It won't come as a surprise to anyone seeing an ample supply of 5c devices at Apple (NASDAQ: AAPL ) retailers, but sources are telling The Wall Street Journal that the tech giant is scaling back orders from the device's two assemblers.
Sources say Apple has scaled back orders by less than 20% for the current quarter from Taiwan's Pegatron and by a third at Hon Hai Precision. A component maker has been notified of a 50% cut in orders, suggesting that production will be scaling back even more next quarter.
This isn't a reason to bail on Apple. The iPhone 5s continues to sell briskly by nearly every account. But it should once again raise questions as to why Apple didn't price its iPhone 5c more aggressively.
Source: Apple.
It was a gamble from the start. Pricing the colorful plastic-shelled iPhone 5c at $100 less than the iPhone 5s may seem like half off in this country where carrier subsidies dramatically shave the upfront cost to those tethering themselves to two-year contracts. But this was supposed to be the device that opened up new markets overseas, where wireless providers aren't as generous. In China, for example, an unsubsidized iPhone 5c at roughly $735 may be cheaper than the iPhone 5s at $866, but it's no threat to the other high-end smartphones running Google's Android that cost hundreds less.
Closer to home, shoppers aren't dumb. They know that the iPhone 5c doesn't cost half as much as the iPhone 5s. They are still subject to the same costly pricing plans that set them back roughly $2,000 for two years at the two largest carriers. What's the difference between the iPhone 5s at $2,200 and the iPhone 5c at $2,100? The features are fewer, and the colorful shells aren't much of a draw to consumers that will just slap a protective case on the device.
If the iPhone 5c was supposed to be Apple's response to Google's growing momentum, it doesn't appear to be working. As of the second quarter, tech tracker IDC had Google's Android share growing from 69% to 79% of the global smartphone market over the past year. Apple's iPhone went from 17% a year earlier to 13% this time around.
We'll have a clearer snapshot when Apple reports in two weeks. We can compare its iPhone sales for its fiscal fourth quarter and its overall guidance for the holiday quarter to where it was a year ago. Apple doesn't have to play the mainstream market, but letting Google's Android continue to grow unchecked doesn't seem like a very smart strategy.
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Report this Comment On October 16, 2013, at 7:38 PM, Gyre07 wrote:
Whoever was involved with the 5c should be fired. Plastic construction in pastel colors only, the same processor as the 5, the same price, and nothing new other than a facial cheapening. "Why" would anybody buy that? More importantly, who did the marketing department think it would actually appeal to?
If the stock wasn't going up I'd be pissed. But the question of what persons allowed that thing off the drawing board really needs to be examined as to their actual value to the company.
Report this Comment On October 16, 2013, at 8:04 PM, ScottAtlanta wrote:
@ Gyre -- lol, @ "....that thing..." There's always the morning after pill.
Tim Cook..."we don't do junk..."
Really?
Well I guess if Apple = gold Else Junk is the operating delusion.
Take that GD stock pile of 140 Billion and INNOVATE! Full Disclosure: Apple taunter here.
Report this Comment On October 16, 2013, at 8:19 PM, Bgraham55 wrote:
The 5c is doing exactly what was intended. Filling the spot of the one year old phone in the line up. Selling at 17% of total iphone sales vs the 14% of the 4s at this time last year. In September It was the 2nd or 3rd best selling phone at the 4 largest carriers in the US. A phone that is outselling the GS4 at AT&T and Sprint with only 11 days of sales vs 30. October it will most likely hold the 2nd spot at all 4 largest US carriers. World wide it will most likely sell over 10 million units before the end of the year in just over 100 days of availability and far less in many countries. Android can have the bottom of the market. Facebook just published iphone users are 1700+% more valuable than Android users because they use their phones more and they spend more.
Report this Comment On October 16, 2013, at 9:20 PM, secularinvestor wrote:
It is a shame that the author has been totally fooled by Google's smoke and mirror claims when he says: "As of the second quarter, tech tracker IDC had Google's Android share growing from 69% to 79% of the global smartphone market over the past year. Apple's iPhone went from 17% a year earlier to 13% this time around. "
These claims of Google gains in market share come from "shipment" ESTIMATES from the likes of Strategy Analytics and IDC, which rely on off the record "shipment" numbers from the marketing departments of Apple's rivals. These exaggerated "shipment" claims are then often reported in the media as "sales".
Both these organisations are notoriously inaccurate and biased. For example Samsung refuse to publish their actual unit sales since the evidence in Court last year showed that their actual sales were around ONE TENTH of their previous shipment claims. Instead, after almost every earning release, Strategy Analytics, whose Korea office is in Samsung's building, publish their "shipping" estimates, which invariably flatter their paymaster. For years IDC forecast that Windows phones would overtake iPhone sales....LOL
Furthermore, most of these alleged Android "Gains" come China, India and other underdeveloped economies, where the great majority of Androids are in fact "WHITE BOX" phones i.e. cheap phones which use FORKED versions of Android, which shut out Google and their adverts i.e. totally useless to Google. These forked users also cannot access Google Play, which means they are also totally useless to legitimate Android developers. To make matters worse, there numerous sites for Android App download sites in China and India where piracy, malware, scams and viruses are rampant, where any successful App is immediately copied, depriving legitimate Android developers of revenue and profits.
If you check more reliable sources such as Kantar, Comscore, Canaccord Genuity, NetMarketShare, GlobalStats, Mobile Ad, Chitika etc who use surveys of users actual buyer decisions, carrier activations and web usage data, they all show that over the last 12 to 18 months iPhones and iPads have been GAINING market share in the US, Canada, UK, France, Italy, Spain, Japan, Australia, Mexico etc. and that, in most of these mature, so called smartphone "saturated" markets, Android have been losing market share. This is very bad news for Google, because these are their main advertising markets
For example Kantar shows that in the past year in the US and Canada, by far the most important market for Google's adverts, iPhone share has increased from 33.9% to 39.3% while Android's share has decreased from 60.7% to 55.1%. Comscore show an even worse picture with Android's share of new users declining to less that iPhone's.
When it comes to tablets, Chitika's data shows that iPad's share has INCREASED over the last 3 surveys, from 81.3% to 84.3%, while Androids' share has DECLINED, with forked Amazon Kindle's share declining from 7.4% to 5.7% and Samsung Galaxy shrinking from 4.7% to 4.2%. The Google Nexus tablet has a tiny 1.2%, the same as forked Barnes and Noble tablet.
Research by Ben Bajaran finds that Apple have 64% US share of smartphones over $400.
Report this Comment On October 16, 2013, at 9:32 PM, djtetsu wrote:
I teach at a college here in souther california, and with my students it's ALWAYS majority iphones, usually closer to 75%.
This in conjunction with actual web useage stats you have to conclude that Android marketshare is merely flip-phones gone touch screen, nothing more.
Report this Comment On October 16, 2013, at 9:37 PM, secularinvestor wrote:
@ ScottAtlanta says "Take that GD stock pile of 140 Billion and INNOVATE! Full Disclosure: Apple taunter here."
I wonder in what deluded, fantasy world he inhabits?
So this isn't INNOVATION?
The iPhone 5S is a huge leap ahead of all its competitors with a combination of features a generation ahead of its rivals
* The 64 Bit A7 processor, far faster and more powerful than any other mobile chip
* The Touch ID which provides a reliable, easy to use, high security system
* The power sipping 24/7 M7 motion sensor chip
* The digital camera with software so advanced and powerful that it needs the power and speed of the 64 bit A7 chip.
In short Apple's innovation has left all their rivals floundering and struggling. It will take them years, IF EVER, to catch up.
As we speak iOS developers are working to rush out a new generation of high quality Apps to take advantage of the iPhone 5S powerful, innovative features.
These new Apps will widen even further the QUALITY GAP of iOS Apps compared to the already greatly inferior Android Apps.
Report this Comment On October 16, 2013, at 10:06 PM, secularinvestor wrote:
@ Bgraham55
"The 5c is doing exactly what was intended. Filling the spot of the one year old phone in the line up. Selling at 17% of total iphone sales vs the 14% of the 4s at this time last year. In September It was the 2nd or 3rd best selling phone at the 4 largest carriers in the US. A phone that is outselling the GS4 at AT&T and Sprint with only 11 days of sales vs 30. October it will most likely hold the 2nd spot at all 4 largest US carriers. World wide it will most likely sell over 10 million units before the end of the year in just over 100 days of availability and far less in many countries. Android can have the bottom of the market. Facebook just published iphone users are 1700+% more valuable than Android users because they use their phones more and they spend more."
A GREAT POST
Elaborating a bit more on the amazing data from Canaccord Genuities sales data the 4 largest US carriers.
* BOTH the iPhone 5S and 5C outsold the supposedly "best selling" Samsung Galaxy S4 during the month of September
* The Glaxy S4 was on sale throughout the 30 days of September at heavy discounts.
* The iPhone 5S and 5C were ONLY on sale for the LAST 10 Days.
* From other sources it is estimated that the the 5S outsold the 5C by between 2:1 to 3:1
* This means that together the two new iPhones OUTSOLD the Galaxy S4 3:1 or 4:1
* Because the Galaxy was available for 3 times the days of the new iPhone (30 days v 10 days) this means that the new iPhone 5S and 5C were selling at a a daily rate of 9 to 12 TIMES the daily rate of the Galaxy S4
Regarding the author's ill informed contention that "Apple's Cheap Smartphone Isn't Cheap Enough", the 5C was actually outselling the allegedly "best selling" rival Galaxy S4.
It seems that the author s=does not understand how premium quality luxury goods are marketed.
BMW, Mercedes, Audi, Jaguar, Ferrari, Porsche and every other luxury car maker has a range of models, including more affordable ones designed to get potential buyers through the door. They then try to convert them to buy their flagship models.
Walmart, Best Buy and others are all advertising and promoting special offers for the 5C which draws them into their showrooms.
When potential 5C buyers compare them to the flagship 5S, the best smartphone that money can buy, many then decide to upgrade. It nmakes sense, Not only do they get the best snartphone around, but they will be able to get a better trade in price, reducing the overall cost of ownership.
Every car maker would be delighted if they sold more of their flagship models than their more affordable models, but not according to the strange logic of Apple's detractors.
Report this Comment On October 16, 2013, at 10:18 PM, secularinvestor wrote:
@ Gyre07 and ScottAtlanta
Hey guys - SMELL THE COFFEE
According to Canaccord Genuity the 5C is outselling the Samsung top of the line Galaxy S4 by a daily rate of around 3:1
(According to Canaccord Genuity's survey of the 4 largest US carriers BOTH the iPhone 5S and 5C outsold the Galaxy S4 in September, even though new iPhones were only available for 10 days compared to the S4's 30 days)
Report this Comment On October 17, 2013, at 7:17 AM, jdmeck wrote:
It's more than cheap enough. Apple does not need to and should not aim towards the low end of society. Apple needs to remain the premium product. There is already enough low end junk out there.
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