One Big Takeaway From Apple’s Earnings: No One Seems To Want The IPhone 5c

Tim Cook: Demand for the iPhone 5C “turned out to be different than we thought.”

One Big Takeaway From Apple’s Earnings: No One Seems To Want The IPhone 5c
[Image: Flickr user Karlis Dambrans]

Apple earnings are out, and the overall picture painted by the numbers is a bit… complicated. Net income remained at $13.1 billion. And, for the first time in two years, Mac sales were actually up 20% from 2012.


The iPhone, however, was a bit of a different story over the holidays when Apple’s bread-and-butter fell well short of analyst expectations. Although the company moved 51 million iPhone units total–a record, mind you–that figure was still 3 million short of the 54 million mark many analysts expected. What happened?

This chart from analyst Horace Dediu is instructive:

As you can see, although iPhone sales tallied higher than ever (easily), this was also the first quarter Apple released two new iPhones simultaneously: The Touch ID-equipped iPhone 5s and the plastic-backed iPhone 5c. Although it doesn’t tease out exact figures for individual iPhones, Tim Cook noted during the subsequent conference call that demand for the iPhone 5c “turned out to be different than we thought.” He continued: “In North America we did not do as well.”

That seems to bolster the reports that Apple spent the better part of the quarter adjusting its production mix when consumers went gaga for the iPhone 5s while the response for the colorful iPhone 5c was lukewarm. Here’s how Cook tried to spin it:

“I think the 5s, people are really intrigued with Touch ID,” Cook said. “It’s a major feature that has excited people. And I think that associated with the other things that are unique to the 5s, got the 5s to have a significant amount more attention and a higher mix of sales.”

What’s beginning to look like a gulf in demand between the 5s and the 5c raises a few possibilities. Some critics argue the 5c was still too expensive for what was widely perceived to be a device targeted toward the low-end market. In the U.S., the 5c was only $100 cheaper than the glitzier and far more future-proof 5s. And in other countries where the phone isn’t subsidized by carriers, the 5c still ran upwards of $500–far more expensive than cheaper, just-as-capable Androids.


There are a few bright spots for the 5c, however. Apple finally inked a deal with China Mobile, which began selling iPhones on Jan. 17. With 760 million subscribers, it’s not just China’s largest carrier–it’s the world’s. “We’ve been selling with China Mobile now for about a week,” said Cook. “And last week was the best week for activations we’ve ever had in China.” Furthermore, Cook notes that iPhone 5c was very popular among first-time buyers, ugly (or genius?) case be damned.

One possible lesson for Apple is that North American consumers don’t seem to mind paying a premium for the best and latest. While it’s still far too early to deem the iPhone 5c a failed experiment, it seems Apple will have to do better than “beautifully, unapologetically plastic” in its next at bat.

About the author

Chris is a staff writer at Fast Company, where he covers business and tech. He has also written for The Week, TIME, Men's Journal, The Atlantic, and more.