Apple’s iPhone 5c has taken a bit of a beating in the headlines since its launch, most recently on speculation that the plastic-backed model just wasn’t seeing the kind of demand expected for the less-expensive phone.
On Wednesday, The Wall Street Journal reported that Apple had reduced its orders for the phone at its final assembly plants in Taiwan. Apple declined to comment on the report.
The article follows news last week that Apple analyst Ming-Chi Kuo of KGI Securities cut his forecast for iPhone 5c sales by one-third for this most recent quarter, as reported by Business Insider. Kuo also dropped his estimates for the all-important holiday quarter by 10 percent, to 10.4 million units.
Reception for the iPhone 5c was, from the outset, a bit lukewarm. Analysts immediately said that the iPhone 5c wasn’t quite as cheap as they had expected. Instead of launching a phone that could be picked up, unsubsidized, for around $300 in developing smartphone markets, Apple gave the iPhone 5c the place in the pricing range that normally goes to its year-old smartphones. At an unsubsidized price of $549, analysts had said, it was unlikely to pick up customers among the truly budget-conscious. Plus, news that retailers are already dropping the iPhone 5c’s price in their own stores set off speculation that people just aren’t that interested in the phone.
But before the iPhone 5c gets labeled as the modern Newton and a harbinger of Apple’s doom, there are a couple of things to consider. For one, as Kuo said in his note, sales of the iPhone 5s — which has higher profit margins — and the iPhone 4S are better than expected, and so overall iPhone sales will be right in line with expectations. As long as overall sales don’t dip, it’s not a bad thing to have a mix that favors the iPhone 5s.
It’s also difficult to draw too many conclusions from individual reports within the supply chain, even from final assembly plants. As ZDNet noted, The Wall Street Journal report said that production would get cut by less than 20 percent at Pegatron and by about one-third at Hon Hai. That could, the site’s Larry Dignan said, be inventory adjustment. And Enders Analysis’s Benedict Evans told Reuters that there are “too many moving parts” in the supply chain to draw conclusions about the iPhone 5c quite yet.
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