backtop


Print 59 comment(s) - last by Jim_Liquor.. on Feb 1 at 1:44 AM

Apple CEO Tim Cook makes an rare admission to a "miscalculation" on product mix

When Apple released its earnings report for fiscal Q1 2014 this afternoon, the company “missed” analysts’ expectations for iPhones sales. Analysts were expecting that Apple would sell 55 million iPhones during the quarter, yet the Cupertino, California-based hardware/software giant only sold 51 million iPhones.
 
Part of the shortfall in the numbers could come from the fact that Apple misjudged demand for the budget iPhone 5C. During the company’s earnings call this afternoon, Apple CEO Tim Cook admitted, “It was the first time we ever ran that play, and demand percentage turned out to be different than we thought.”


iPhone 5C
 
In this case, many customers weren’t too impressed with the “new” iPhone 5C and had no problems forking over an extra $100 to step into a more advanced iPhone 5S. "The mix was stronger to the 5S, and it took us some amount of time to build the mix that customers were demanding.”
 
Apple’s strategy with the iPhone 5C was slightly different than in years past. Before the iPhone 5C, Apple would traditionally introduce a brand new generation of iPhone at the $199 price point (on contract), and simply discount the previous generation model to $99 (on contract).


iPhone 5S
 
However, with the launch of the iPhone 5S, Apple took things a step further. Apple discontinued the previous generation iPhone 5 and introduced the iPhone 5C, which was essentially the iPhone 5 in a candy-coated plastic shell. Apple hoped that the colorful plastic shell would distract customers from the fact that this was just a warmed over iPhone 5.
 
In fact, Apple was so confident in its ability to “read” its customers that when the iPhone 5C and iPhone 5S were launched last year, it was the cheaper iPhone 5C that got the most prominent real estate on Apple’s website and the bulk of Apple’s attention in TV spots.

 
As for why he thinks customers are actually flocking to the iPhone 5S instead, Cook says it’s because of Touch ID. “It's a major feature that has excited people. And I think that, associated with the other things that are unique to the 5S, got the 5S to have a significant amount more attention and a higher mix of sales."

Source: Apple



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Can we stop calling a $550 phone 'budget'?
By stm1185 on 1/27/2014 10:22:16 PM , Rating: 5
The iPhone 5C is not a budget phone. A budget phone sells for under a $100 (Lumia 521). A mid range phone sells for under $400 (Nexus 5). At $550, the iPhone 5C is a high end device!




RE: Can we stop calling a $550 phone 'budget'?
By Acupuncture on 1/27/2014 10:29:23 PM , Rating: 2
Wal-mart was selling the iPhone 5C for free on contract.


RE: Can we stop calling a $550 phone 'budget'?
By lightfoot on 1/27/2014 11:08:34 PM , Rating: 5
And yet it somehow is still overpriced.


By chekk4 on 1/27/2014 11:58:31 PM , Rating: 2
Damn, that made me laugh hard. Thanks for the giggles.


RE: Can we stop calling a $550 phone 'budget'?
By Argon18 on 1/28/14, Rating: -1
RE: Can we stop calling a $550 phone 'budget'?
By Gio6518 on 1/28/2014 10:28:54 AM , Rating: 5
quote:
Kind of like the Microsoft Windows that comes "free" on every new computer. "It's still overpriced".


Yup kinda like how you can pay twice as much for a computer that has the exactly same internals, for twice as much because it has mac OS...and realize that most software doesn't work and have to buy virtual Windows anyways.....LOLOLOLOLOL


RE: Can we stop calling a $550 phone 'budget'?
By Argon18 on 1/28/2014 12:20:09 PM , Rating: 2
You won't catch me defending Apple and their world of overpriced closed proprietary crap. But you won't catch me defending Microsoft and their world of closed proprietary crap either.

Clueless fanboys are so easy to spot. It's like you don't even try to hide it. Take off the rosy Redmond goggles and you'll find Apple and Microsoft are two sides of the same broken proprietary coin.


RE: Can we stop calling a $550 phone 'budget'?
By Labotomizer on 1/28/2014 5:54:17 PM , Rating: 1
Microsoft is one of the leading contributors to the Linux kernel. Microsoft has numerous open source projects. Additionally, they in no way, shape or form limit anyone from running anything the could ever want on a Windows system. Nor do they prevent their OS from being loaded on whatever hardware you'd like. Sure, you pay for it. But it's better than dealing with people like you on a forum when you have a problem.

Heck, I'd pay you $200 if you never logged into this site again. And I'd get the better of that deal.


RE: Can we stop calling a $550 phone 'budget'?
By Argon18 on 1/29/2014 12:24:28 PM , Rating: 2
"Microsoft is one of the leading contributors to the Linux kernel."

Lol, what? No they're not. I don't know who is feeding you your information, but time to find some more reliable sources.

" Additionally, they in no way, shape or form limit anyone from running anything the could ever want on a Windows system."


A couple things wrong with this statement. Namely the last two words "Windows System". Microsoft uses closed proprietary protocols, closed proprietary API's, and closed proprietary file formats (Office) to lock you into their ecosystem. They've always done this. Anti-consumer and anti-competitive behavior is what this is called. But you'll continue to take it up the butt and smile like a good Wintard, won't you.

Lets put it another way: "Apple in no way shape or form limits anyone from running any Apple software on an Apple system". See what I did there?

" Nor do they prevent their OS from being loaded on whatever hardware you'd like."


Wrong again. You probably haven't heard of the TPM trusted platform module, or the UEFI encryption keys that lock your hardware to your OS. On top of that, when you're stuck using a Windows OS, you're stuck using only the hardware that the OS supports - Try using your graphics card from 2003 on a Windows 8 PC. It probably won't work due to driver incompatibility. Linux doesn't have this problem.

"Sure, you pay for it. But it's better than dealing with people like you on a forum when you have a problem."

I'm not sure what your point is here, aside from being a troll comment. Whether you choose Microsoft or Apple or Linux, all three have paid support options, and all three have internet forum support options.

"Heck, I'd pay you $200 if you never logged into this site again. And I'd get the better of that deal. "

Don't shoot the messenger. I only speak the truth. You've got to remove those Redmond Wintard goggles if you want to see clearly.


By Cheesew1z69 on 1/29/2014 3:28:03 PM , Rating: 2
quote:
aside from being a troll comment.
Oh, the irony is getting deep in here...


By Sahrin on 1/28/2014 10:51:29 AM , Rating: 2
...wow. Some people are not so good with the math, it seems.


By Gnarr on 1/28/2014 5:39:14 AM , Rating: 2
When you're paying $50 a month for two years, it's not exactly free...


By Strunf on 1/28/2014 7:41:29 AM , Rating: 4
Free in my dictionary means you don't pay anything and there's no strings attached, if you are to have a contract then it's not free anymore.


RE: Can we stop calling a $550 phone 'budget'?
By Flunk on 1/28/2014 9:07:44 AM , Rating: 2
Forget the fake "on contract" prices. If you do the math you always end up overpaying for devices if you buy like that.


RE: Can we stop calling a $550 phone 'budget'?
By cfaalm on 1/28/2014 10:26:22 AM , Rating: 2
Well, not always. But it doesn't hurt to do the math before pulling the trigger.


RE: Can we stop calling a $550 phone 'budget'?
By Dorkyman on 1/28/2014 12:44:21 PM , Rating: 2
No, pretty much always. Only in the USA do people (sheeple?) "pay" only $100 for a $600 phone, then ignore the fact that they wind up paying $1,500+ extra over the next two years than if they had just bought a new ($600) or year-old ($200) phone and just paid for usage.

We switched all three of our smartphones over to Ting from Sprint a few months back; monthly bill is half what it once was.


By Rukkian on 1/28/2014 4:02:49 PM , Rating: 2
While I agree with you in principle, if the only service that has reliable, fast service where you live and work charges the same whether you pay for your phone outright, or get it on contract, then there is a difference.

Sprint and Tmobile suck where I live, and ATT, Verizon, and USCC are all pretty much the same price, although ATT seems to be starting to respond to TMobile's changes.


By alpha754293 on 1/29/2014 9:33:06 AM , Rating: 2
Canada too.

I've ran the analysis before and I figured out that if I buy the device outright and then go to a $35/month plan (no data), the payoff period between that and putting it on a contract for a $85/month plan is like 11 or 12 months.

And over the course of 4 years, I end up SAVING over $1000 because I don't have to pay as much for the monthly plan.


By Denithor on 1/28/2014 10:28:03 AM , Rating: 2
...which is, of course, exactly why the phone companies offer these "deals" to begin with.


By carage on 1/29/2014 11:48:30 AM , Rating: 2
When you have an overpriced multi-year contract attached it distorts the whole math.


RE: Can we stop calling a $550 phone 'budget'?
By inteli722 on 1/27/2014 11:02:23 PM , Rating: 2
People only really talk about on-contract prices. besides, at $550 off contract, the iPhone 5C is a mid-end device. High-end is $700-800+ (see iPhone 5S, Galaxy S4, Galaxy Note, etc)


By piroroadkill on 1/28/2014 5:44:04 AM , Rating: 5
Mid-end? What the hell? How can it be the end of the scale if it's in the middle?

You mean "mid-range"...


By Old_Fogie_Late_Bloomer on 1/28/2014 6:22:10 AM , Rating: 2
I literally just went from contracts and high-end Android smartphones to pay-as-you-go and a Lumia 620, so my perspective may be skewed, but I think that if Apple doesn't get a phone into $300-$400 territory new and off-contract, they're going to get their butts handed to them in the long run. I'm aware that they want to project a "premium" image, but there's a not-so-fine line between premium and niche...


By Flunk on 1/28/2014 9:12:15 AM , Rating: 5
At $550 it's priced over the high-end Nexus 5 ($350). The Moto G is mid-end and that's $180. If you're not subsidizing the price with an overpriced contract both iPhones look like terrible purchases.


By marvdmartian on 1/28/2014 7:48:36 AM , Rating: 3
Tim Cook got it wrong. He thought people wanted a cheaper iPhone, as in, "less features for less money".

What they REALLY wanted was the same iPhone, that didn't cost a fortune. Once again, Apple fails to understand people!


iso 7 is a joke
By SPOOOK on 1/27/14, Rating: 0
RE: iso 7 is a joke
By Brandon Hill (blog) on 1/27/2014 9:47:44 PM , Rating: 5
Here's a guaranteed way to make your iPad crash in iOS 7:

Go to Settings, tap on Wallpapers and Brightness. Tap it once more. Instant crash to Home Screen.


RE: iso 7 is a joke
By luv2liv on 1/27/2014 10:09:36 PM , Rating: 2
want your istuff to work great forever? never update!
my ipod touch was working great until i updated the OS. never again. im not buying a new igadget every year just cause apple is promising something better when it was working fine


RE: iso 7 is a joke
By inighthawki on 1/28/2014 12:55:02 AM , Rating: 2
Not true! If your iDevice starts with iOS7, you're screwed!


RE: iso 7 is a joke
By slow_excellence on 1/28/2014 10:32:02 AM , Rating: 2
Still running IOS 4.2.3 on my ipod touch, works like a charm!


RE: iso 7 is a joke
By kmmatney on 1/27/2014 10:13:08 PM , Rating: 2
I haven't had any crashes on my iPad 4, but I think iOS 7 is just plain ugly. Aesthetically, it was a big downgrade for me.


RE: iso 7 is a joke
By Nutzo on 1/28/2014 12:50:02 PM , Rating: 2
So Apple is copying Microsoft again?


RE: iso 7 is a joke
By Tunnah on 1/27/2014 10:27:47 PM , Rating: 3
Either you had a stroke whilst writing this post or I had one just before I read it because I can't make heads nor tails of your gobbildy-grammar


The 5C is Under Appreciated
By Acupuncture on 1/27/2014 10:15:14 PM , Rating: 1
I think most people do not understand the purpose behind the 5C. It was not intended as a "cheap" solution. It was a departure from Apple's tried and true "legacy" approach of selling last year's model for a cheaper price. Instead of simply re-selling the 5, Apple updated the hardware and components and sold the phone as a replacement for the 5. It's not that the 5C failed, it's more about Apple's customer base more than willing to pay a premium to get the best product they offer. If Apple were smart, they'd come out with a "pro" model this year or next, and put every high end hardware offering inside and charge $700 or more, even on contract. It would sell incredibly well.




RE: The 5C is Under Appreciated
By Brandon Hill (blog) on 1/27/2014 10:29:10 PM , Rating: 5
I think it was Apple that misunderstood its customers:

1) They made a cheaper iPhone 5 and sold it for iPhone 5 money. An iPhone 5 for $99 makes sense. A "plastic" iPhone 5C that costs Apple less to make isn't worth $99 to consumers -- $50, maybe. Plastic is no longer premium to Apple customers; Apple made that clear years ago with the iPhone 4 then went back on that mantra to improve margins.

2) Call me sexist, but the iPhone 5C colors don't appeal to me -- they look girly. That cuts out 50% of your potential base right there. Where's the red, navy blue, red, or black? Instead, all we get are pastels and white? Pffffffffff


RE: The 5C is Under Appreciated
By Acupuncture on 1/27/2014 11:18:33 PM , Rating: 2
The 5C is arguably more rugged due to the rubber. It runs iOS 7 better, has an HD front facing screen and better battery life. I do agree the aluminum feels better, but the 5C is a better phone for the same price the 5 would be (or cheaper, as I said earlier wal-mart was giving the handset away for free on contract). It was a gamble for Apple, one that arguably did not pay off. However for customers the 5C was a better choice than the 5 in nearly every way.


RE: The 5C is Under Appreciated
By ritualm on 1/28/2014 1:35:40 PM , Rating: 3
quote:
The 5C is arguably more rugged due to the rubber. It runs iOS 7 better, has an HD front facing screen and better battery life.

Except everything you said is wrong. The 5C has literally the same internals as the 5, but constructed inside a plastic case. Same SoC, same display, same battery, only thing changed besides the casing and first-party accessories is iOS7 being shipped by default.
quote:
However for customers the 5C was a better choice than the 5 in nearly every way.

Wrong again. The 5 is better than 5C on every metric. That makes the $550 5C overpriced.


By Cheesew1z69 on 1/29/2014 8:17:25 AM , Rating: 2
quote:
The 5C has literally the same internals as the 5, but constructed inside a plastic case. Same SoC, same display, same battery, only thing changed besides the casing and first-party accessories is iOS7 being shipped by default.
I had someone arguing with me over this. I was like no, it's the SAME as the 5, just in plastic and they kept arguing saying it wasn't...

I eventually gave up.


RE: The 5C is Under Appreciated
By Nutzo on 1/28/2014 12:47:05 PM , Rating: 3
quote:
Call me sexist, but the iPhone 5C colors don't appeal to me -- they look girly. That cuts out 50% of your potential base right there.


Completely disagree. The colors fit right into the Metrosexual fashion statement of most iPhone users.


By Reclaimer77 on 1/29/2014 1:28:27 AM , Rating: 2
quote:
2) Call me sexist, but the iPhone 5C colors don't appeal to me -- they look girly.


Guess what the huge majority of 5C's have been sold in? Pink! Go figure?


Tim Cook isn't the only one.
By lightfoot on 1/27/2014 11:19:32 PM , Rating: 2
I too thought Apple could keep selling overpriced crap forever. I guess that Tim Cook found the limit. Plastic crap is out. Has to be shiny to command a premium price. Next time they should save the five bucks by using a cheaper processor or less memory. Maybe even a smaller screen. As Apple fans love to remind us, plastic is cheap and junky, and stats don't matter.




RE: Tim Cook isn't the only one.
By Acupuncture on 1/27/2014 11:31:47 PM , Rating: 2
For all of the "superior" hardware on high-end android phones, where are the apps that take advantage of if? Where are the games that look like Infinity Blade 3? Why does Samsung continue to use cheap plastic on their flagship phones?


RE: Tim Cook isn't the only one.
By Solandri on 1/28/2014 4:36:49 AM , Rating: 5
Actually, phones are approaching the point that laptops have reached - where a mid- or low-tier model is "good enough" for most people. Mostly the extra speed is there to quickly finish whatever task you give them phone, before it drops back into low-power mode. I'm finding that memory (RAM) is more important, as I tend to leave about two dozen apps running, and being able to quickly switch between them is nice.

As for an example of superior hardware, I was setting up my new Nexus 5, forgot I'd put it into airplane mode, and said "Ok Google." Surprisingly, it recognized my voice and informed me that although it couldn't reach the network, it could still do local things like look up contacts. i.e. It's running the voice recognition locally on the phone, not transmitting the audio over the network to a server which does the voice recognition like the iPhone does. I'd read in the reviews that the Moto X had dedicated voice recognition hardware, but I was surprised to find similar capability in the Nexus 5 (not sure if it's running entirely in software, or if it's got hardware for it too).

And personal preference, but I play my games on my 24" monitor. Better fps, better visuals, better controls, better sound, more immersive on a bigger screen. While playing a game on my phone is a nice distraction now and then, I'd hardly consider it a suitable standard with which to judge the features of a smartphone.

As for "cheap plastic", the best designed laser printers were the old HP Laserjets. They were a plastic exterior with a metal interior frame. That's the best design. The plastic helps absorb the impact energy from falling or bumping, without breaking. The metal frame protects the innards. The requirements for a phone are a bit different due to the glass screen, but you're mistaken if you automatically think metal exterior = better. For a graphic example, watch this Blendtec video:
http://www.youtube.com/watch?v=5MMmLQlrBws

Pay particular attention between 0:30-0:60 when he hits each tablet against the blender. The plastic Nexus 7 bounces back to its original shape - it would survive at least one such impact no worse for wear. The metal iPad Mini instantly deforms - it is a total loss after a single similar impact. (The Kindle clip is cut short before we can see if it would've rebounded to its original shape.)


RE: Tim Cook isn't the only one.
By Ktracho on 1/29/2014 4:43:46 PM , Rating: 2
I think where Apple went wrong was in assuming that quality/functionality of the design was more important to consumers (though I think they were merely trying to cut costs). The lesson for Apple should be that customers shopping for an iPhone 5/5S are looking at its value as a fashion/status symbol, where plastic equates to cheap and metal is more desirable/glamorous/sexy.


RE: Tim Cook isn't the only one.
By JackBurton on 1/28/2014 1:14:17 AM , Rating: 1
Yeah, exactly! Leave the crappy feeling plastic junk phones to Google. :)


RE: Tim Cook isn't the only one.
By ritualm on 1/29/2014 11:37:57 PM , Rating: 2
Your iPhones won't survive a trip to the asphalt without eleventh-hour surgery. Mine will, even though my phone is fully clad in "crappy feeling plastic junk".


By ewhite06 on 1/28/2014 2:34:57 PM , Rating: 2
Or maybe they finally reached market saturation. Everyone that wants an iPhone, has an iPhone. The number of "new" buyers isn't exceeding the number of people 'defecting' from Apple. At this point, most logical people have figured out that the hardware isn't that radically different anymore and hold onto their old phones for longer. Fanboys not included, obviously. Tough to keep selling devices when they are all essentially the same thing - just not as shiny.


Touch ID, really?
By RandomFool on 1/27/2014 9:44:57 PM , Rating: 5
I somehow doubt that people are flocking to the iPhone 5S because of a fingerprint scanner. I'd wager most people realize the 5C is an old iPhone in a cheap plastic case and would rather have the "real" iPhone.




RE: Touch ID, really?
By ritualm on 1/27/2014 9:54:21 PM , Rating: 3
Pricing is a problem for the 5C. It should be more than just $100 less than the base 5S price off-contract. As it currently stands, the user pays $200+ to Apple just to get phone functionality added to an iPod Touch.


RE: Touch ID, really?
By Tunnah on 1/27/2014 10:31:27 PM , Rating: 2
Although this makes the most sense, this would indicate that iphone users actually have a brain rather than the mental-midgetry of consciousness that is normally passed as intelligence in a mac-head


RE: Touch ID, really?
By Nutzo on 1/28/2014 12:42:21 PM , Rating: 2
You give them way too much credit.

The iPhone is a fashion accessory/status symbol.

Why would someone who is shopping for a fashion accessory/status symbol buy a cheap plastic imitation?


Hillarious but true
By Gio6518 on 1/28/2014 10:25:29 AM , Rating: 3
RE: Hillarious but true
By Cheesew1z69 on 1/28/2014 10:31:26 AM , Rating: 2
ROFL!


RE: Hillarious but true
By Jim_Liquor on 2/1/2014 1:44:52 AM , Rating: 2
Funny until the point he thought he was a hip hop gangsta and started in with all the slang and 'sass' ...


The purpose
By Sahrin on 1/28/2014 10:50:52 AM , Rating: 1
Of the iPhone 5C was to sell 5S's. What Apple is saying is "we succeeded more than we thought."

It's probable that Apple is selling more 5S's relative to 5C's than it did 5's relative to 4S's. So they 5C is working better than they hoped: drive people to the full product.




RE: The purpose
By siconik on 1/28/2014 10:58:48 AM , Rating: 4
Yeah, every time I expect to sell 55 of something and sell 51 instead the first through I have is how great things worked out. Sure, a layman may question my inability to read the market or wonder what I am going to do with the unwanted inventory but that's just crazy talk.


What Apple needed to have done
By zerocks on 1/27/2014 10:42:15 PM , Rating: 2
when launching a "budget" phone (which isn't even what they said they were releasing but, it was what they were doing)
They should have had the iPhone 5S, iPhone 5C and iPhone 4SC
The 5 should have been plastic and the 5S metal or whatever the hell they do on there
But the 4SC (which doesn't exist) should be made to be the same size physically as the 5C and just have the 3.5" screen with a larger bezel and compensate with larger battery or something
use lightning bolt and have the same body but with 3.5" instead of 4" screen so it's still obvious which one is the cheaper one but there actually is a budget one that still fits in new cases




By Acupuncture on 1/27/2014 10:47:51 PM , Rating: 1
lolwut? Grammar buddy, grammar. And punctuation.


Gee, who could have known?
By siconik on 1/28/2014 10:48:13 AM , Rating: 2
I really think Apple's "God" complex simply backfired. They really thought that after telling people that plastic = crap, they could just wave the magic marketing wand and presto, everyone would forget all about how plastic is a "substandard" material, because...Apple! I can't fully blame them, after all the whole "this feature is useless until we got it then its awesome" worked for them so many times before.




"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki