Apple discounts iPhone 5C 8%-9% in five markets via storage cuts

Reaction to poor sales, eroding share and fierce competition from below

Apple today unveiled an 8GB iPhone 5C that costs between 8% and 9% less than the previous lowest-priced model with 16GB of storage space.

"This is a very clever way for Apple to lower prices without discounting," said Ben Thompson, an independent analyst who covers technology on his Stratechery website.

In China, the new 8GB iPhone 5C was priced at 4,088 yuan, or 8.9% less than the same smartphone with 16GB. Apple Australia, meanwhile, listed the 8GB model at A$679, an 8.1% price cut.

Computerworld found the 8GB iPhone 5C on Apple's e-stores in just five markets: Australia, China, France, Germany and the U.K. Spot checks revealed that the model was not available in other major markets, such as Brazil, Canada, Hong Kong, Japan, Taiwan and the United States.

In those markets where Apple began selling an 8GB iPhone 5C, the company retained the iPhone 4S in its line-up, contrary to some earlier speculation that it would drop the 2011 handset from its inventory. For buyers in China, an 8GB iPhone 4S costs 3,288 yuan, or 19.6% less than the 8GB iPhone 5C.

What was interesting about the pricing was that Apple discounted the 8GB iPhone 5C about half as much as it does the 16GB model when compared to the higher-priced 32GB 5C. In China, the 16GB iPhone 5C listed for 15.1% less than the 32GB model, while in the U.K, the difference was 14.6%.

It was almost as if Apple was saying it didn't really want to sell the 8GB iPhone 5C, but felt it had no choice. That was the take of some, who portrayed the 8GB iPhone 5C availability as a reaction to slow sales of the plastic-encased smartphone that Apple rolled out last September.

"This is discounting," said Jack Gold, principal analyst at J. Gold Associates, agreeing with Thompson. "The 5C has not sold up to expectations, including Apple's. So how do you get ride of that product? You cut prices."

Apple has acknowledged poor sales of the iPhone 5C. In its January earnings call with Wall Street, CEO Tim Cook CEO admitted, albeit in carefully-couched terms, that the mix of iPhones sold in the December quarter had included a larger percentage of the top-dollar iPhone 5S than Apple had anticipated.

"It was the first time we'd ever run that particular play before, and demand percentage turned out to be different than we thought. We sold more 5S than we expected," Cook said, tacitly admitting that the other model, the lower-priced iPhone 5C, under-performed.

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