's terribly confusing because the case changed, but the 5c is actually the same as the iPhone 5, and thus fits into this pattern.

 

[LastQuadrant]

I think the 5C didn't sell as well was primarily because of the colors. If they had better colors, they might sell more.

But I think Apple needs to focus on larger screen models and fast. That's where Apple doesn't have ANY market share.

I think the market share numbers should be split into more categories since it goes after different buyer demographics.

I think once Apple spits out some larger screen models, they'll get more market share since I think that's what is holding up more sales. I know for me, I'm waiting for a 5 inch model and my 2 year contract is over this month.

 

[osofast240sx]

I'm surprised this caught Apple off-guard. The iPhone 5c was just a plastic 5 and priced accordingly. Nothing new about the proposition, yet still the forecast was way off apparently.

Serious error in judgement.

Not a error in judgment they just need to find the right mixture. It's not like they're taking a loss they just haven't sold as expected

 

[djgamble]

For $100 over the 5C, the 5S offered A LOT of benefit.

Yep EXACTLY....
In Australia it is $529 for a 4S (yes 4S!!), $739 for a 5C and $869 for a 5S.

Other factor aside, here's my reasoning as a consumer:
1) 4S is oooold!! I can get one second hand for ~$200 or less, why would I buy one 'new?' They don't compare with new $500 Androids in terms of features/performance and really aren't a good buy. I bought one new when they were brand new and still use it (love it.) BUT I think Apple looks bad selling 3-year-old phones for $500. I'd cut them from the market, mainly because people will buy them and say 'man the iPhone is nowhere near as good as Androids... I got this brand new 4S and it's much slower...etc'

2) The 5S is THE phone to get. It's the newest, the fastest and has the most features. It costs close to a grand so is a considerable amount of money for most. Without quoting my income, I can afford that kind of money but would rather not spend it on a phone every year (hence why I use the 4S still.) I guess when push comes to shove I prefer having a new/reliable car (without a loan), annual trips to Asia/Europe/The USA with my partner, platinum memberships for my favourite footy club and my law school fees as I recently went back to school part-time. I enjoy having all of these rather than the latest iPhone every year. FWIW I pay ~$25 a month for my phone bill as I'm not on a plan and scoot around choosing the best deal each month (doesn't usually change too often.)

When I eventually upgrade (maybe when my 4S turns 4 or 5?) I'll probably get the equivalent of the 5S. To me this is the only option unless the 5C becomes a $300-$500 phone, in which case I'd consider buying last year's phone at a 50% discount every year.

3) The 5C... let's get real, it's just a 5 in a new case that apparently has a slightly larger battery. I actually like them but feel most people wanted to pay ~$500 for them, NOT $100 less than a 5S. If you're spending close to a grand and can get an infinitely better product for $100 more then why not?

IMO It's MUCH cooler than simply keeping the iPhone 5 on the market, but to be frank, why shouldn't I just buy a 2nd hand iPhone 5 instead? A mate offered me one for $500 when he got his 5S (the guy isn't rich but he's one of those... dudes who buys a new Mac Pro and iPhone every year because he can't live without having the latest and greatest Apple gear.) His money, not mine...

Anyway that would be my call. If times were tough, my 4S broke/became unusably slow and the $100 extra for a 5S was going to break the bank then I would buy a 2nd hand iPhone 5 instead of a 5C.

---

Note: Think what you like... Apple has me feeding from their hands. I like Apple's ecosystem and don't want to buy Windows/Android devices. A few years back I was broke (went through a horrible international divorce and was unable to work full-time for as I was going in between countries for court visits...etc and had a bit of a breakdown.) She took my Mac (grab and run when clearing out her gear) and I was forced to go shopping for low-end gear.

Rather than buy a cheap PC I found a 10 year old Mac for ~$100. I'm the same with iPhones and believe that a significant proportion of Mac users are like this. We love Apple and will only buy Apple gear BUT we need the right deal...

 

[daneoni]

Its the price stupid. $100 less than an 5S makes no sense. Its not a budget price, and if you're pricing at flagship level...people will buy the actual flagships.

The Moto G is an excellent example of how to do budget.

 

[TrentS]

Ow My Fingy!!

I don't think the plastic build was the reason why few wanted to buy the 5C. I think it was mainly because it didn't come with the finger print sensor.

 

[B4U]

The 5C did not sell well because the colors of the devices are AWFUL.

Get the colors right, Tim and more people will buy it. Let me make this easy for you:

Red
Black
White

You know, non-Barbie/girly colors. I can't believe how wrong all the analysis is of the 5c.

How dare they not to include Blue with the Red and White in USA?

Jokes aside, those 5C colors are not that bad (yeah, right...), at least someone liked them in Apple and then approved them...

 

[nagromme]

...with the 5s outselling the 5c by a two-to-one margin...

Two to one. Two-thirds of current iPhones sold were the high-end model. The more profitable one. The one that gets TouchID into more hands to foster a whole new future ecosystem. Apple guessed the mix wrong and then corrected it, ultimately selling every 5S and 5C they made. (Guessed wrong by how much? What launch by any company is ever a perfectly-predicted quantity that never needs adjustment? What Apple launch doesn't "lose" some sales due to shortages?)

Are we somehow going to have a perpetual narrative that that's a failure?

Are we somehow going to have a perpetual narrative that the 5C is a failure because it got "only" 1/3 of a massive sales number?

Yes, I think we will

 

[69650]

If they didn't see this coming than I find that worrying quite frankly. Everyone and their auntie could see the price differential between the 5c and 5s was just plain ridiculous given the difference in spec.

Presumably they will lower the 5c price next year and use it to replace the 4s which will probably help to boost sales. Who knows they might actually make some nicer colours to.

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Two to one. Two-thirds of current iPhones sold were the high-end model. The more profitable one.

Do we know for sure the 5s is more profitable? The Touch ID and better spec presumably costs more to make.

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I don't think the plastic build was the reason why few wanted to buy the 5C. I think it was mainly because it didn't come with the finger print sensor.

I would agree with that. I bought the 5s primarily because I wanted the Touch ID. I don't actually like the metal design. It's uncomfortable to hold. First thing I did when I got home was stick it in the new Apple leather case, which is a right pain as I'm finding out that almost none of the peripherals I want to buy will work with the 5s in a case. Even Apple's own charging stand won't take the 5s with the case. How stupid is that!

I would actually have preferred to buy the plastic 5c. It's more comfortable to hold and you don't have to put it in a case. I'm not keen on the current range of colours but if they made some more adult-orientated colours rather than colours for teens and added Touch ID then I would happily buy one.