How can Apple avoid another iPhone 5c?

How can Apple avoid another iPhone 5c?

Apple doesn't break out sales numbers for individual iPhone models, but other companies keep an eye on things. And since the iPhone 5c and iPhone 5s were introduced last fall, one thing's become clear: the iPhone 5c sales haven't burned up the charts. How can Apple avoid that going forward?

Rewind to opening day: September 20, 2013. Lines around the block at many of Apple's retail stores, like usual. But unlike most days, customers have two new products to choose between — the premium-priced iPhone 5s, packed with whiz-bang features like an industry-first 64-bit mobile Apple A7 processor, Apple M7 coprocessor and Touch ID sensor, or the more mundane iPhone 5c — available in a steel-reinforced colorful polycarbonate shell, but still mostly last year's model under the hood.

While Apple had plenty of stock of the iPhone 5c in all of its colors, the iPhone 5s sold out quickly. Inventory of the premium phone stayed constrained for weeks afterwards - especially the gold version, whose popularity apparently caught Apple not customarily off guard.

After the fact, even Apple CEO Tim Cook admitted it had been a rare misstep. Speaking to analysts on Apple's Q1 2014 earnings call for the period that began shortly after the iPhone launch, Cook said, "It was the first time we ever ran that play, and demand percentage turned out to be different than we thought." He said that the "mix was stronger to the 5s," and it took some time for Apple — and Apple's suppliers — adjust accordingly.

Now rumor has it Apple is hoping to breathe a bit more life into the iPhone 5c by offering it in a lower-priced 8 GB version, at least for some international markets. At this point in the iPhone life cycle, a new lower-priced iPhone 5c model (with half the storage of the next lowest-priced model) is likely to have a modest effect on sales, if any.

The iPhone 5c isn't a bad iPhone. In fact, it's pretty good. But it's little more than Apple's iPhone 5 in an easier to manufacture, less expensive-looking polycarbonate shell, available in some different colors — nothing you can't accomplish with one of thousands of cases available for the devices.

Apple put a lot more thought and engineering into their iPhone 5c design than a lot of other smartphone makers put into theirs, but first impressions mean a lot. And when the average customer sees the iPhone 5c, they don't think about that engineering or that design - they see a colored non-metal shell, and think cheap. When high-end customers look at it they may like the shell but what they notice more are the missing high-end features exclusive to the iPhone 5s.

The iPhone 5c is modestly less expensive than the 5s — starting at $99 subsidized, or $549 full-priced, compared to $199 for the more feature-rich iPhone 5s, $649 unsubsidized. If there's a lesson to be learned here, it's that you can't expect a cheap-looking iPhone that still commands a premium price to sell well.

We're all wondering what Apple has up its sleeve for the iPhone 6, which we presume will be out this fall. It's a given that it'll have all the features the iPhone 5s does and then some, and there's been a lot of speculation that Apple is going to produce a larger phone.

I'd love to see Apple produce two new phone models this fall, just like they did last year — but instead of another iPhone 5s and 5c situation, I'd like to see two phones with nearly identical specs, just in different sizes. Both phones should have a premium feature set; neither should have any dramatic compromises.

Just offer a smaller iPhone for those of us who still value something easy to wield with one hand and slip in a jeans front pocket, and a larger model for those of us looking for a bigger expanse of screen real estate — something to fit that gap that exists between the iPhone and the iPad mini.

The iPhone 4s was kept around last year as the free phone for people on subsidized plans; it wouldn't surprise me to see that 8 GB iPhone 5c that we're hearing about end up at that tier. That way an iPhone with a smaller screen will be out of the current product matrix.

In some ways this mirrors what Apple has already done with the iPad Air and the Retina iPad mini so the precedent is there. Hopefully, one way or the other, Apple will be better prepared to change direction if they don't get the mix right the first time.

Do you want a larger iPhone? Or are you happy with things the way they are? Do you think I'm wildly off base here? Sound off in the comments.

Peter Cohen

Managing Editor of iMore, Mac and gaming specialist and all-around technologist. Follow him on Twitter @flargh

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How can Apple avoid another iPhone 5c?

64 Comments

Dream on my friend, dream on. I don't think that will ever happen. Apple makes most of their money from hardware. They would lose some serious profit if they did that. Although it would be nice, it won't happen.

Nexus 5... enough said

There is a VAST difference between "cheap" and "affordable."

Nobody, who is unbiased, would call the Nexus 5 and Moto X "cheap." They are two well designed devices. Nexus 5 gives you top of the line hardware, direct from Google updates, and understated design for a very low cost.

Moto X gives you a wonderful experience, not unlike the iPhone, while not trying to put emphasis on the specs.

But I to get to the main point, I do agree that Apple doesn't really try to do affordable and they definitely won't do cheap. They don't have to, and they won't as money comes from that hardware. Unlike Google who gets money from eyeballs and Motorola who really just needs to take one for the team in order to get back in the game big time.

Right now I have the q10 and the note 3.

I will definitely going to get the q20 and if Apple didn't increase the size of the IPhone then I will get the note 4 or somthing big.

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The problem with the 5c was in the marketing, I think. It was marketed as a new iPhone but really it was an iPhone 5 with a colorful plastic casting. Plus it was only $100 cheaper than the much superior performing 5s with TouchID, so of course it's a no-brainer just to opt for the 5s.

I wonder if it would have been better just to offer the 5s in both the unibody aluminum chassis AND the colorful plastic chassis (5sc?). That way those that want the aluminum would pay $649 (starting price) and those that preferred the plastic chassis would pay $549 (starting price), with the rest of the specs being identical.

Then they could move the 5c down the $399 / 449 price range.

I agree with you 100%. I took my 17 year old daughter to get a new phone last week. After (spending a LOT of time) looking at all the phones she went into "aggressive negotiations" mode for the 5s. Her primary reason? The thumbprint scanner.

She loved the colors and make of the 5c, but she wanted the coolness factor of the thumbprint scanner. In retrospect this may be partially my fault as when I got my 5s I put a bet on the table that the first person who could unlock it got a $20 bill... You live, you learn.

I think it's nearly essential to have very close feature parity -or- have a much more compelling price point. On T-Mobile the "EIP" price point of these two phones is $5 ($22 vs $27). Yes, that is five bucks for nearly two years which adds up, but she agreed to pay it for the cooler phone. The way phones are sold in the US, I'm not sure what the breaking price point would be where someone is willing to get the cheaper phone with fewer features.

Personally, if they release a larger phone size I will be JUMPing this fall for it. :) If not, I'll probably keep the 5s for another year until the 6s rolls out (I like sticking with the 's' revisions).

" If not, I'll probably keep the 5s for another year until the 6s rolls out (I like sticking with the 's' revisions)."

You and me both.

You hit on something here that a lot if people forget: the change in carrier upgrade programs. Previously, price was a pretty big barrier at point of sale. $100 is $100. But now it is just a few bucks more each month for people to get the better phone. Sure that's more money - but it is easier for people to justify that small cost in their heads.

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I think it's very important. The difference in cost for both over 24 months is ($648 s - $528 c = $120). So, beyond the $100 price difference, you're paying an additional $20 bucks over two years for the privilege of having the 5s in what amounts to one less starbucks latte per month (I still consider it a subsidy, it's just a different way of doing it).

(My wife and I pay for the kids' cell service and a basic phone on our plan so that we have contact with the teenagers when we need it...they pay for their own premium handsets. When I told my daughter it would be an additional five bucks a month over those two years she looked at me like I was an idiot. "Of course it's worth finding five bucks somewhere.")

I have to agree. I'm willing to bet nearly anyone looking at those two phones can wiggle an extra five bucks out of the cushions in the couch and the floor-mats in the car regularly to get the upgrade. :: shrug ::

Truthfully, I think Apple is going to really start feeling it if they don't offer a larger alternative. I'd like to believe that a 4.7" phone would be big enough (and it would for me) but I really think they are going to need to go larger to appeal to the Samsung hoarding crowd. People want space and they want to use their phones. I have heard numerous times from people that have purchased iPad Minis that they probably wouldn't have purchased it if Apple had offered a 5" or larger phone. I think people don't want to carry multiple devices. Again, I am in the minority, here, but I think the "average Joe" just wants a big enough phone to do stuff with.

I also feel that Apple will start to have clientele move away from the platform if they don't offer a larger device. I know that Apple has a set model for how they build and release, but I don't think it would completely hurt their image or processes to break from tradition every now and again. I had huge hopes for the 5S. But, Apple stuck to their guns and released an additional 4" phone. It is my opinion that there are just too many people making larger devices for Apple to ignore it any longer.

I actually prefer the look and feel of the 5c rather than the 5s. If the 5c had the guts of the 5s, I would have went for the 5c. Also, I can't wait for a new larger iPhone. Not only will the screen be a welcomed addition, but a larger battery with potentially longer battery life is a plus too!

Peter, you state "In some ways this mirrors what Apple has already done with the iPad Air and the Retina iPad mini so the precedent is there" but isn't this EXACTLY what they did with the iPod touch last year?

http://www.imore.com/apple-introduces-new-ipod-touch-4-inch-retina-displ...

I take this "rumor" of the 8 GB iPhone 5c as such. If it does get released now, or in the coming weeks, I think the 4S goes away, and would not be the least bit surprised if iOS 8 is not supported on the 4S.

I agree with regarding the 4S going away this year. But I also think that iOS 8 will have support for the 4S for current 4S users.

Oh, the 4S IS going away this year, no doubt. Just a matter of when. We all assume fall, and if that is the case, yes, it will get iOS 8. If, however, an 8gb 5c launches tomorrow, or the next few weeks, and REPLACES the 4S, then the 4S would not be a current model come WWDC, and realistically, with precedent being the iPod touch changes last year, of it not getting the iOS update.

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What I haven't heard is how previous year model sales compare to this years 5c sales. I still think the 5 would have out sold the 5c if they had kept it. How did the 4s do when the 5 came out?

I don't think the 5/4s is the right comparison, because the 5 was new body year. You would need to compare how the 4 sold when the 4s came out.

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No, he's right. For last years technology, it should be much more than just slightly cheaper than the flagship model. A price conscious customer is always going to pick Android since even a "this years tech" Android phone can be obtained far, far cheaper.

It should be in the basic Android phone price range which is about $200 off-contract.

I saw a study about what the are the biggest considerations by phone buyers and price was was ahead of operating system which and i think it was top. But because price matters and apple won't likes to get high margins competitors will always have a chance to stay in the game because they'll do what apple won't: make drastic cuts. interestingly what was also very low was screen size and carrier. Much lower than price and os. Which tells me apple won't lose much even not following the tech fanboys dream of some super large phone.

Not price it so high off contract for starters.

This should have been $300-$400 max off contract when released. It would have sold very well at that price point.

Can they? Yes. Will they? No.

The problem with the 5c is it's ugly colors and it's expensive price compared to alternatives. All they need to do is make it black and normal colors not the girly colors and make it cheap. I'm not saying cut out the memory and lower the price just lower the price. 8gbs in a modern phone is barely useful.

This is pretty simple.

“It was the first time we ever ran that play, and demand percentage turned out to be different than we thought.”

The only problem was that the demand mix didn’t match the expected mix. The fix is simply to recalibrate their expectations based on the new data.

Although better colors certainly couldn’t hurt.

How about a 6th generation iPod touch, with an A7 processor, and 5s quality camera, in a 5c case? I would love it, although the chances seem slim...

The easy answer is price. If the thing wasn't priced like a new phone, but made out of a plastic shell filled with last years components, it might actually sell.

I expect it to stay around next year at a cheaper price (next to nothing sounds about right).

I feel the same way. Offer two differently-sized phones with otherwise-identical specs. Personally, I'd like to see 4" and 5" variants.

They just got the pricing wrong on the 5C. It's a really nice phone - I preferred the feel to the 5S but it in the UK it was just £80 extra to get the latest processor and specs and effectively an extra year of life out if the phone. Really no way could I go for the 5C even though I really liked it. I thought I wanted a bigger phone until using the 5S for a year and I think I prefer the compact size. They should offer 4" and 5" with same new specs.

8 GB is barely enough to do an OS upgrade once you download some apps. I'm sorry but a 16 GB Moto X or Nexus 5 is better than any 8GB phone. Come on Apple. The cost they pay for 8 vs 16 GB is lucky to be $10. The fail wale on this item is the cost. This phone should have been free on contract and around $400 off contract. Anyone who would buy a 5c would have have been able to buy a 5s. If you couldn't then i'd say you couldn't afford the 5c either. The 5S is clearly worth $100 more than the 5c. The 5c clearly wasn't worth the premium price it was set at. Anyone who tries to say Apple doesn't make cheap phone is full of Apples BS. The Moto X isn't a cheap phone and it's cheaper than a 5c. Having an Apple logo on the product virtually guarantees it will sell like hot cakes. Not being able to sell an item with the Apple logo is like not being able to sell a fat kid cake. (just an expression. don't mean anything by it)

I was going to buy one, but the limited internal memory stopped me.

Why they cap the memory on the 5c I may never understand. Presumably it is because they want to drive people toward the 5s but if that's the case why bother with the 5c in the first place?

"Apple put a lot more thought and engineering into their iPhone 5c design than a lot of other smartphone makers put into theirs"

How do you know this?

Q: How can Apple avoid another iPhone 5c?
A: Easy! Make iPhone 6c ... price it the same a little less than iPhone 6 ... and everyone goes after 6 instead of 6c!

Problem solved .... there was none anyways! LMAO

Yes I think you are right on the money. Also I would very much like a larger iPhone. For me my phone has become my computer so what I really want is an iPad mini with phone capabilities. I don't need a phone device to be next to my ear. I very seriously doubt Apple would do that cause I personally believe it would cut into the phone sales even though phones are subsidized for the most part.

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I think the main problem is no large storage options.
I much prefer the look and feel of the 5c over the 5s, but I need/want more than 16 GB.
My friends with 16gb phones are always running out of space!

Either drop $100 off the price, or Apple could offer the 5c with the same internal hardware as the flagship model, just with a plastic shell. If they had done the latter, I probably would have done that over a 5s. I'm just going to put the metal iPhone into a case, so if I could just start with a nice plastic shell to begin with, I'd be happy. I don't, however, want to sacrifice the internal hardware to get a plastic shell.

I think you are right on. The larger screen is also something I am looking forward to. I use my phone more and more for everything so for me I would like to see a iPad mini w/phone capabilities. Of Apple will not do that cause it may deeply effect the iPhone sales especially if the iPad mini was subsidized.

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My wife actually liked the 5C form more than the 5S. She fell in love with the Coral Pink model. But getting last years processor was a turnoff.

Don't think people are that stupid and want a repackaged iPhone 5 and going from that great design to cheap plastic. You bash samsung for it, stay away from the fingerprint magnet that is the 5c.

My prediction is that Apple will release 2 phones. A big one and a small one. The small one will be an iterative upgrade from the 5S and the bigger uone. Will be similar but offer something g new. Tim and his guys will assume most will still want the smaller model and place orders accordingly but they will be shocked because yagai

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Because once again they will be proven wrong when the demand for the larger model is significantly larger than they believe it was.

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Look at supply vs demand and try changing the price accordingly, etc

The 8gb version will make it a 'bad' experience phone, agree with 2 model different sized iphones.

2 new models is fine, just keep the smaller model and make an extended battery option...please!!!

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The problem with the 5C was one thing - price. For 3-6 months before the phone came out every pundit, Wall Street analyst, Apple blogger was assuming the "C" stood for cheap. So people's expectations were a cheaper phone to grab market share in China, India, Europe, etc. Had the phone been priced $100 cheaper off contract I think it would have sold like hotcakes. This is one instance when I think someone should have gone to Tim and Peter and told them the pricing was a mistake.

Someone is going to call me a fanboy for this but I think this shows how apple has set an expectation of quality or at least perception of quality in its customer base. I think to many people saw the 5c as "cheap" instead of "less expensive" and they didn't buy in because that's not apple. If they had done the same thing with the iPod, that's different. The iPhone and iPad have gotten to a place where only size dictates most peoples buying decisions and we see that with the current generation of iPads. You want cheap you get a three generation old ipad 2 which is capable but I bet isn't selling near what the air and retina mini are selling. I would be curious to see what 5c sales numbers compared to 4s sales this time last year but I guess we'll see if they give us 2 iPhones with the same specs and different sizes this year.

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I would also be willing to bet that we will only see an iPhone 5c as a less expensive alternative with no 5s derivative in sight like they did with the iPad 3 when the iPad 4 and Air/Retina Mini launched.

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No, you are not off base. Personally I think you are right on the money. I am very much waiting for a larger iPhone. What I would really want is to make the iPad mini a phone too, but certainly that would put a huge dampenr on the iPhone especially if the iPad mini was subsidized like an iPhone. But for me I do not need to put my device up to my ear anymore so one device is all I would like to weld, since I use my phone now more and more as my main computer.