New iPhone 5c has analysts talking about possibly poor sales

http://www.latimes.com/business/la-fi-apple-iphone-20131018,0,7444589.story

by tod222 • 13 years ago

26 41 13 years ago

lchitnis• 13 years ago

Of course sales are poor...we are so used to paying a premium for the cool factor, and for quality (debatable), why would we go for plastic? It's largely (if not completely) a case of perception here. I just got off the phone with Apple because I need a new laptop. After tallying up a 15" Mac Book Pro with Retina Display, 3-year Apple Care, and a few other necessary extras, I'll be paying about $3k out the door. I wince as I write this but it's worth every penny for me...if I'm at Apple and I'm already being gouged, why not just get the best thing they have?

jasonlmk• 13 years ago

Comes down to how inelastic I am at that price point as well. Personally, if I'm going to pay $739 for a 5c here in Australia, I might as well fork out an extra $130 to 'future proof' myself with the 5s. I get the feeling that Apple still needs to get the price of the 5c right.

gfodor• 13 years ago

Of course, the catch here is that the 5C is not a "new iPhone" in the traditional sense. The 5S is the "new iPhone." The 5C is taking the place of the 5 in this cycle. If the 5C's numbers look better relative to the last analogous period, the sales of the 4 when the 4S was released, then this was a win for Apple (on a revenue basis.)

film42• 13 years ago

Exactly! The 5C wan not about making a new phone, it was about cutting costs of the old 5 so they could hit their market goal of $99 with 2/yr contract.

batiudrami• 13 years ago

The price difference between the 5C and the 5S appears even more minimal in countries where the phone payments are split across the life of the contract, rather than being upfront as in the US.

For instance, on the same plan with the same inclusions in Australia, the 5C is $64 a month, and the 5S is $69. From my perspective, there is no chance I would go for the 5C, and I think for it to be a successful device it needed to be $200 cheaper than the 5S (unsubsidised/retail), and really be a midrange device. But then, I've been wrong about Apple products in the past, so who knows.

tadfisher3• 13 years ago

The system most common in the US is a subsidy on the purchase of the phone, which for most people ends up working in a similar fashion. This is part of why the traditional phone contract here is much more expensive than the equivalent service in other countries, as phone subsidies make up a large portion of per-subscriber costs.

As most subscribers purchase subsidized devices, this system ends up working much like the system you described, but with a key difference: the up-front cost can be easily manipulated to serve the needs of carriers and manufacturers. At AT&T, the 4S is 0$ up front, the 5C is $99, and the 5S is $199, and that is the price the customer will see and reason about more than the monthly fee. This effectively creates a market for the 5C.

Things are getting complicated now that T-Mobile has introduced their à-la carte pricing scheme, where the service sold is decoupled from the cost of the device (whether paid in installments or up front). There you see a much less stark difference in the up-front costs between iPhones, and I'm curious about the sales numbers there.

oneeyedpigeon• 13 years ago

I find the use of the term "subsidy" hilarious in this context. You DO realise the phone companies just sting you through your monthly bill, and you end up paying MORE for the phone, right? That's an interest-charging loan you're getting, not a subsidy.

InclinedPlane2• 13 years ago

There's a lot of money in the low-end of the market, especially in the near future. Over the next decade or so the developing world is going to add on trillions of dollars in GDP. That's going to bring a lot of people to the table who will be able to afford a low-end smartphone or tablet, and for many of those people it will be their first computing device. Due to sheer volume alone there is a ton of money in that market. And that's in addition to the low-end of the market in existing developed countries, which is already huge.

However, the 5c isn't in that market. It's a $550 phone. It's only seemingly "cheap" because the usurious financing that most cell companies use enables them to offer a low down payment amount.

Look at it in two ways. When you lock yourself into a 2 year contract you're going to be paying about $1k for whatever device you upgrade to. The difference between $100 and $200 up front is trivial in comparison to this. So paying $1100 for a $550 phone versus $1200 for a $650 phone is, well, stupid. Even more so when you consider the performance and quality differences between the 5c and 5s.

That's at the high-end, for people who can afford expensive plans and expensive phones. At the low-end the 5c isn't competitive either. If you comparison shop un-subsidized phones on prepaid services you see that you can get LTE android devices in the $200 to $300 range, a Galaxy S3 is only $350. With an S3 and a $35/mo plan (virgin mobile) someone will be saving a minimum of $500 and closer to $1000, for comparable service, over 2 years compared to buying a subsidized 5c from verizon or AT&T. Even more if they opt for a truly low-cost phone (which can be as cheap as $150 unsubsidized for LTE capable devices, and essentially free if you don't care about LTE).

So it doesn't compete on the low-end because it's too expensive and it doesn't compete on the high-end (where its price puts it) because it's missing stuff.

No wonder no one is buying it.

alwaysinshade• 13 years ago

No wonder no one is buying it.

"Months of rumors about order cuts and so forth, so let me take a moment to comment on these. No comment on any particular rumor.

I suggest its good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on."

- Tim Cook, Q1 conference call, regarding rumors that demand for the iPhone 5 was waning. Q3 results? 31.2 million iPhones sold.

Analysts aren't very good at predicting things when they're using isolated data points from the supply chain.

sfjailbird• 13 years ago

Did you read the article? Shops say shelves are full of 5Cs all over the place.

tadfisher3• 13 years ago

I wouldn't be surprised if sales of the 5C are fine for US-style subsidized contracts, mostly because the psychology is different. Carriers do not present the total costs of their contracts, and customers are presented with two numbers: the monthly service fee and the up-front cost of the device. The service fee is the same between iDevices, leaving the up-front cost as the only apparent price discriminator.

It may be "stupid" for a customer to pick the slightly-cheaper 5C when considering total costs, but there is a market that places greater value on the extra $100 due at sign-up than on the superiority of the 5S over the 5C, and that is a market in which you and I do not take part.

nsxwolf• 13 years ago

It's a weird world when millions of units sold is interpreted as "no one is buying it".

innino• 13 years ago

News guys getting desperate. How many times can you run the story "finely-calibrated update to world's most popular phone still insanely popular"?

rebel• 13 years ago

The move seems so logical by Apple, although I've yet to really see any journalist comprehend it. Apple has lowered their cost to produce a product they were going to offer anyway (they always sell last years model at the same discount), while at the same time, visually differentiating it from the high end product. One would have to assume this has pushed more purchasers up-market to the newer device, while also attracting new customers who don't care about specs and are more concerned about the colors/fun factor. So Apple has not only gained a higher profit margin, they presumably have improved their device yield by making a simpler phone to produce. On top of all that, they have a product to appeal to a different segment of the market. The phone also allowed them to have something on the shelves while the 5s was sold out. Everything about it seems like an outstanding success to me.

marze2• 13 years ago

Very well put. It will be the first or second best selling phone in history and will have great margins for Apple. From their point of view, an excellent move.

The best indicator of the excellence of the Apple phone products, in my view, is that the iPhone 4 is still being sold. It came out 3 1/2 years ago, and is still good enough to be sold today. Are any competing smart phones from mid-2010 still being sold today?

objclxt• 13 years ago

I don't think Apple are still selling the iPhone 4...perhaps there is some inventory that's still available in certain markets, but if you go to an Apple Store it's the 4S, 5C, and 5S.

shrikant• 13 years ago

The 5c seems to be such a basic case of decoy marketing, that it's astounding I haven't seen it being mentioned more often.

http://www.dmn3.com/dmn3-blog/decoy-marketing-it-works-and-h...

daegloe2• 13 years ago

A technique used quite effectively when selling bundle tiers (e.g., platinum package vs. gold package vs. silver package, etc). Amazing that both Wall St and the general press have failed to recognize the 5c pricing for what it is: a brilliant decoy driving sales of the higher margin 5s.

Cthulhu_• 13 years ago

Your points are valid, but I do think Apple's taking a big risk there; especially in the last couple of years, the competition has fiercely increased, and I don't think the primary choice is "Latest model or latest -1" with a lot of consumers, but "iPhone or Android". Especially given how high-end, sexy-looking Android phones can easily dive under the price of the cheap-looking 5C.

yaeger• 13 years ago

I'd like to point out that the competition would have to offer a whole lot more than the current device people are using before they would consider a switch.

Isn't that why WinPhone has yet to actually gain any traction? The market of smartphones is pretty saturated. People by large who want to use smarthones compared to "dumbphones" most likely already use one.

Especially with Apple and them being first in the app store market, people who have been with them since the beginning have invested a lot on the eco system. And if you have bought so many apps and devices over the years, as time moves on, it would get more difficult to just up and leave for another eco system.

Which, incidentally is also why I think the design of the iPhone has not changed that much since the 4. I think starting form the first iPhone to the 4 they have really found a great design. And judging by the sales of the 4 and up, a lot of people feel the same. Personally, I don't want the next iPhone to feature a radically different design just for the sake of change. I saw what change for the sake of change gets us with Windows8.

If people want to switch phones on a whim just cause there is a "new sexy device" coming out, then Android has been their first choice for a long time now. Most iPhone users I know chose it because a) No tinkering needed, b) Always had a smooth Interface, c) A lot of apps available and d)A nice clean phone design.

I don't think Apple runs a risk just cause they don't suddenly convert their entire approach to mimick Android companies and releasing a plethora of different phone designs and specs. iPhone is iPhone and the variety we have now is sufficient. It would have to happen a lot before I would consider a switch of eco systems. But that would be more on the side of "what apple might do that I don't like" and not on the "what other android companies do that I might like". So, the "competition" increasing, to me, is only of interest for people who just now are in the market for their first smartphone. Or people who exclusively only get free apps. For those, the choice of eco system is entirely free to change on a whim. For me who has invested several hundred dollars in apps over the years? Not so much.

arbutus• 13 years ago

It's not supposed to sell like the 5S, it's supposed to sell like the 4S did when the 5 launched.

vvhn• 13 years ago

Not really. there is a much greater marketing push behind the 5c so the expectation seemed to have been more than the ones for " last years model"

YOSPOS• 13 years ago

Apple's market share for iPhones and iPads are going to crush the competition after the numbers for the holiday quarter come out.

dingaling• 13 years ago

Yes, analysts are predicting that Apple will take 100% of the iPhone and iPad market.

In reality, iOS market share in Europe is around 18% compared to 70% for Android; China is similar. In the USA it's 35-50.

I can see why Mozilla and Jolla are chasing the developing World markets; the market positions in the mature markets are pretty static now and are unlikely to fluctuate much. Anecdotally, people upgrade their phone on longer periods now ( three or four years ).

RealCasually• 13 years ago

3 to 4 years? I know you said anecdotally, but that seems absurd with the carrier cycle at 2 years.

seanmcdirmid• 13 years ago

iOS in China is down to 20% vs. 23% last year. It is still Apple's second largest market though (even compared to the EU as a whole); on track to be the largest next year or the year after.

Nokia dominates developing world markets for some reason; that's the whole point of Asha.

rimantas• 13 years ago

  > 70% for Android

Now compare this figure with the platforms distribution for mobile web traffic and it may appear, that a lot of those 70% consists of "Android powering featurephone".

jpalomaki• 13 years ago

According to WSJ [1] they have cut down the orders on 5c and increased orders on 5s.

There could be some psychology involved here. It's not hard to imagine some people making the decision to go for iPhone based on price of 5c but then actually ending up spending the few extra bucks to get the better model.

[1] http://online.wsj.com/news/article_email/SB10001424052702304...

gte910h2• 13 years ago

The point of the 5c is to make the 5s seem premium. It's also a higher profit phone than the 5 would have been even at this point, so if people happen to buy it, they make marginally more per unit.

New iPhone 5c has analysts talking about possibly poor sales

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