Report Claims Suppliers Are Downsizing Production Of The iPhone 5C
A recent report suggests that Apple is in the process of shifting from the “unapologetically plastic” iPhone 5C and towards the “forward thinking” iPhone 5S. The report, released by Taiwan based DigiTimes, claims that “industry sources” say Foxconn’s Zhengzhou factory will stop producing the iPhone 5C and concentrate on the production of the high end iPhone 5S.
The DigiTimes report also mentions that Apple will reduce iPhone 5C orders at its other Asian suppliers. Foxconn is only responsible for 30% of all iPhone 5C order while the other 70% is the responsibility of Pegatron, a Taiwanese electronics manufacturing company. Both the Wall Street Journal and Reuters reported last month that iPhone 5C’s “weak sales” had negative consequences for Pegatron as the Taiwanese manufacturer announced lower than expected net profit during its third quarter earnings.
Why Is The iPhone 5C Not Selling As Well As Apple Wanted?
This year Apple adopted a new strategy and risked a lot when it decided to manufacture not one but two new iPhone models instead of just one as it did in previous years. The high end iPhone 5S is the successor of the iPhone 5, featuring a metal body, updated hardware (a 64 bit System on Chip, the A7, and a motion co-processor) and new features (such as the fingerprint sensor). The iPhone 5C is the other smartphone released this year by Apple and it was initially expected to be a budget iPhone, meant for emergetn markets that couldn’t afford a high end iPhone and while it had lower specs and a plastic body, the iPhone 5C was released in many color variants.
The iPhone 5S was a success and was received positively not only by critics but also by consumers; the iPhone 5C on the other hand was not received as well as the iPhone 5S. Boston based Localytics claims the iPhone 5S sold about 3.4 times more units than the iPhone 5c during the opening weekend in the United States. Consumer Intelligence Research Partners claims that the iPhone 5S outsold the iPhone 5C by more than a two to one margin, mentioning the iPhone 5S was responsible for 64% of new iPhone sales while the iPhone 5C was responsible for only 27%.
One of the reasons that could explain the big difference in popularity between the iPhone 5S and the iPhone 5C may be related to consumers’ expectations for both new iPhone models. The iPhone 5S felt like a main entry and also fresh due to its upgraded specs, new features (such as the fingerprint sensor that was very well received by consumers) and color variants (space grey and gold); the iPhone 5C on the other hand was expected to be a colorful and low budget iPhone but as it turned out, it was only colorful but not as low budget as consumers hoped.
Analysts and investors were as surprised (and disappointed) as consumers when they found out this September that Apple will not make the iPhone 5C as affordable as many had hoped. Instead of being the first iPhone to be available for $350 to $400 unsubsidized, the iPhone 5C was released with an off contract price tag of $549 (in China it was released for the equivalent of $735). The idea behind the iPhone 5C was to make a cheaper iPhone model for the Chinese market (and for other emergent markets like China), however it seems that the iPhone 5C is not the iPhone that will address the “cost sensitive regions” of the smartphone market, as Goldman Sachs’ Bill Shope said to Tim Cook, Apple’s CEO.
Speaking of Tim Cook, during a conference call with investors after Apple’s fourth quarter earnings report in late October, he said: “I realize that some people were reading rumors about that the entry phone would be the 5c, but that was never our intent obviously […] Our entry iPhone is the iPhone 4s and as you know from comments that I’ve made previously we were selling the iPhone 4 in very good volumes and as we began to experiment in different regions at somewhat lower price points we saw a fair amount of price elasticity and so we’re hoping and thinking that, that will continue with the 4S”.
Tim Cook also mentioned that the company’s low budget iPhone is the iPhone 4S, not the iPhone 5C, while the iPhone 5C is actually Apple’s mid budget smartphone and the iPhone 5S is obviously the company’s high end smartphone. The iPhone 4S is free in the United States with a two year contract. Considering the iPhone 5C is basically the same as last year’s iPhone 5 (in terms of hardware and features) even though it has a plastic body (but it also improves on some of iPhone 5’s features, such as its cameras), it make sense that the iPhone 5C is actually the company’s mid budget smartphone and not the low budget one.
That said, Apple’s decision to focus its manufacturing schedule on the high end iPhone 5S shouldn’t come as a surprise as it is the most popular of the two new iPhone models. Apple was expecting the successor to the iPhone 5 to be more popular anyway and the iPhone 5C is still a worthy option for those that don’t want to spend that extra hundred bucks for the iPhone 5S.
The iPhone 5C sells less because it pushes potential customers towards the high end iPhone 5S and that is exactly the iPhone 5C’s role. The plastic iPhone 5C is meant to encourage potential customers to spend that extra $100 to get the newer and better iPhone 5S; iSuppli suggests this way the iPhone 5S has higher profit margins since the high end iPhone 5S only costs $199 to build while the $549 iPhone 5c costs $173 to build. If you are curious, the iPhone 5 (which has been discontinued by Apple following the release of the iPhone 5S and the iPhone 5C) cost over two hundred bucks to build.
If you think about it, it makes sense that the iPhone 5C is a long term bet, unlike the iPhone 5S. The iPhone 5C may not be successful now, but it can be successful later. In 2014 Apple will release the next generation iPhone (dubbed the iPhone 6) and the current high end iPhone 5S will become the company’s mid range iPhone while the iPhone 5C will replace (or join) the iPhone 4S as the company’s low budget iPhone. At the moment the iPhone 5C is too expensive for customers in most emergent markets, but it will get cheaper eventually and when that will happen the Apple will have a real chance of penetrating most emergent markets around the world with the help of the iPhone 5C.
About The iPhone 5C
The iPhone 5C heavily borrows from the iPhone 5 but it also improves some aspects of Apple’s 2012 flagship. There are also a few differences between the iPhone 5C and the iPhone 5. The most obvious one is the transition from the aluminum build of the iPhone 5 to the “unapologetically plastic” iPhone 5C. Another difference is the fact that the iPhone 5C was released in five color variants (these being blue, green, yellow, pink and white) instead of just two (black and white) like the iPhone 5.
Inside the iPhone 5C’ case we find the same hardware that Apple used for the iPhone 5. Both the now discontinued iPhone 5 and the iPhone 5C are powered by the A6 System on Chip, both feature the same 4 inch Retina display, the same 8 MP camera sensor with 2.4 aperture and single LED flash and both run iOS 7. The iPhone 5C also features a few upgrades, such as the front facing FaceTime camera and the battery (the iPhone 5C was released with a 1507 mAh battery while the iPhone 5 features a 1,440 mAh battery). The iPhone 5C also supports 13 LTE bands, more than any other smartphone besides the high end iPhone 5S.
About The iPhone 5S
While the iPhone 5S has a similar design as the iPhone 5, there are a few differences between it and the iPhone 5 in two ways. One difference is represented by the fact that the single, circular flash of last year’s iPhone was replaced by a dual LED flash that is built with amber and white LEDs for increased color accuracy, especially for skin tones. The other difference between the iPhone 5s and the iPhone 5 is represented by the three color variants of the iPhone 5S: the first is the same silver on white color of the iPhone 5, and the other two new color variants are a space grey on black (which replaces the slate on black iPhone 5, that many customers complaint about being easily scratch-able) and a new white on gold color that sells like hotcakes ; unfortunately supply of the gold iPhone 5S is low.
The A7 System on Chip that powers the iPhone 5S, is twice as fast as the iPhone 5?s A6 System on Chip in both graphics performance and computational performance. And while the fact that the A7 SoC is built on “billions of transistors” is pretty impressive, even more impressive is the fact that the iPhone 5S is the first smartphone in the world to be powered by a 64 bit SoC. Unfortunately for now there aren’t many 64 bit optimized apps on the App Store; however, in the near future more 64 bit apps will start to be released and they be able to take advantage of all the 64 bit architecture of the A7 SoC.
The iPhone 5S also comes equipped with a new iSight camera sensor, that is just as amazing as the fingerprint sensor. The new camera sensor is improved from the iPhone 5?s camera due to a larger aperture (f/2.2) that receives more light from the environment and also because of larger sized pixels in the image sensor. While featuring the same 8 MP resolution as iPhone 5?s camera, thanks to its dual LEDs iPhone 5S’ camera can adjust its flash intensity based on the color temperature of the picture, thus improving color balance; it can choose from nearly 1000 combinations for an almost perfect lighting in every picture you take with your iPhone 5S. As a result, images taken with the iPhone 5S’ camera will look more accurate than pictures taken with iPhone 5?s camera.
iPhone 5S’ new iSight camera also includes a pretty cool feature: burst mode. This feature allows you to capture 10 pictures per second by holding the shutter button down. The feature can choose the best picture based on lighting and pose, but you can also make the choice yourself, from all the captured images. The new iSight camera also performs admirably when recording videos, thanks its auto image stabilization and live video zoom (up to 3x); it also comes with a feature that allows you to record videos in slow motion at 120 frames per second and a resolution of 720p.
The star of iPhone 5S’ specs is most likely the fingerprint sensor. It is very thin (170 microns), it senses 550 pixels per inch and it can scan your sub epidermal skin layers using a 360 degree design that allows it to read the print at any angle. Touch ID, the security system using the integrated fingerprint sensor, can detect and remember multiple fingerprints, up to five individual fingerprints. This will allow you to share your iPhone 5S with a few family members.
