The cheap iPhone is neither cheap, nor seen as the real iPhone.
) has reduced orders for the iPhone 5C from its assemblers in Asia,
according to the
Wall Street Journal'
s Ian Sherr
. It turns out that customers are not buying the conspicuously
saw on Monday
the iPhone 5S is indeed an incredible feat of industrial design,
but it is also a high-end aspirational product. This is why the
flagship iPhone is outselling the "cheaper" 5C two to one. It
should be clear now that the 5C's pricing was far off the mark.
Apple is one of just two companies that makes profits in the
smartphone industry -- 60% of the market's profits, actually.
Especially in the cheaper segments of mature markets like the US,
(OTCMKTS:SSNLF) and other handset makers employing
) Android platform outsell Apple at a lower margin. This is even
more pronounced in emerging markets countries where analysts expect
the most pronounced growth in the smartphone market. In India, the
priced so far out of most people's reach
that even the
) Windows Phone outsells Apple there.
Apple investors were understandably scared that the high-end market
is already saturated with iOS devices, and that Apple will miss out
on growth, especially in countries where mobile carriers don't
usually subsidize the cost of a phone. When Apple revealed that its
notion of "affordable" is still not so cheap, the stock fell about
The newest batch of phones also went on sale in China and the US
simultaneously. But customers in China still aren't biting. The
iPhone remains a luxury product for the nouveau riche. The gold
iPhone 5S was the popular one there, especially with the
(which means "gold of the uncouth wealthy" or "like Elvis, you have
money and no idea how to spend it with class").
So Apple is cutting orders by about one-fifth or one-third,
according to the
Wall Street Journal
; one supplier said that orders were cut in half. The assembly
plants in China are even cancelling plans to hire more employees.
The article also said that
) are already starting to discount it. And unlike the 5S, consumers
have no trouble getting a 5C without any delay.
I should point out that the 5C was very well-reviewed. It's a nice
phone, but it's not as nice as the "real" iPhone. Apple just missed
the sweet spot on pricing. However, it hasn't even been two months
since Apple bifurcated its phone customers. Early adopters won't
settle for the colorful, but less spec-heavy phone. But when
holiday season rolls around, that might change.