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.
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.<p>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.<p>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.<p>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).<p>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.<p>No wonder no one is buying it.
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?
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.<p>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.
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.)
According to WSJ [1] they have cut down the orders on 5c and increased orders on 5s.<p>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.<p>[1] <a href="http://online.wsj.com/news/article_email/SB10001424052702304864504579138761727258256-lMyQjAxMTAzMDEwNjExNDYyWj" rel="nofollow">http://online.wsj.com/news/article_email/SB10001424052702304...</a>
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.