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Apple Cuts Supply Orders for Not-Cheap-Enough iPhone 5C

Apple Cuts Supply Orders for Not-Cheap-Enough iPhone 5C
October 16, 2013 2:00PM

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The apparently critical flaw with the iPhone 5C is its price. Instead of coming in far below the cost of Apple's premium iPhone 5S, it was released at a relatively close price point. Although the device is great for people who want a plastic or colorful phone, it is not providing a "cheap" way to access the iOS ecosystem, which is what many customers want.

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Apple is now having to cut back supply orders for the iPhone 5C due to the phone's lack of appeal among buyers. Based on Apple's own sales numbers, the iPhone 5S is selling at twice the rate of its plastic-backed and slightly cheaper iPhone 5C.

While sales are low in the U.S., Apple is really struggling to push out the iPhone 5C to buyers in other countries. Unfortunately, the iPhone 5C was intended to be Apple's gateway into overseas markets, but it has failed to be that so far.

High Price, Low Sales

The apparently critical flaw with the iPhone 5C is its price. Instead of coming in far below the cost of Apple's premium iPhone 5S, it was released at a relatively close price point. Although the device is great for people who want a plastic or colorful phone, it is not providing a "cheap" way to have access to the iOS ecosystem, which is what many customers want.

Analysts have not been surprised by Apple's decision to cut back on its production orders.

"As far as emerging markets, the 5C is simply not cheap enough to gain traction with customers that can buy $150 Android devices," said Morningstar analyst Brian Colello.

Bloggers and analysts in China have repeatedly made accurate predictions regarding the iPhone 5C and how its price would affect sales. Within hours of the iPhone 5C's price being announced, it was clear to most people that the phone would not be Apple's solution to its developing-market problem.

iPhone 5S Is Winning

While Apple did not win over the market with the iPhone 5C, its latest round of new phones were not completely unsuccessful. The high-end iPhone 5S is selling twice as fast as its cheaper brother and is doing quite well in the usual U.S., European, and now, Asian markets.

To many analysts' surprise, the iPhone 5S has actually been the successful iPhone in Asian countries, specifically China. For the people who are able to afford it, the 5S is the better choice considering that it barely costs any more than the 5C.

It may well be the fact that releasing two completely new devices is what killed off the iPhone 5C's potential for success. Some analysts are now assuming that saturation of the iPhone market is the leading cause of the public's lackluster interest in the 5C.

According to Foxconn executives, Apple is raising its production orders for the iPhone 5S at the same time as it decreases its request for 5C units. This makes sense considering how overwhelmed Apple stores and authorized retailers were on the new iPhone's launch date. In the end, Apple's general iPhone sales predictions for the rest of 2013 will likely stay accurate. However, the bulk of those sales will be coming from the 5S, and less will come from the cheaper iPhone 5C.

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