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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: 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.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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