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The great 'iPhone 5C is a failure' freakout

John Cox | March 19, 2014
The iPhone 5C is six months old in March. It's been declared a disaster, a dud, a fiasco and a flop. The reports of its death have been greatly exaggerated. Here's why.

Getting the few facts available right
The iPhone 5c, released six months ago, was priced in keeping with Apple's past practice of discounting the previous year's model, when a new iPhone was announced. But this time, Apple had created not a hold-over, but a product in its own right: the main hardware components of the year-old iPhone 5, including screen size, display technology, and processor, combined with some features introduced in the high-end iPhone 5s.

Given all the misunderstanding, misinterpreting, suspect data, and sheer rumor that underlie the proclamations of doom, is there anything that suggests how the iPhone 5c is actually faring?

As noted,Cook revealed in the January earnings call that the phones in both "categories" the 5c entry phone or mid-phone and the high-end 5s had sold year-over-year more units than the previous phones in both those categories. He also said that Apple sold more 5s units "than we projected." But said nothing about the 5c projections.

Cook revealed another criteria for measuring iPhone 5c success. Later in the call, Brian Marshall, of ISI Group asked: "Can you help us think about how you guys view the iPhone new user growth out there in the marketplace versus simply a solid replacement cycle that the company has with its installed base?"~~

Cook: "We saw a significant new-to-iPhone number. It's not numbers that we throw out, but we particularly saw that on the 5c, which is what we wanted to see. So, it's clearly not just upgraders [from existing iPhones to one of the two new models]." One intended role of the iPhone 5c was to bring in first-time iPhone users and it did so in "significant" numbers, according to Cook.

One set of independent data supporting Cook is from the UK data analysis firm Kantar, as reported by Citeworld's Ron Miller, who is one of the relatively few who have argued that the 5c was succeeding or, at least, not failing.

"While 80 percent of 5s purchases came from people who previously owned an iPhone, Kantar reported that almost half of those buying iPhone 5cs were switching from Android phones, particularly from LG and Samsung...." Miller wrote. "Apple is also reaching a less affluent group with the 5c, with 42 percent of U.S. buyers reporting an income of less than $49,000. All of this data suggests that while iPhone sales overall have gone down in the UK and held flat in Europe, Apple is starting to capture some of the competition's market."

If Kantar's data is correct, it shows that Apple understands its prospective new users those targeted with the 5c — better than the iOSphere does. After the 5c was announced in September 2013, another meme was quickly established: the $100 difference between the 5c and 5s was "minimal," sort of like a rounding error, and buyers would opt for the 5s because it offers a higher value it's worth it. For some buyers, this is, indeed, the calculation they would make. But this kernel of truth is often universalized and couched in strikingly condescending terms.

 

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