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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 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.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer














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