The latest additions to the iPhone line --
the colorful iPhone 5C, left, and higher-
end iPhone 5S -- mark the first time
Apple has launched two new versions of
the phone. Initial reviews have been
positive.
-- When Apple unveiled not one but two new
iPhones last month, it was the dawning of a new
strategy for the company, which for six years had
championed its single iconic smartphone even as
competitors rolled out an array of shapes, sizes and
features.
But a month later, there are questions about how
effective this strategy has been, particularly in regards
to the iPhone 5C, the cheaper, colorful plastic
counterpart to Apple's higher-end iPhone 5S.
Though some observers see a long game in which the
"fun" version of the iPhone will still prove popular,
others are skeptical, based on some early signs.
Apple has not released figures breaking down sales of
the 5C versus the 5S (An earnings report on October 28
may change that). But independent analysts estimate
that the fancier 5S is outselling its candy-colored
cousin by 3 to 1 or, in some cases, even more.
Localytics , an analytics and marketing platform creators
say samples apps on 1 billion devices, says the 5S is
winning 3-to-1 in the United States and a whopping 5-
to-1 (72% to 28%) worldwide.
Reports from generally reliable sources in China say
Apple has cut production of the phone there, less than
a month after it went on sale. C Tech, a Chinese site
that ran accurate photos of the iPhone 5C and 5S
before they were released, quotes insiders who say daily
production of the 5C has been cut in half -- from
300,000 to 150,000.
Part of the problem, some analysts say, is the price.
Although the iPhone 5C starts at $99 with a mobile
data plan, many had predicted that it would need to be
even cheaper to appeal to buyers in emerging markets
like China and India.
In China, where phones aren't subsidized
by mobile carriers, the 5C is selling for
3,500 yuan, or about $560.
And though its style is all new, the 5C
doesn't sport features significantly
upgraded from the iPhone 5, which can
be had for as low as $199. The two-year-
old iPhone 4S can be had for free with a
data plan.
Sarah Rotman Epps, an analyst with
Forrester Research, says that selling the
more expensive 5S, which starts at $199,
is good for Apple's bottom line in the
short term.
"But in the longer term," she said, "it's
bad news.
"Apple needs new customers to keep
growing, and the 5C was supposed to
appeal to a new, more price-conscious
consumer," she said. "Turns out that
acquisition is a lot harder than retention."
Some retailers have responded by slashing prices on
the 5C. This month, Best Buy ran a promotion offering
the phone for $50. Walmart has discounted it to $45
through the holidays, and Radio Shack is giving
customers who buy one $50 gift cards through early
next month.
But some say it's not quite time to write the phone's
obituary.
"Rumours on order cuts (or increases) from parts of
Apple's supply chain tell us absolutely nothing either
way," Benedict Evans, an independent analyst, wrote
recently on Twitter . "Too many moving parts."
In another post, he made light of people comparing
iPhone 5S and iPhone 5C sales as an indicator of
Apple's success.
"iPhone 5S outselling 5C? Apple's growth strategy a
failure. Sell! " he wrote. "iPhone 5C outselling 5S?
Cannibalisation and (revenue per user) collapse. Sell!"
This year, Apple CEO Tim Cook himself downplayed the
amount of weight observers should place in supply-
chain rumors.
"I suggest it's good to question the accuracy of any kind
of rumor about build plans," Cook said during an
earnings call. "The supply chain is very complex, and
we have multiple sources for things. ... There is an
inordinate long list of things that can make any single
data point not a great proxy for what is going on."
And there is something to be said for your top-end
phone leading the way. The iPhone 5S has hit the
streets to almost universally high marks from both
reviewers and users. Apple announced last month that
first-weekend sales of both phones combined topped 9
million, a record for the company.
Still, Apple does nothing accidentally. The iPhone 5C
clearly was released to appeal to customers in a way
that the iPhone 5S couldn't. Only time will tell whether
Apple will succeed, but it will need to see
improvements before it does.
"Apple has more work to do to attract the next
generation of iPhone customers," Epps said. "The 5C
isn't resonating as Apple hoped it would."
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