The IPhone 5C Turned Out To Be A Dud

Apple iphone 5cREUTERS/Adrees LatifThe iPhone 5C.

Apple may have reported record-breaking iPhone sales for last quarter, but one model doesn’t seem to be selling so well: the iPhone 5C.

For the first time since the original iPhone launch, Apple introduced two new models last year, the iPhone 5S and iPhone 5C. The latter, which basically has the same internals as 2012’s iPhone 5 but wrapped in a colourful plastic body, was at first thought to be Apple’s entry into the low end of the smartphone market. But Apple priced the 5C at just $US100 less than the 5S, giving customers little incentive to choose it over the flagship model.

And it looks like the 5C is turning out to be a dud in terms of sales (it’s still a nice phone), at least compared to the iPhone 5S. While Apple doesn’t break out sales of individual models, we have plenty of evidence showing that the 5C isn’t performing very well with consumers.

First, there’s the Average Selling Price (ASP) for iPhones. The ASP increased last quarter to $US637 (it was $US577 the quarter before), meaning more people are buying the pricier iPhone 5S instead of the iPhone 5C or iPhone 4S.

Here’s a look at the iPhone ASP over time:

On yesterday’s earnings call, analysts repeatedly asked Apple CEO Tim Cook about the iPhone 5C sales. Cook admitted that the plastic phone didn’t do as well during the holiday quarter because people preferred the advanced iPhone 5S features like the new Touch ID fingerprint sensor.

“I think [with] 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.”

On the other hand, Cook said the iPhone 5C was more popular among first-time iPhone buyers.

“We saw a significant new to iPhone number,” Cook said on the call. “It’s not a number that we throw out, but we particularly saw that on the 5C, which is what we wanted to see.”

It makes sense. The iPhone 5C only costs $US100 less than the iPhone 5S, but it’s still powered by hardware that’s over a year old. There isn’t much incentive for customers to choose the iPhone 5S over the 5C. If it were $US200 or $US300 cheaper, things may have been different. But Apple has been firm in its stance that it doesn’t need to offer a “cheap” phone.

Meanwhile, an early report from The Wall Street Journal hinted that Apple may discontinue the iPhone 5C this year and launch two new iPhones with bigger screens instead.

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