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10/16/2013
09:12 AM
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Apple Slashes iPhone 5c Production

Apple reduced orders for the iPhone 5c for the rest of the quarter, leading to speculation about demand.

iPhone 5c, 5s: 10 Smart Design Choices
iPhone 5c, 5s: 10 Smart Design Choices
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Apple has asked Pegatron and Hon Hai to slow down their production of the iPhone 5c. Apple revised its orders from Pegatron downward by 20% and revised its orders from Hon Hai downward by one-third. The reduction suggests that the iPhone 5c may not be selling as well as Apple had forecast.

The information comes from unnamed supply chain sources cited by Reuters and The Wall Street Journal. Apple has not confirmed the details, but the order reduction gels with recent reports that the iPhone 5s is outselling the 5c by a factor of two to one.

Earlier this week, Consumer Intelligence Research Partners (CIRP) data indicated that Apple's iPhone 5s accounted for 64% of total iPhone sales at the end of September. The iPhone 5c accounted for 27% of sales, and the iPhone 4S comprised 9% of sales. In other words, the 5s is outselling the 5c by a significant margin. When purchased on contract, the least expensive iPhone 5s retails for $199, the 5c for $99 and the 4S is now free.

[ What do you want to see in Apple's next-gen iPad? Read Apple's New iPads: 7 Predictions. ]

Some are calling into question Apple's pricing strategy for the iPhone 5c. The iPhone 5c is essentially a repackaged version of last year's iPhone 5. It sheds the aluminum exterior for one made of polycarbonate. The 5c may cost Apple a bit less to manufacture than the high-end iPhone 5s, but the pricing differential is not enough.

Without a contract, the iPhone 5c starts at $549 -- certainly not a "low-cost" device -- while the 5s starts at $649. With only $100 separating the two, many consumers are opting for the high-end model. Initially, the 5c was expected to serve as an entry-level iPhone at a lower point of entry for emerging markets. That's not how it shaped up. In large markets such as China and India, the $549 iPhone 5c can't compete with entry-level Android phones that cost $200 or less.

The 5c, which is readily available from Apple, has already been discounted by $50 by U.S. retailers such as Walmart and Target. Discounts so early in a device's life generally point to weak demand.

However, Pegatron and Hon Hai are not Apple's only manufacturing partners. It's also useless to speculate about how much iPhone 5c stock Apple already has on hand. Last month, Apple said it moved 9 million iPhones in just four days, but it didn't provide a breakdown of how many were 5s and how many were 5c models. Further, analysts still predict that Apple will sell 23 million 5c devices during the fourth quarter of the year and another 10 million during the first quarter of next year.

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Ramon S
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Ramon S,
User Rank: Apprentice
10/17/2013 | 11:23:43 AM
re: Apple Slashes iPhone 5c Production
If I spend money on a smartphone then I want the best, especially since iPhones are mainly bought for bragging rights. Using a 5c gets you beaten up in schoolyards and lunch rooms. If Apple wants to sell more product then maybe insisting on a 450$ profit margin per phone is not the way to go. iPhones are nothing but ridiculously expensive toys.
AustinIT
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AustinIT,
User Rank: Apprentice
10/16/2013 | 8:18:18 PM
re: Apple Slashes iPhone 5c Production
Yes, but your analogy does not hold sway in Apple's case. They made a cheaper product and it had little material impact on their flagship device. The Apple buying public is what it is...
Jack N FranF583
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Jack N FranF583,
User Rank: Guru
10/16/2013 | 5:09:40 PM
re: Apple Slashes iPhone 5c Production
If you make bling, you undercut your bling by making a cheaper version. This is the Apple dilemma: if they make a knockoff that looks the same but is cheaper they devalue their primary product, if they make a cheaper looking product it has no status. Kind of like making a brass Rolex watch.
RudyA017
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RudyA017,
User Rank: Apprentice
10/16/2013 | 3:03:43 PM
re: Apple Slashes iPhone 5c Production
Hetep, If true all it would demonstrate is that apple dose not make "Cheep" phones like the Iphone clone folks. And the computer literate Iphone tribe does not want a cheep phones but might buy a less expensive Iphone for their children as a first phone. Wait till you see the holiday numbers.

Last but not lease cost is a concern for some especially over seas. However, here in the states droids are sold to two types of customers. Tech types that want to play under the hood, customize stuff etc. and Computer illiterates who get bat and switched into a droid because the Salesman makes a bigger commission.

I offer my condolences to the latter, but then in the end, they will make some of the best Iphone customers.
EdwardO676
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EdwardO676,
User Rank: Apprentice
10/16/2013 | 2:48:14 PM
re: Apple Slashes iPhone 5c Production
How about some verifiable information? "The information comes from unnamed supply chain sources cited byReuters and The Wall Street Journal." Would it not have been better to say "rumor has it"?
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