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Apple's iPhone 5c Sales May Be Faring Well After All

By Daniel Sparks - Oct 8, 2013 at 6:00PM

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Price cuts don’t necessarily indicate lackluster iPhone 5c sales.

iPhone 5c. Source: Apple.

After Apple ( AAPL 2.15% ) reported 9 million iPhone shipments during the launch weekend in September, the Street rallied around a new concern: Were Apple's lower-cost iPhone 5c phones actually making it into consumers' hands, or were many just sitting on retailers' shelves? Some new data from Canaccord Genuity suggests the concern may be overblown.

Though Apple's new iPhones didn't go on sale until Sept. 20, both the iPhone 5s and the iPhone 5c placed among the top three sellers at the four largest U.S. wireless carriers in during the month of September, according to Canaccord Genuity.

Carrier

Top 3 Smartphones in September

AT&T

1. iPhone 5s

2. iPhone 5c

3. Galaxy S4

Verizon

1. iPhone 5s

2. Galaxy S4

3. iPhone 5c

Sprint

1. iPhone 5s

2. iPhone 5c

3. Galaxy S4

T-Mobile

1. iPhone 5s

2. Galaxy S4

3. iPhone 5c

Source: Data from Canaccord Genuity via AppleInsider.

So what explains the price cuts?
After Apple launched the iPhone 5c, there were several indications that the lower-cost model wasn't doing as well as the company had hoped. First of all, while Apple quickly had to push back iPhone 5s shipment dates on its website, possibly as the model sold out, the company didn't have to do the same for the iPhone 5c. Then, Localytics introduced another layer of concern, estimating that the iPhone 5s was significantly outselling the iPhone 5c in the U.S. by a factor of about 3.4. Internationally, the analytics firm said usage stats suggested the iPhone 5s could be outselling the 5c by a factor of 3.7.

iPhone 5c special offer by RadioShack. Source: RadioShack website.

The sales concerns continued when Best Buy introduced an aggressive discount on the iPhone 5c, giving customers a $50 gift card with a purchase of the phone with a two-year plan. RadioShack initiated the same promotion, and Wal-Mart followed suit by dropping the price of the iPhone 5c on contract to $45 through the holidays.

The price cuts were a surprise, as Apple's new iPhone models typically sell for full price for at least a month before their prices are cut so significantly. Though price cuts soon after a new tech product hits the market usually signal weak demand, this isn't always the case with smartphones, according to All Things D's Ina Fried:

Promotions on phones, even relatively new ones, are not uncommon as retailers such as Best Buy and Amazon trade some of their profit margins in exchange for a higher share of sales for a hot new product. Retailers also can get incentives for signing up new customers -- money which can also be used to fund various promotions. Best Buy, for example, is also running a special right now giving $50 off various Samsung Galaxy phones, including some models of the Galaxy S4.

Maybe there's nothing to worry about Apple's iPhone 5c sales after all. Maybe, for once, Apple has simply managed to successfully ramp up production on the new iPhone models earlier than usual. In fact, Best Buy's promotion for the iPhone 5c, which was scheduled to end yesterday, appears to have not been extended.

The dynamics have certainly changed this year with Apple launching two new iPhone models instead of one. But Canaccord's data suggests that Apple's announcement of more than 9 million iPhone shipments during the launch weekend (compared to 5 million last year) may truly be indicative of demand.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$165.32 (2.15%) $3.48
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$139.00 (1.08%) $1.49
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$115.63 (2.54%) $2.86
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$104.66 (-1.14%) $-1.21
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,427.37 (1.11%) $37.58
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$51.07 (-0.68%) $0.35
Sprint Corporation Stock Quote
Sprint Corporation
S
AT&T Inc. Stock Quote
AT&T Inc.
T
$23.28 (-0.77%) $0.18

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