Order cuts will impact profits for manufacturers
Sources within the Apple supply chain have announced that Apple has been informing iPhone 5C manufacturers that it intends to cut orders of the cheaper smartphone for Q4 of 2013. The iPhone 5C sells for about $100 less than the high-end iPhone 5S. Both the iPhone 5C and the iPhone 5S were unveiled last month.
The iPhone 5C was Apple's attempt to go after the lower end smartphone market, but the price difference between it and the high-end iPhone 5S has proven to be small enough that most buyers are simply opting for the more expensive iPhone 5S. This is actually seen as a benefit for Apple by some and the company stock opened 0.8% higher despite producing orders for the low-end iPhone.
Apple has increased orders for the iPhone 5S. Despite the stock price rising and increased orders for the iPhone 5S, the production orders for the iPhone 5C is seen as a reinforcement to the sentiment that the iPhone 5C was overpriced and wouldn't be well received on the smartphone market.
"This reflects a failure in Apple's pricing strategy," said Bevan Yeh, a Taipei-based senior fund manager at Prudential Financial Securities Investment Trust. "The price differentiation between 5C and 5S is too small. It's an iPhone 5 with plastic casing and isn't worth the price."