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Just How Epic a Failure Is Apple's iPhone 5c?

Like it or not, even the best companies are guilty of the occasional blunder.

Microsoft had the Zune. Netflix had Qwikster. From time to time, it just happens.

Tech giant Apple (NASDAQ: AAPL  ) certainly isn't immune to the periodic dud either: Newton, anyone? And from the look of things, Apple appears to have created another less-than-memorable product when it released its lower-cost iPhone 5c last fall.

The high end of the low end
In the run up to Apple's iPhone refresh last September, the analyst community was abuzz with speculation that Apple was indeed planning to finally introduce a device that would help it compete in the highest-growth area of the global smartphone market: the low end.

What consumers got instead was the iPhone 5c, a phone aimed at just that, but with a price tag that suggested otherwise. Starting at just $100 less than the higher-end iPhone 5s, Apple placed the device in an awkward no man's land of being a cheap luxury device.

And as you might expect, the iPhone 5c hasn't exactly been flying off the shelves. In the video below, tech and telecom analyst Andrew Tonner examines some recent data that suggests Apple's iPhone 5c is as unpopular as many thought.

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Read/Post Comments (11) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On March 15, 2014, at 12:06 PM, Cintos wrote:

    The iPhone 5C has been a failure at executing Mr. Market's strategy for Apple. Tough. For the actual company's purposes, the 5C supplanted the previous iPhone5 version at the -$100 price point. Apple has typically positioned the generation -1 handset for $100 less at the carriers. There is no doubt that the 5C costs less than the old 5 to make, so Apple is likely making more Margin with it.

    As for failure? How does 6% vs 20% of 160 Million in use after 175 days constitute a "Disaster". It likely outsold the Samsung 4 across that time period - it certainly did at 2 of the 4 US carriers in the third quarter in spite of being available only for 20 days.

    Using Fiksu's adoption rate tracking, Apple's two latest iPhones will collectively be in use by 25% of all iPhone users after less than six months of availability.

  • Report this Comment On March 15, 2014, at 12:16 PM, marv08 wrote:

    Well, the 5c is either the second or third best selling phone on every US carrier, which is absolutely no fail and certainly no epic one. It does do less well in countries with no, or only very minor subsidies which is certainly no huge surprise, as, considering the TOC (unsubsidized device plus plan), it is only something like 2-3% cheaper than the flagship model which is more future proof and should have a significantly higher resale value. Still, it captured the $100 price point in the US and thus prevented millions of people from buying elsewhere... That is exactly what it was supposed to do.

    Bottom line Apple sold more top end devices than expected. If that is your definition of fail, then...

  • Report this Comment On March 15, 2014, at 2:58 PM, DeWinter21 wrote:

    As I recall when the Iphone 5 was released, the Iphone 4S sold really really well. So why not capitalize on last years model by a makeover? I am not privy to exactly what Apple wanted to accomplish with the 5C, but we know that it got lot's of people into Apple stores who upgraded to the 5S. Would they have bought a new plain 5? My 12 year old niece got a 5C for Christmas, she would NOT have even gotten an iphone if it hadn't been for the trendy 5C model. I asked her if any friends had gotten a 5C? Oh yeah, lot's!

    Is it just like the first time color was added to the Ipod? Again we don't know what Apple wanted to accomplish. Perhaps this has gone really well in their scheme for the future, especially getting young kids on board.

  • Report this Comment On March 15, 2014, at 7:20 PM, JarJarThomas wrote:

    The iphone 5c sold better at the release of the iphone 5s than the iphone 4s at the release of the iphone 5.

    So ... where is it a failure ?

    It keept the margins

    it is the second or third best sold phone on us carriers.

    It it is a better phone than the 5

    and it sold better than last years iphone 4s.

    I can't see there any failure ?

    Why should it be a failure ?

    Is it only a failure if it outsells the 5s ?

    But wouldn't be the 5s the desaster then ?

    So in the end ? 5s and 5c are the most sold phones worldwide. How is THAT a failure ?

  • Report this Comment On March 15, 2014, at 9:14 PM, Dbolander wrote:

    Remarkable that the second or third best selling phone on all major American carriers is considered a “failure.”

  • Report this Comment On March 16, 2014, at 2:00 AM, bdkennedy1 wrote:

    Apple also flopped with Pippin, the G4 Cube, and iPod Hi-Fi. It happens.

  • Report this Comment On March 16, 2014, at 8:36 AM, fauxscot wrote:

    chaimyonkel2013 apparently lost money on an apple trade and is bitter.

    the 5c is what it is. when you evaluate a COMPANY, andrew, you evaluate the company's performance, not the stock's performance. the company, Apple, seems to be doing a good job, based on the old timey metrics of buying low, adding value, selling at a higher price. 5c is part of that, not all.

    the stock AAPL, on the other hand, doesn't work that way. it has to overcome emotional barriers, like greed, fear, hope, and such. it's a short term reflection of those elements and a long term reflection of company performance.

    your bio says you studied finance. might want to stick to that and leave marketing assessment to others. and commenters like chaimyonkel2013 will just have to learn how to time their purchases and sales better if they are going to speculate as opposed to invest.

    quick, lazy money and losses are currently showing at GOOG, TSLA, and other frothy fad outfits.

  • Report this Comment On March 16, 2014, at 1:44 PM, ViewRoyal wrote:

    It's unimaginable how anyone can call the iPhone 5c a "failure"!

    The iPhone 5c is sold as a less expensive alternative to the more upmarket iPhone 5s. The fact that tens of millions of the iPhone 5c have been sold worldwide is ridiculously being called a failure.

    If Apple DIDN'T have the iPhone 5c, all of those tens of millions of sales (and billions of dollars of profit) would have gone to competitors who sell similarly priced lower-end models. The buyers of the iPhone 5c would NOT have gone for the more expensive iPhone 5s, but would have bought a competitor's smartphone.

    The other very smart thing about Apple producing the iPhone 5c, is that in the past, Apple sold the previous year's model as the lower priced phone. But when the iPhone 5s was introduced, the previous model was the iPhone 5.

    The iPhone 5 is much more costly for Apple to manufacture than the iPhone 5c, and so Apple not only has a brand new model to offer to people who can't afford the iPhone 5s, but it (the iPhone 5c) is also a higher margin product than the iPhone 5 would have been at the same price point.

    All of this, by ANY measure, spells success. It is just bizarre to call it a "failure".

  • Report this Comment On March 16, 2014, at 5:31 PM, jbelkin wrote:

    Well, you might panic easily like if the gas tank is a half full, you start crying but really, you need to chill. The bottom line is that the 5C is the BEST SELLING smartphone NOT named the 5S. So, if you're ONLY measurement is that the 5C is not selling in the same ratio as the 5S - then yes, it's not a huge success. IF the 5C were the ONLY iphone Apple was selling, then you are right but that's like saying the Porsche Cyaman does not sell as well as the 911. Basically, Apple is the ONLY company that releases 2 products and people WILLING line up AROUND the world to buy the MORE EXPENSIVE ONE. It might cost Apple $5 more to make the 5C but they make an extra $95 for each one sold ... again, outdistancing the next best selling high end smartphone by 8 to 1. In the US, China & Japan (markets you might consider important) - the iphone 5S holds down the top 3 spots with each model around 16% taking nearly 50% of the market for high end smartphones ... 4th is a samsung around 2.3% - 5th and 7th are two models of the iphone 5C also at 2.3% so while the 5C only comprises 4.5% of the market, it outsells the last samsung by 100% ... again, it's like saying it's only 4.5% of the market but 4.5% of a 390 BILLION dollar market is something. So, if you are a pessimist, you might call the 5C a failure but basically, it kills EVERY ANDROID high end smartphone - especially since it's not even a standalone phone. It's essentially a an iphone5 repackaged ... Apple has it covered - that is why Apple makes 90% OF ALL THE PROFITS in the smartphone market with 2 PHONES.

  • Report this Comment On March 17, 2014, at 5:50 AM, Interventizio wrote:

    On thing is to screw it up when you try to innovate (remember Jobs's Lisa?), another thing is to screw it up like Apple did with this low-cost Iphone which was not all that low-cost at all. I'm afraid doesn't have the stuff.

  • Report this Comment On March 17, 2014, at 1:34 PM, ViewRoyal wrote:

    We don't know exactly how many iPhone 5c have been sold, but we do know that Apple has sold about 200 Million iPhones all together in the past year.

    It is estimated that "only" 20% of iPhones being sold are the iPhone 5c model. Doing the math, and extending to a full year of sales, that equals approximately 40 Million iPhone 5c sold!

    It turns out that other than Samsung's top selling Galaxy S4 phone model, no other iPhone competitor has a top-selling smartphone model that sells as many as the iPhone 5c.

    So... if the iPhone 5c is a "failure" (as some irrational bloggers have been calling it) then companies like HTC, Motorola, etc. should close-down shop and give the proceeding to their investors, because none of them can make or sell a smartphone even as successful as the iPhone 5c "failure". ;-))

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Andrew Tonner

Andrew Tonner is a tech specialist for The Motley Fool. He is a graduate of The University of Arizona with a degree in Finance.

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