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The Wall Street Journal is reporting that Apple is cutting component orders for the iPhone 5c by up to a third, reiterating the news that Apple is curtailing iPhone 5c production. This backs up a multitude of reports by industry analysts, which said that iPhone 5c demand is weaker than Apple’s initial expectations.

Apple told its Taiwanese assemblers Pegatron Corp. and Hon Hai Precision Industry Co. that shipments of the iPhone 5C in the fourth quarter would be cut, the people said. Pegatron, which analysts say assembles two thirds of the iPhone 5Cs, was told orders would be cut by less than 20%, said a person familiar with the matter. Hon Hai, which assembles the remaining low-cost iPhones, was told orders would be cut by a third, said two people familiar with the matter.

In the past, Apple CEO Tim Cook has cautioned against supplier shipments analysis as an indicator of sales performance, saying that Apple sources components from multiple manufacturers. However, the sheer number of independent reports about cuts to iPhone 5c suggests there is some underlying truth to the story. On the flip side, iPhone 5s sales seem to be booming, doing better than predicted.

The Wall Street Journal says that Apple has raised orders for the 5s, according to two Hon Hai executives, an iPhone manufacturer. These sales forecasts seem to reflect the consumer-facing situation. Whereas the iPhone 5s remains supply constrained (and out of stock in many areas), the 5c is available to dispatch from Apple’s online store within 24 hours and has received deep discounts at third-party retailers almost immediately after it launched, suggesting demand for the latter model is lower.

Apple will report its fiscal Q4 earnings next week, which will include sales numbers for the first week of iPhone 5s and 5c sales, although Apple is unlikely to publish the sales split for competitive reasons.

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18 Responses to “Wall Street Journal backs up analyst reports that Apple is reducing component orders for iPhone 5c”

  1. Bob Black says:

    but, but, but,, didn’t they sell 9 million in 24 seconds or something like that??

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  2. Greg Frith says:

    Personally, I believe apple is seeing lower than expected sales of the 5c for 2 primary reasons:

    1. Its too overshadowed by the 5s. Let’s face it, people who buy iPhones are largely those who embrace technology and want the best and newest gadgets, so they will stretch their budget to get fingerprint recognition.

    2. The colours. They just don’t appeal to the male market. Blokes don’t want brightly colour toy looking phones, we want silver, grey and blacks (this is certainly the case in the UK). Granted there maybe some international markets where this isn’t the case, but I think that in many countries a black model would have sold better.

    And the price difference doesn’t differentiate them enough.

    G

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    • thejuanald says:

      “Let’s face it, people who buy iPhones are largely those who embrace technology and want the best and newest gadgets”

      Hahahahahaha

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    • I agree with you with some modifiers. Apple customers who are early adopters are most likely to buy the newest model on release day or soon after and are going to spring for the top model. The 5c will see it’s greatest success over time as others upgrade on their 2 year cycle. Your second point I think is spot on. Guys don’t want pastel phones. If they’d had red and black models they probably would have sold more to guys.

      I think another thing that tempered enthusiasm for the 5c is the fact it’s plastic.I know it’s selling very well, but obviously not as well as Apple thought it would. People want colors, but they want Apple to release colored phones in Apple’s signature high build quality devices. They don’t want plastic. Even if the plastic on the 5c is superior to that used on other devices like the S4, it’s still plastic and therefor perceived as being “cheaper.” People don’t want cheaper at the same second tier price point as previously done. At least before the 5c the phones were still the same high build quality and materials. HTC is coming out with the One in colors and they look great (and aren’t pastel), which proves it can be done with aluminum. I think Apple would be better suited to do that. Even though the 5c plastic is high quality and the build quality is great, it’s still perceived as lesser quality for the same money, and I think that hurting its sales, at least initially.

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      • thejuanald says:

        “Even if the plastic on the 5c is superior to that used on other devices like the S4″

        It isn’t.

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      • By all reports, it is. The knock on the S-series has always been build quality due to flimsy feeling plastic. All the reviews of the 5c purport it to be a solidly constructed device despite the use of plastic. I’m just saying what reviewers have said. I honestly could care less.

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  3. WAIT !!

    Something is definitely Wrong !!!

    Apple can’t be Right !!

    ALL the Anal-ysts claimed and predicted that Apple NEEDED to make a “cheaper” iPhone.

    Then and Only then, would Apple sell gazillions of iPhones.

    And until Then, Apple will Only Sell bazillions of iPhones.

    Proves to me that the Anal-ysts know NOTHING.

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    • thejuanald says:

      The problem is, the 5c isn’t the cheaper phone that analysts were calling for. Off contract it’s still ridiculously priced and on contract it’s just the same price as the previous year’s model always is. That’s not what analysts were saying when they said cheaper phone. The 5c is just a shitty iPhone 5 that’s made more cheaply but costs the same price while increasing apple’s margins. Then again, I’m talking to someone who thinks it’s clever to write anal-ysts.

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      • You’re not getting the point. The point he’s making is that Apple’s core group of buyers aren’t as price sensitive as many would believe. I’ve sold Apple products for years and the cheapest Apple products are rarely the best sellers (Mac mini vs iMac etc). The key to emerging markets may indeed be significantly lower priced iPhones but in the US consumers that are looking at Apple are prepared to pay a premium.

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      • Since when is the iPhone 5 shitty? The 5c actually got improved battery and camera compared to the iPhone 5. I agree it’s more cheaply made (slightly) and I think it is perceived that way with the plastic, even if the plastic is high quality. A $50 price reduction would probably help it tremendously, but it’s not actually selling poorly. It’s just selling less than Apple anticipated, while the 5s is selling more than they anticipated. OH NO, THE HIGHER PRICED MODEL IS SELLING BETTER THAN WE THOUGHT IT WOULD! DOOOOOOOOOOOM! And guess what? Anal-ysts (I thought it was funny. You’re probably a hoot at parties) don’t set Apple’s prices. Everything they were saying was wishful thinking on their part. Apple is still the most valuable tech company in the world. Sure the stock came back down to earth, but that was inevitable. It still hovers right around $550 a share. Every other company on earth WISHES they had Apple’s “problems.”

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  4. rogifan says:

    I’d like to remind people that it was also th WSJ which reported iPhone 5 cuts last January because of alleged “lack of demand”. That was a huge story and the stock really got hammered by it. Yet as far as we know it wasn’t accurate, certainly wasn’t reflected in iPhone sales.

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    • wildmarkets says:

      Game is rigged against Apple. Only Earnings will throw away market negativity.

      Look at FB rip and go after earnings! World was bearish FB at 20-25, Now world is Bullish at 50 lol

      Like

  5. This was obvious from day 1.

    5s = better processor, M7, better camera, aluminium shell, touch id. In people’s minds the extra 100 bucks are WAY justified. From the other perspective, 100USD is not really a big incentive for going for the “cheap one”.

    My guess is that the people who chose the 5c did it for a mix of liking the plastic’s fresher / leaner looks, plus saving a few bucks. But it was more of a “I prefer the looks” thing, methinks

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  6. rettun1 says:

    Is this supposed to be bad? I don’t think it makes sense to have production firing on all cylinders for months after a product is announced.

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  7. “However, the sheer number of independent reports about cuts to iPhone 5c suggests there is some underlying truth to the story”

    Yes I kind of believe that the more we repeat a lie it becomes true.

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  8. The iPhone is just too expensive for the average person living in China. What the analysts were looking for was an iPhone at half the price or lower, made cheaply, and sold on the strength of the brand. But maybe Apple didn’t want to dilute their image because the bulk of their sales come from developed nations, where image is a big part of the sell, as compared to developing nations where it’s more of a necessity.

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