
New iPhone 5c has analysts talking about possibly poor sales - tod222
http://www.latimes.com/business/la-fi-apple-iphone-20131018,0,7444589.story
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rebel
The move seems so logical by Apple, although I've yet to really see any
journalist comprehend it. Apple has lowered their cost to produce a product
they were going to offer anyway (they always sell last years model at the same
discount), while at the same time, visually differentiating it from the high
end product. One would have to assume this has pushed more purchasers up-
market to the newer device, while also attracting new customers who don't care
about specs and are more concerned about the colors/fun factor. So Apple has
not only gained a higher profit margin, they presumably have improved their
device yield by making a simpler phone to produce. On top of all that, they
have a product to appeal to a different segment of the market. The phone also
allowed them to have something on the shelves while the 5s was sold out.
Everything about it seems like an outstanding success to me.

~~~
Cthulhu_
Your points are valid, but I do think Apple's taking a big risk there;
especially in the last couple of years, the competition has fiercely
increased, and I don't think the primary choice is "Latest model or latest -1"
with a lot of consumers, but "iPhone or Android". Especially given how high-
end, sexy-looking Android phones can easily dive under the price of the cheap-
looking 5C.

~~~
yaeger
I'd like to point out that the competition would have to offer a whole lot
more than the current device people are using before they would consider a
switch.

Isn't that why WinPhone has yet to actually gain any traction? The market of
smartphones is pretty saturated. People by large who want to use smarthones
compared to "dumbphones" most likely already use one.

Especially with Apple and them being first in the app store market, people who
have been with them since the beginning have invested a lot on the eco system.
And if you have bought so many apps and devices over the years, as time moves
on, it would get more difficult to just up and leave for another eco system.

Which, incidentally is also why I think the design of the iPhone has not
changed that much since the 4. I think starting form the first iPhone to the 4
they have really found a great design. And judging by the sales of the 4 and
up, a lot of people feel the same. Personally, I don't want the next iPhone to
feature a radically different design just for the sake of change. I saw what
change for the sake of change gets us with Windows8.

If people want to switch phones on a whim just cause there is a "new sexy
device" coming out, then Android has been their first choice for a long time
now. Most iPhone users I know chose it because a) No tinkering needed, b)
Always had a smooth Interface, c) A lot of apps available and d)A nice clean
phone design.

I don't think Apple runs a risk just cause they don't suddenly convert their
entire approach to mimick Android companies and releasing a plethora of
different phone designs and specs. iPhone is iPhone and the variety we have
now is sufficient. It would have to happen a lot before I would consider a
switch of eco systems. But that would be more on the side of "what apple might
do that I don't like" and not on the "what other android companies do that I
might like". So, the "competition" increasing, to me, is only of interest for
people who just now are in the market for their first smartphone. Or people
who exclusively only get free apps. For those, the choice of eco system is
entirely free to change on a whim. For me who has invested several hundred
dollars in apps over the years? Not so much.

~~~
ScottWhigham
_iPhone is iPhone and the variety we have now is sufficient._

I was with you up until this statement. As one of the millions who left the
iPhone because I wanted a larger screen, I disagree. You are acting as though
"bigger screen" isn't a big deal but it's clearly a big deal (as judged by the
sales of the Samsung Galaxy S4, the HTC Ones, the Note, etc). I have nothing
but anecdotal evidence but I'd assume a full 20-30% of the people buying
bigger screen phones are leaving the iPhone to do so. That's a whole lot of
market to just ignore.

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InclinedPlane
There's a lot of money in the low-end of the market, especially in the near
future. Over the next decade or so the developing world is going to add on
trillions of dollars in GDP. That's going to bring a lot of people to the
table who will be able to afford a low-end smartphone or tablet, and for many
of those people it will be their first computing device. Due to sheer volume
alone there is a ton of money in that market. And that's in addition to the
low-end of the market in existing developed countries, which is already huge.

However, the 5c isn't in that market. It's a $550 phone. It's only seemingly
"cheap" because the usurious financing that most cell companies use enables
them to offer a low down payment amount.

Look at it in two ways. When you lock yourself into a 2 year contract you're
going to be paying about $1k for whatever device you upgrade to. The
difference between $100 and $200 up front is trivial in comparison to this. So
paying $1100 for a $550 phone versus $1200 for a $650 phone is, well, stupid.
Even more so when you consider the performance and quality differences between
the 5c and 5s.

That's at the high-end, for people who can afford expensive plans and
expensive phones. At the low-end the 5c isn't competitive either. If you
comparison shop un-subsidized phones on prepaid services you see that you can
get LTE android devices in the $200 to $300 range, a Galaxy S3 is only $350.
With an S3 and a $35/mo plan (virgin mobile) someone will be saving a minimum
of $500 and closer to $1000, for comparable service, over 2 years compared to
buying a subsidized 5c from verizon or AT&T. Even more if they opt for a truly
low-cost phone (which can be as cheap as $150 unsubsidized for LTE capable
devices, and essentially free if you don't care about LTE).

So it doesn't compete on the low-end because it's too expensive and it doesn't
compete on the high-end (where its price puts it) because it's missing stuff.

No wonder no one is buying it.

~~~
alwaysinshade
> No wonder no one is buying it.

"Months of rumors about order cuts and so forth, so let me take a moment to
comment on these. No comment on any particular rumor.

I suggest its good to question the accuracy of any kind of rumor about build
plans. Even if a particular data point were factual, it would be impossible to
interpret that data point as to what it meant to our business. The supply
chain is very complex and we have multiple sources for things. Yields can
vary, supplier performance can vary. There is an inordinate long list of
things that can make any single data point not a great proxy for what is going
on."

\- Tim Cook, Q1 conference call, regarding rumors that demand for the iPhone 5
was waning. Q3 results? 31.2 million iPhones sold.

Analysts aren't very good at predicting things when they're using isolated
data points from the supply chain.

~~~
sfjailbird
Did you read the article? Shops say shelves are full of 5Cs all over the
place.

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lchitnis
Of course sales are poor...we are so used to paying a premium for the cool
factor, and for quality (debatable), why would we go for plastic? It's largely
(if not completely) a case of perception here. I just got off the phone with
Apple because I need a new laptop. After tallying up a 15" Mac Book Pro with
Retina Display, 3-year Apple Care, and a few other necessary extras, I'll be
paying about $3k out the door. I wince as I write this but it's worth every
penny for me...if I'm at Apple and I'm already being gouged, why not just get
the best thing they have?

~~~
jasonlmk
Comes down to how inelastic I am at that price point as well. Personally, if
I'm going to pay $739 for a 5c here in Australia, I might as well fork out an
extra $130 to 'future proof' myself with the 5s. I get the feeling that Apple
still needs to get the price of the 5c right.

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batiudrami
The price difference between the 5C and the 5S appears even more minimal in
countries where the phone payments are split across the life of the contract,
rather than being upfront as in the US.

For instance, on the same plan with the same inclusions in Australia, the 5C
is $64 a month, and the 5S is $69. From my perspective, there is no chance I
would go for the 5C, and I think for it to be a successful device it needed to
be $200 cheaper than the 5S (unsubsidised/retail), and really be a midrange
device. But then, I've been wrong about Apple products in the past, so who
knows.

~~~
tadfisher
The system most common in the US is a subsidy on the purchase of the phone,
which for most people ends up working in a similar fashion. This is part of
why the traditional phone contract here is much more expensive than the
equivalent service in other countries, as phone subsidies make up a large
portion of per-subscriber costs.

As most subscribers purchase subsidized devices, this system ends up working
much like the system you described, but with a key difference: the up-front
cost can be easily manipulated to serve the needs of carriers and
manufacturers. At AT&T, the 4S is 0$ up front, the 5C is $99, and the 5S is
$199, and that is the price the customer will see and reason about more than
the monthly fee. This effectively creates a market for the 5C.

Things are getting complicated now that T-Mobile has introduced their à-la
carte pricing scheme, where the service sold is decoupled from the cost of the
device (whether paid in installments or up front). There you see a much less
stark difference in the up-front costs between iPhones, and I'm curious about
the sales numbers there.

~~~
oneeyedpigeon
I find the use of the term "subsidy" hilarious in this context. You DO realise
the phone companies just sting you through your monthly bill, and you end up
paying MORE for the phone, right? That's an interest-charging loan you're
getting, not a subsidy.

~~~
tadfisher
Except it's even worse than that -- everyone except T-Mobile charges the same
service fee to customers who buy outright and customers who purchase through
the carrier. The subsidy is indeed a subsidy, the costs of which are spread
amongst all subscribers.

------
gfodor
Of course, the catch here is that the 5C is not a "new iPhone" in the
traditional sense. The 5S is the "new iPhone." The 5C is taking the place of
the 5 in this cycle. If the 5C's numbers look better relative to the last
analogous period, the sales of the 4 when the 4S was released, then this was a
win for Apple (on a revenue basis.)

~~~
film42
Exactly! The 5C wan not about making a new phone, it was about cutting costs
of the old 5 so they could hit their market goal of $99 with 2/yr contract.

------
jpalomaki
According to WSJ [1] they have cut down the orders on 5c and increased orders
on 5s.

There could be some psychology involved here. It's not hard to imagine some
people making the decision to go for iPhone based on price of 5c but then
actually ending up spending the few extra bucks to get the better model.

[1]
[http://online.wsj.com/news/article_email/SB10001424052702304...](http://online.wsj.com/news/article_email/SB10001424052702304864504579138761727258256-lMyQjAxMTAzMDEwNjExNDYyWj)

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arbutus
It's not supposed to sell like the 5S, it's supposed to sell like the 4S did
when the 5 launched.

~~~
vvhn
Not really. there is a much greater marketing push behind the 5c so the
expectation seemed to have been more than the ones for " last years model"

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gte910h
The point of the 5c is to make the 5s seem premium. It's also a higher profit
phone than the 5 would have been even at this point, so if people happen to
buy it, they make marginally more per unit.

------
YOSPOS
Apple's market share for iPhones and iPads are going to crush the competition
after the numbers for the holiday quarter come out.

~~~
dingaling
Yes, analysts are predicting that Apple will take 100% of the iPhone and iPad
market.

In reality, iOS market share in Europe is around 18% compared to 70% for
Android; China is similar. In the USA it's 35-50.

I can see why Mozilla and Jolla are chasing the developing World markets; the
market positions in the mature markets are pretty static now and are unlikely
to fluctuate much. Anecdotally, people upgrade their phone on longer periods
now ( three or four years ).

~~~
RealCasually
3 to 4 years? I know you said anecdotally, but that seems absurd with the
carrier cycle at 2 years.

~~~
Geee
Right after you have paid your phone you will want to buy a new one? Not all
people have the money to spend $500-$1000 every two years, if your old phone
is still fine.

