Diverging from its usual iPhone line-up, Apple in September unveiled the marginally cheaper and massively more colourful iPhone 5c alongside its flagship iPhone 5s. The new addition provoked mixed opinions from Apple watchers, with many believing that the company has missed the mark with the iPhone 5c's pricing and positioning. But is the iPhone 5c really a flop?
On launch day, 20 September 2013, Apple quickly ran out of iPhone 5s units globally, but had an abundance of iPhone 5c models available, hinting at a shaky start for the new arrival. But good news arrived when Apple announced that it had set a new record within the first three days of the two new iPhones' availability, selling more than nine million iPhone 5s and iPhone 5cs during the opening weekend.
What Apple didn't say, however, was exactly how that figure was divided between the two devices, so there was no way to gauge the iPhone 5c's individual success. We're still none-the-wiser about how many iPhone 5cs Apple has sold, but many have suggested that the figure is lower than expected.
During Apple's 27 January earnings call for the first quarter of 2014, which was also the first full quarter that the iPhone 5s and iPhone 5c were available to buy, Apple's CEO Tim Cook noted that the iPhone 5s sold better than expected, a comment that many took to be a confession that the company had over-estimated the demand for the iPhone 5c. "It was the first time we'd ever run that particular play before, and demand and percentage turned out to be different than we thought. We sold more 5S than we expected," Cook said, which many analysts took to be a tactical way of admitting that the iPhone 5c underperformed.
When asked about the pricing strategy of the iPhone 5c, Cook said: "If we decide it's in our best interest to make a change then we will make one. We're willing to make any product that's a great product." Apple has since made a change to the iPhone 5c's pricing; by introducing a new 8GB model that's £40 less than the 16GB version, at £429.
However, the first reactions to the new addition to the iPhone 5c family were less than impressed, with many still pointing out that a £429 price tag remains hefty, particularly as 8GB will be gobbled up in no time, especially since there's only actually 4.9GB of that available to users. That said, Samsung's 16GB Galaxy S4 only actually has 8.56GB available for users.
It is available on contract from O2 for free, though, so it might appeal to some customers looking to get an iPhone without coughing up a big chunk of cash.
While Cook didn't mention the iPhone 5c at all during the main portion of the January earnings call, he did mention that Apple has already seen a "significant new-to-iPhone number," noting that, while Apple won't disclose that figure, the iPhone 5c was a particularly important player in the increase, which was one of the aims of the new device.
However, Piper Jaffray analyst Gene Munster believes that demand for Apple's iPhone 5c "has not been good." He doesn't expect the company to ditch the device completely, but believes that Apple will eventually reduce the price.
Munster has also said that cases could be a problem for the iPhone 5c, as the colourful selling point of the device is being covered up by third-party protection that disguises the smartphone.
Jefferies analyst Peter Misek, on the other hand, thinks the iPhone 5c has a short life-span ahead of it. "I would expect them to cancel the product after the iPhone 6," he said. "Price cuts are not what Apple does. They build products that they are passionate about and then charge accordingly."
Former Apple advertising executive Ken Segall published a blog post recently that suggests the iPhone 5c proved a marketing challenge for Apple, which chose to focus on the plastic aspect of the device in its ads.
"There was a strategic plan to head off the potential negative by boldly proclaiming it as a positive," says Segall, referring to the "Plastic Perfected" and "Unapologetically Plastic" taglines Apple used to sell the iPhone 5c.
The company got dangerously close to one of Steve Jobs' prime directive: Apple doesn't do cheap. By reverting back to plastic in order to cut some of the costs of the iPhone, Apple arguably compromised on quality, and focusing on that on its advertising has come back to bite the company on the bum.
"Unfortunately for Apple, creativity can be a double-edged sword," says Segall. "The "unapologetically plastic" line in the product video was so interesting and memorable, it got played back over and over in articles about the lacklustre demand for iPhone 5c. Not exactly what Apple intended."
Several other reports also suggest that Apple is planning on ditching the iPhone 5c and the 'c' line when it launches a new iPhone (or two) later this year.
The Wall Street Journal says Apple will launch two new iPhone models, both with metal chassis, towards the end of 2014, scrapping the plastic chassis of the iPhone 5c. The publication also claims that Apple has cut back on iPhone 5c manufacturing orders.
Chinese publication South China Morning Post published a report this month that agrees with the WSJ. The publication cites "insiders" who suggest the iPhone 5s will become the cheaper iPhone alternative, while a new, bigger iPhone will become Apple's new flagship device.
With all this negative talk about the iPhone 5c it's only natural for many to deem it a failure. Yes, the iPhone 5c didn't sell as well as the iPhone 5s, but does that really mean it didn't sell well at all?
According to figures highlighted by Apple Insider, the iPhone 5c has actually managed to outsell the Samsung Galaxy S4 on half of the top carriers in America, and also pushed every other Android, Windows and Blackberry phone out of the top three smartphones across each carrier since it launched in September.
Plus, an estimate by Horace Deidu of Asymco highlights that the iPhone 5c is estimated to have accounted for just under 20 per cent of the $32 billion in iPhone revenues for the first full quarter of its availability, which would equate to $6 billion. To put that into perspective, if Apple's only product was the iPhone 5c and it made no other revenue, it would still be within the Fortune 500 list, at about number 430 (Apple is currently number 6).
Things seem to be gradually improving, too. In December 2013, Kantar reported that the iPhone 5s was outselling the iPhone 5c by a 3:1 ration in the UK, but by late February 2014, that ratio had improved to 2:1.
The launch of the 8GB mode of iPhone 5c suggests the company hasn't given up on it, and that it's still deemed to be a product worth pursuing.
Whether the 8GB model of the iPhone 5c will be a success is yet to be seen, but Apple hasn't stopped there. The company seems to have upped its advertising for the device recently. The company is believed to be behind the new iSee5c page on Tumblr, which features a series of 'Every colour has a story' videos that represent the different case and colour combinations of the iPhone 5c.
Interestingly, there's a 'coming soon' tile on the iSee5c page, which has left many wondering what Apple could be planning to do with the page in the future, assuming it really is the company's handiwork.
We've also seen new iPhone 5c print ads appearing in tube stations around London and in magazines and newspapers, suggesting Apple hasn't given up on the device yet
Personally, I hope that Apple doesn't discontinue the iPhone 5c. I've seen a steady increase of the device on my morning commute, and think that it's the kind of device that'll pick up the pace slowly but surely, as smartphone owners come to the end of their contracts and begin the hunt for a new one. It's bright, bold and fun, and, aside from the ugly case that Apple launched with it, I really rather like it.
The iPhone 5c isn't a device for early adopters. Early adopters want the latest, greatest, most expensive smartphone that Apple can offer, so they'll choose the iPhone 5s, whereas those simply on the lookout for an upgrade now that their older, possibly Android device has reached the end of its contract, are more likely to be attracted to the iPhone 5c.
If Apple is able to bring the cost of the iPhone 5c down to make the gap between it and the iPhone 5s bigger, more upgraders are bound to opt for the cheaper option. Right now, you can get an iPhone 5s for just £50 more than the iPhone 5c on some contracts, which is not a big enough pull to convince people that the cheaper option is worth choosing.
That's not to say that it's a bad thing that customers are choosing the more expensive phone. For Apple, it's great news that its flagship iPhone is selling better than expected, but for the iPhone 5c it doesn't bode well.
I would expect Apple to hold off launching a new iPhone 5c later this year, instead bringing the price of the current model down significantly and perhaps ditching the iPhone 4S to make the 5c the low-end model. It would be a shame to see it go so soon after it was introduced.
What do you think about the iPhone 5c? Should Apple continue developing the 'c' line? We'd love to know your thoughts in the comments section below