Apple Is Said to Cut iPhone 5C Orders
Move Raises Concerns About Demand, Pricing Strategy for Low-Cost Device — A customer looks at an Apple iPhone 5c at a store in Palo Alto, Calif., on Sept. 20. Bloomberg News — HONG KONG— Apple Inc. has notified its two assemblers …
Context & Ripple Effects
Apple’s reported assembler instructions follow an earlier report of reduced iPhone 5c production alongside confirmed softening in Chinese gray-market prices. They also sharpen a pricing question that had surfaced in January, when concern over iPhone sales fueled discussion of a cheaper model.
First-order effects
- Apple’s two iPhone assemblers must revise near-term iPhone 5c production plans after the reported order reduction.
- The lower-cost iPhone’s demand and pricing rationale face immediate scrutiny inside Apple’s product lineup.
Second-order effects
- Assemblers’ reduced production schedules flow through to their component purchasing and inventory plans for iPhone 5c parts.
- Apple must weigh whether its lower-priced model is drawing incremental buyers or diverting demand within its own iPhone range when setting future order volumes.
Third-order effects
- If demand repeatedly falls short for lower-priced iPhones, Apple’s product segmentation will depend less on adding a cheaper option and more on matching price tiers to distinct buyer demand.
The trend: The iPhone 5c order change is an early test of whether Apple can broaden its smartphone price range without weakening demand allocation across the lineup.