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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



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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?


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