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China Daily Website

Sending signal Apple slows iPhone 5C's

Updated: 2013-10-17 10:57
By Yu Wei in San Francisco ( China Daily USA)

Sending signal Apple slows iPhone 5C's
New iPhone 5Cs are displayed at a media event in an Apple Inc office in Beijing, on Sept 11, 2013. Apple launched its new low-end iPhone 5C on Sept 10, but was met with widespread complaints in China about its still-too-high price. Its starting price is 4,488 yuan ($728), only 800 yuan lower than the iPhone 5S. [Photo by Wei Xiaochen/Asianewsphoto] 

Apple Inc notified its two suppliers of the new lower cost iPhone 5C that it's cutting orders of for the fourth quarter, the Wall Street Journal reported.

Taiwan-based Pegatron Corp and Hon Hai Precision Industry Co, two major assemblers for Apple, were told to cut orders of the iPhone 5C this quarter by 20 percent and 33 percent respectively, according to unidentified sources cited by the paper.

Sending signal Apple slows iPhone 5C's

Meanwhile, the Journal also quotes two Hon Hai executives as saying Apple raised orders for the 5S in the fourth quarter.

Apple shares closed on Wednesday at $501.11 in afternoon trading.

"If Apple is really cutting orders for 5C, then this does suggest that demand is not as strong as hoped," said Andy Tsay, chair for operations management and information systems at the Leavey School of Business at Santa Clara University.

One possibility Tsay said is that potential buyers are seeing price cuts for the 5C already start to happen (in the US), at least for the ones sold with a service contract. "Apparently Best Buy cut the price from $99 to $50, and Target and Walmart are offering discounts as well," he said.

Another possibility Tsay said is customers are not buying the 5C because they are buying the 5S instead, since the 5S is not that much more expensive by comparison.

"Sometimes companies place certain products into the portfolio not with the intention to necessarily sell a lot of that product, but with the direct purpose of making their other products look good by comparison. This is a long-standing strategy in retailing, especially in electronics," he said. "I don't know if this was Apple's intention with the 5C, but this could be the end result."

Apple launched a pair of new models - flagship iPhone 5S and the cheaper iPhone 5C in September. According to Consumer Intelligence Research Partners' recent survey, iPhone 5S accounted for 64 percent of total iPhone sales at the end of September, whereas iPhone 5C accounted for 27 percent. That means the 5S is outselling the 5C by more than two to one.

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