iPhone 5s Demand Higher Than Expected, Took Time to 'Build the Mix' Customers Wanted

iphone_5c_store_heroToday’s earnings call revealed that Apple saw lower than expected iPhone 5c sales in the United States, primarily because iPhone 5s sales exceeded Apple’s projections.

While Apple did not break down sales between individual iPhone models, the company did indicate that the iPhone 5c ended up representing a smaller mix of iPhone sales than anticipated.

According to Apple CEO Tim Cook, the company's iPhone sales growth in North America was not as high as that seen in other countries partially because Apple underestimated demand for the iPhone 5s, with the iPhone mix being "different than we thought." He also mentioned changes to domestic carrier upgrade plans as a partial reason for weaker-than-expected iPhone sales in the U.S.

The company expected a more balanced demand between the flagship iPhone 5s and the mid-tier plastic iPhone 5c, but actually saw a stronger preference than projected for the 5s, possibly due to a high interest in Touch ID.

It took us some time in order to build the mix that customers were demanding. As a result, we lost some units for part of the quarter in North America.

Cook said that it took Apple the better part of the quarter to get the iPhone into supply/demand balance as a result of the unexpected demand for the iPhone 5s, which was in short supply for several months following its release.

While Apple has not revealed how many iPhone 5c devices it has sold, multiple reports suggested that the phone was seeing poor sales compared to the iPhone 5s, with the 5s outselling the 5c by a two-to-one margin. Shortly after the phones were introduced, Apple cut iPhone 5c production while ramping up iPhone 5s production to meet customer demand.

Apple today reported record sales of 51 million iPhones in the quarter, up from 47.8 million in the same time period last year.

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Top Rated Comments

TC03 Avatar
136 months ago
I'm surprised this caught Apple off-guard. The iPhone 5c was just a plastic 5 and priced accordingly. Nothing new about the proposition, yet still the forecast was way off apparently.

Serious error in judgement.
Score: 25 Votes (Like | Disagree)
macduke Avatar
136 months ago
Big surprise. People want the best—especially Apple customers. If you're primarily concerned with price, you get an Android free on contract.
Score: 19 Votes (Like | Disagree)
Corrode Avatar
136 months ago
For $100 over the 5C, the 5S offered A LOT of benefit.
Score: 14 Votes (Like | Disagree)
osx11 Avatar
136 months ago
Next year upgrade it to the 5S's battery and give it the A7 and M7 chip and then make it free on contract. That's the market it should be trying to penetrate while they should make the iPhone 6 a 4.5 inch screen beast to appeal to the high end market.

PLEASE STOP with this FREE PHONE nonsense!

There are no free phones. Apple will never make an iPhone that is less than $500 off-contract, the true price of the phone. The fact that people still think there are free phones just goes to show how easily people are manipulated. People (especially in the US) spend nearly $2000 for a 2-year contract, and then think that getting a "free" phone instead of a "$200" phone is a steal. :confused:
Score: 12 Votes (Like | Disagree)
dmelgar Avatar
136 months ago
Avoided the 5C because of touch id on the 5S? Get real. People avoided the 5c because it looks like a cheaper plastic version of the iPhone 5 in amazingly bad colors. Hard to find folks who like the colors. I've asked random sampling from teenage girls to boys, to various age adults and its certainly not love at first sight.

If they had kept the 5 at the lower price, maybe. Or the 5C at a lower price.

I guess people aren't that gullible after all.
Score: 10 Votes (Like | Disagree)
ZipZilla Avatar
136 months ago
The 5C did not sell well because the colors of the devices are AWFUL.

Get the colors right, Tim and more people will buy it. Let me make this easy for you:

Red
Black
White

You know, non-Barbie/girly colors. I can't believe how wrong all the analysis is of the 5c.
Score: 8 Votes (Like | Disagree)