Apple has cut fourth-quarter orders for its iPhone 5c, the lower-cost version of its flagship smartphone, sparking concern about weak demand, The Wall Street Journal said.
Citing “people familiar with the situation”, the report said that customers have focused their attention on its higher-end (and more expensive) sibling the iPhone 5s, which is hardly a bad situation for the company to find itself in.
The launch of the iPhone 5c marked the first time Apple has introduced a specific lower-cost version of the iPhone, rather than simply shifting the previous flagship down in price when a new one is introduced.
But the price differential is not that great, leading to speculation that in emerging markets it is still too expensive, while in Apple’s traditional strongholds the savings are not great enough to cause customers to switch from the iPhone 5s.
According to a Consumer Intelligence Research Partners report cited by AllThingsD, 64 per cent of iPhone buyers in the US are going for the iPhone 5s, compared with 27 per cent for the iPhone 5c and 9 per cent for the iPhone 4S, which also remains available.
While the introduction of a new set of colours also opened a new set of options for consumers, it has also made the vendor’s device portfolio significantly more complicated.
The WSJ report suggests that Pegatron, which assembles two-thirds of iPhone 5c volumes, had its orders cut by 20 per cent, with Foxconn, which makes the rest, seeing its orders cut by 30 per cent.
And one component supplier said that there has been a 50 per cent drop in orders for iPhone 5c components.
This is not the first time Apple has seen negative reports based on supply chain sources, and it is worth noting that in many cases this is not subsequently reflected when it publishes its quarterly reports.
It is certainly possible that Apple needed to order more devices than usual to support the launch, in order to support availability of numerous colour, memory and connectivity variants, before it was able to accurately gauge where the greatest demand lies.
This would make an inventory rebalancing a sensible option for both the vendor and its suppliers.
But with many observers looking for any sign of a weakness in Apple’s armour, the latest reports do provide some indication that initial expectations are not being met.