New iPhone 5C theory: Apple missed out on China's 'Golden Week' carrier subsidies
NPD DisplaySearch analysts forward theory that iPhone 5C sold poorly in China during national holiday
Computerworld - Apple mistimed the launch of the iPhone 5C and priced the smartphone too high, missing out on aggressive subsidies offered by Chinese mobile carriers during an important holiday, a research firm said today.
On Friday, NPD DisplaySearch, a researcher that tracks display orders from smartphone, tablet and PC makers, became the latest to posit a poor reception for the iPhone 5C, the $549 smartphone Apple launched more than a month ago alongside the flagship iPhone 5S.
"Our latest channel checks confirm that Apple indeed has cut back 5C production by 35% and increased 5S production by 75%," said Tina Teng and Shawn Lee, two senior analysts with DisplaySearch, in a post to their firm's blog.
Earlier this week, media outlets such as the Wall Street Journal and the Reuters news service said Apple had cut orders for the iPhone 5C by between a fifth and a third, respectively.
The production cuts, argued some on Wall Street, proved that Apple misjudged the appeal of the lower-priced iPhone 5C. Others, however, countered, saying it was historically a waste of time to judge sales or product acceptance from production numbers because there were too many unknowns.
Teng and Lee of DisplaySearch pointed out that Chinese mobile carriers offered aggressive smartphone subsidies during "Golden Week," a multi-day national holiday that began Oct. 1, the anniversary of the 1949 founding of the Communist People's Republic of China.
Carriers budget for Golden Week sales long in advance, said Teng in an interview today, and with the iPhone 5C's Sept. 10 debut and price disclosure, the Cupertino, Calif. missed the boat: Carriers had already made their decisions on how much to offer consumers in new phone subsidies for the various brands and models they wanted to promote.
The actual timing was secondary, however, to Apple's insistence on pricing the iPhone 5C at a relatively high level.
Before its launch, many analysts expected that Apple would offer the 5C at a dramatically cheaper price, perhaps as low as $350 unsubsidized. Instead, Apple substituted the iPhone 5C into the middle of its three-tier sales strategy for the superseded iPhone 5, selling the new plastic-covered phone for $549 sans subsidy. U.S. carriers that offered subsidies sold it for $99 with a two-year contract, half the price of the iPhone 5S.
That price point wasn't what Chinese carriers had hoped for, Teng said.
"The carriers were looking to get more subscribers through that whole week," said Teng of Golden Week. "But because Apple wanted to sell the iPhone 5C at the same profit margin and because the carriers didn't want all the eggs in the same basket, they weren't willing to give even more subsidies to Apple's devices."
- As iPad sales slump, Cook hijacks analysts' fast-uptake explanation
- Android mobile ad traffic beats iOS for first time
- The iPad's expected ebb, and the search for why
- Apple customers downsize iPhone, iPad storage in March quarter
- Apple has bigger plans than just song ID with Shazam deal
- Automakers show off in-vehicle Wi-Fi, new smartphone interfaces
- First-to-market means diddly when it comes to smartwatches
- Apple slates WWDC for June 2-6, sets up ticket lottery
- Nadella to Cook on Office revenue sharing: Drop dead
- Microsoft scraps 'Windows-first' practice, puts Office on iPad before Surface
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Logicalis eBook: SAP HANA: The Need for Speed Without timely business insights, organizations today can suffer logistical, manufacturing, and even financial disaster in a matter of minutes
- Neustar 2014 DDoS Attacks and Impact Report For the third consecutive year, Neustar surveyed hundreds of companies on distributed denial of service (DDoS) attacks. The survey reveals evidence that the...
- Acxiom Case Study This case study, which focuses on Acxiom, explores how the company was able to secure employee data, reduce migration costs and boost productivity...
- Windows® XP Migration: Protect and Secure Critical Data With the end of the Microsoft Windows XP operating system's lifecycle on April 8, 2014, businesses are faced with the decision to migrate...
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Building Tomorrow's Infrastructure Listen to this podcast to discover how Crider Foods worked with PC Connection to update their IT infrastructure, while maintaining compliance and control. All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!