No, The IPhone 5C Is Not Underperforming

An analysis of why Apple might really be cutting back its iPhone 5C production rates.

Apple is reportedly cutting its iPhone 5C production rates in half, from 300,000 units per day to 150,000 units per day. The reason for the cut is unclear, but the online scuttlebutt is that the phone isn't selling as well as Apple had hoped.

But a little bit of logical thinking and some context suggests this reason is nonsense.

To get a product onto the shelves as quickly as possible, you need an incredibly high initial production rate. This fills the supply channel so the phone is immediately widely available. Assuming Apple was producing 300,000 a day for the last two months, that would come to 18 million iPhone 5Cs. That's plenty to fill the company's supply chain for its international launch, and it's not disproportionate for the launch weekend sales of 9 million units (of both iPhone 5S and 5C, with an assumption that the majority of initial sales were of the 5S device).

Cutting the supply rate now merely means the sales channel is at a sensible capacity, ready for the wider international launch to dozens of new nations in just a few weeks. The ongoing production rate of 4.5 million a month should be plenty--especially given historical analysis that suggests the iPhone 5 sold just over 5 million units in its first two months on sale in 2012.

And there's another fact to consider: The 5C disappointed some pundits who considered it too expensive. But the U.S. phone market is very much unlike the market elsewhere on the globe, where full price pre-pay cellphones are much more common, perhaps the norm in some places. This market is going to be where the 5C phone very likely outsells the more expensive 5S device, and the rollout to Europe and other markets where pre-pay is typical begins at the end of October.

Take the tales of woe with a pinch of salt, eh?

[Image: Flickr user Karlis Dambrans]

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2 Comments

  • matthew

    It bewilders me that link bait like this has legs. Especially after a company like Microsoft is writing down nearly $1b on the Surface, and they're giving the demand-free tablets away. Literally.

    Apple will ADJUST production on either side of demand. Just like they've done for decades. Just like other businesses have done for a billion years. The meaningful difference here is that Apple does EVERYTHING under a microscope...and they still win.