iPhone 5c (blue, iFixit teardown 001)

That is twice in two weeks that we hear Apple has asked suppliers in China to cut down on production of the iPhone 5c. Although the first report from Chinese website C Technology came more as a rumor than an actual fact, today’s WSJ report that echoes the same information definitely gives more credence to the claim.

This is the ideal news for Apple naysayers, downers, and other AAPL bears. Clearly, if Apple is cutting down orders on the iPhone 5c, then it must mean the device isn’t selling as well as expected. But is that really the truth?

I’d like to start by disclosing that I am no production, manufacturing or supply chain specialist. I have however been looking closely at Apple for several years, which I believe gives me a certain level of understanding of how the firm works. This being said, I’d like to offer a couple other possibilities as to why Apple might be cutting production of the iPhone 5c.

The iPhone 5 manufacturing expertise

I don’t like assimilating the iPhone 5c to “an iPhone 5 with a plastic case” but at the end of the day, that’s pretty much what it is. And the good thing about the iPhone 5c is that Apple has been making its predecessor – the iPhone 5 – for over a year now.

Despite the change in casing, one might argue that not only Apple has perfected how to make these devices, but they’re probably making them even faster, and most likely at a lower cost. The experience Apple gained making the iPhone 5 has been a tremendous advantage in making the iPhone 5c.

It’s not hard to imagine that while Apple was introducing the iPhone 5c to the world back in June, production of the iPhone 5 had already been halted. Instead of making phased out iPhone 5, Apple was already busy making the unapologetically plastic iPhone 5c. From then on, the company has probably been piling up stocks and getting ready to supply the demand, which would also explain why the iPhone 5c was widely available at launch while the iPhone 5s can hardly be found anywhere.

With enough supply to satisfy demand, I wouldn’t be surprised if iPhone 5c production cuts were due to the fact that Apple has enough devices on hand now that it doesn’t have to worry about not being able to meet demand. The initial peak of demand has passed, and Apple can now slow down production a bit while still meeting demand.

Making room for other devices

Pegatron and Foxconn, two companies Apple works with to assemble the iPhone 5c, have limited resources too. No matter how many robots and humans they have on hand, there is only that many devices assemblers Pegatron and Foxconn can put together in a given period.

Apple understands this, and on the eve of new iPads, it must make room on assembly lines for the new devices, as well as a still very high demand for the iPhone 5s, as noted by the WSJ. Obviously, it is not as simple as turning off the iPhone 5c switch and turning on the iPad mini one, but you get the idea. If Apple wants to make news iPads and more iPhone 5s, it basically has to relocate assembly lines and move them from iPhone 5c to iPad or iPhone 5s, which could explain a cut in iPhone 5c production.

Because Apple has perfected iPhone 5c production process, it’s not hard to imagine the reason why the company is cutting orders. Not only it has more than enough units to satisfy the demand for iPhone 5c, but it must also make room on assembly lines for its upcoming iPads and the higly demanded iPhone 5s. And this is why I believe Apple is cutting down production of the iPhone 5c. Of course, that won’t fit well with the “Apple is doomed” headlines, but it probably paints a better picture of the reality.

  • CA$H

    This iPhone 5c should have been free on a 2 year and they should have just dropped the 4s

    • iBanks

      Why should the 5c gone free on a two year? Had the 5c not been introduced, the 5 would have dropped to $99 as it did, and there would be no complaints.

      • CA$H

        iPhone 5 beautiful – iPhone 5c looks cheap

      • Jack Wong

        lol c stands for cheap… that what most people though.

      • Mohammed Sahib

        Coz it is cheaper to manufacture, may be? Coz the 4s is outdated screen size and performance- wise, coz dropping the 4s would reduce fragmentation and make developing apps much easier? Coz the iP5 looks and feels like a premium product, the real appeal of the expensive apple, and looks very similar to the flagship 5s? Do u want more reasons?

      • iBanks

        Cheaper to manufacture? I disagree. The internals are the same. Can’t be much of a cost factor by changing an back housing. Your 4S reply is irrelevant to my post. The 5s was to replace the 5, not the 5c replacing the 5, therefore your premium product still looks the same. More reasons please..

      • Mohammed Sahib

        1/ Raw aluminium costs less than plastic. Manufacturing the aluminium and shaping it costs more. So changing the housing to plastic does save money, that’s why they did it.
        2/ The internals are one year old. Thy must be cheaper to manufacture and perfected (higher yields) by now. This is why 1 year old gadgets always cost less than new ones.
        3/ 4s is irrelevant? How about dropping the 4s in favor of the 5c and keeping the 5? (5s@$650, 5@$550 and 5c@$450)
        4/ If I spend $550 on a handset, I want it to look and feel premium. Obvious. Last year people could have a premium looking handset for $550 (or $99 on contract), this year they can’t.
        More reasons:
        How about penetrating new markets with the 5c? You know how many people in the so-called developing countries are switching form feature phones to smart phones these days now that they are getting richer? Do you know most of them are choosing Android phones based on features/price ratio? Imagine how much Apple would gain from selling iPhones to those and how much they make from locking them into their ecosystem instead of Google’s (songs, apps, books). Most people start with one Apple product and then buy others (iPads, Macs). Imagine the huge potential they are missing. With every $50 Apple, or any other company, adds to a product, tens of thousands of people are turned away. With every year Apple is ignoring those markets, they are losing millions of dollars. Talk about bad decisions.

      • Ted Forbes

        Yeah, I agree.

        Apple don’t really need the cash, but its billions they are loosing.

        If they don’t want the billions they can still do the lower markets at lower prices for the fun of giving the billions away. They wont do it but they can do it if they want.

      • Mohammed Sahib

        Apple doesn’t need the cash now perhaps. But what about the future? What happens when the developed markets get saturated with tens of brands? All competing and selling similar products? If they lock people into their ecosystem, they can keep selling.

      • @sexyhamthing

        ^^ Sums out scumbag apple

    • xSeriouSx

      Yup, that’s the moral way, but also the less profiting way. This is the same marketing tactic that first came to play when they replaced the iPod touch 4 with the less appealing iPod touch without a rear camera. Turns out to be working very well; ’cause more and more people are paying out more cash to Apple to get the 5s.

    • Jack Wong

      Exactly, who would paid $99 for an iPhone5-inside device? And you have the plastic case instead…

      By the way, Sprint is doing that for free now with 2years contract.

  • bigtalk

    CAUAS IT FAILED… demand fro that iphone5 in a new case is not as high as they hopped..

  • leart za jmi

    4s is still a great device

    • Lagax

      Jap. Better than the 5c.

      • Guest

        4s is pretty fast, i dont see any reason to upgrade to 5/5c and the 5s is a “little” expensive for the moment 🙂

      • coLin

        LTE

      • Jack Wong

        4G LTE, same monthly charge and finally I can stream movie/music.

    • Jack Wong

      Yes but the weight is too much compare with 5.

      Most importantly, 4G LTE.

  • vs511

    Apple should’ve cropped the 4S out of the picture and kept the iPhone 5 for a hundred dollars less than the 5s and the 5c 100 dollars less than the iPhone 5. This would’ve also prevented fragmentation. 5c price is exorbitant and completely unreasonable. People who buy it are… Well.

    • mav3rick

      4S is the last true legacy iPhone even the specs get outdated.

      5c is way overpriced. Users are paying also the high-end class products CEOs from Yves Saint Laurent & Burberry.

  • Jeffery Simms

    Actually in my opinion, I think that they cut down production simply to keep it from canniblizing the demand of the 5S. Because the average consumer who may not want to wait until 5S is restocked or because they may not want to pay the extra $100 to get it. I just upgraded from a 4S to the 5c and so far I am honestly satisfied with it. I went from 16gs to 32gs and from a performance standpoint, seen a significant improvement. And I’m someone who has been avid fan of apple products. Imagine someone who is new to iPhones but doesn’t feel comfortable with spending that much on the 5s but is comfortable with the price of the 5c. If more consumers are thinking like that, it makes it a harder sell to get people to buy the 5s.

    • vs511

      It’s like you’re saying 5c and 5s price points are $300 apart. In fact, there’s only a $100 gap. Apple just can’t justify this. Even as an Apple fan, I’m loathing the 5c price tag. For $400 5c would rock.

    • Oscar Nigma

      Same here, I was just waiting for them to drop the 5 to a $100.

  • iBanks

    I personally don’t understand all the crying about the 5c. Plastic? Yes, but I’m sure that was the best way to present color. Same as the iPhone 5? Yes, but yet the 5 was a great device. I think it was great to come with options. Hell, majority of you all wanted a phone in color at some point, that’s mainly why you purchase colorful cases, or else you’d just have something simple and clear. I just don’t get all the whining about the 5c.

  • Oscar Nigma

    The 4s was next in line to be the “free” phone and the 5 was gonna drop to the 100 zone but they redesigned it with the plastic for lower cost.
    I would have preferred if they made the C the base free with contract phone, brought down the 5 to the $100-150 range, and have the S be the main phone till next year. And then in the years following years give the C new internals to keep it fresh and have to drop the “higher end” phones to becoming free.
    Still in love with my C though.

  • Marlber Cruz

    “Why would Apple cut iPhone 5c production down?” Gee, let me think… Because its an overpriced downgraded version of the regular iphone 5. Why does this article even exist (since it completely overlooks the obvious)? And everyone keeps saying that “well, the iphone 5c was meant to be an entry level phone for those who’ve never had one.” Who the flying “F” would that be? Aborigines? Eskimos? Lost rain forest tribes?

    They took a great looking phone and downgraded its case, and thats suppose to be innovation? And they have the nerve to charge that much for it too? C’mon iDB, be realistic.

    • Some people will never understand the iPhone 5c…

      • ap3604

        Oh we get it all right : it’s a dirty, low value cash grab by apple to try and devalue last years model (which should have been the 5 at $99) in order to limit customers options to either the more expensive 5s, or the ugly, kid-like plastic version.

      • xSeriouSx

        And some would never understand Apple is yet another greedy company out to make money in moral and immoral ways…not some perfect God.

      • Kaptivator

        So people start businesses and grow them into corporations to not make money?

      • xSeriouSx

        Nope, just making it clear that Apple too is a greedy company like the others; they’re not perfect and shouldn’t be treated like they’re some perfect God.

      • ExRoot

        Amen!

      • Marlber Cruz

        What’s there to understand? Please go right ahead sir and explain it to me… Listen, my gripe with the phone isn’t the tech its made of Sebastien. Its just the way that apple has re-introduce the same product in a cheaper, colored, plastic housing and still charge such a high price for a literally downgraded version of a iphone 5. On top of all that, it’s being taken as “innovative.” No, it’s pathetically “toy-etic” at the most. At the end of the day its still a cheap iphone 5, and the only thing thats at a premium is the ridiculous price. But hey, I guess there are alot of people out there that have more money then common sense.

      • mav3rick

        LOL! Thanks trying to “explain” it… They “invented” colors in plastic but they doesn’t want to sell truck loads of them…

      • Hugh Jassol

        Or ….maybe people understand the 5C better than you think….hence the rumored low sale numbers. 😉

        Only time will tell though.

    • Lagax

      Yap: iDB is trying to make the 5c look good, even though it failed and we all knew it would after apple introduced it as the most overpriced device ever.

      • Pablo

        the real test for 5c is not the countries where it is selling now, but some countries where it’s not selling yet, south american countries for example

      • Lagax

        They are not dumb, too. 15% more money for a min. 1000% better phone? (iPhone 5C -> iPhone 5S)

      • n0ahcruz3

        This was intended for China. Thats why china was included in the launch of devices. BRIC nations are the top priority of apple.

      • #FAILED? 9 million devices in a launch weekend does not in any way resemble a fail. Is that not nearly double the record launch? The dual model release strategy was likely because the 5 with it’s CNC machined casing was too expensive to follow the same (drop the price, keep the model) strategy. Not good for small accessory manufacturers but AAPL will sell through and hit their numbers with the strategy. This reduction in production may well have been the plan all along. Or not, and it really doesn’t matter either way.

    • leart za jmi

      Is not a downgrade from 5 since 5c is faster, at least some tests prove this 🙂

    • Pablo

      it is not a downgraded 5, it has better front camera and battery (just a little, right), behind the plastic is a metal skeleton and I highly doubt the color, nor the price for itself is the reason why 5s is winning sells, but the price gap vs. tech gap between 5s and 5c, that was the mistake, but 5c hasn’t entered some markets yet, like south america, those markets are the real test to see if 5c is a win or a fail, I believe it will sell pretty well, obviously better than in US or Europe

  • KLau

    5c itself isn’t that bad crap.
    The only thing wrong is that apple sells that not-bad 5c at the very same time with the very-good 5s…

    • leart za jmi

      The only thing wrong with 5c is the price, sell it with the price of 400-500$ and lets see the results 🙂

      • Mohammed Sahib

        $400 max- unlocked and it will sell like hot cakes.

  • Yujin

    I think apple probably is cutting orders so they can make more iphone 5S since they are a big seller. In any case stock manipulation is very common for media companies so their subsidiaries can move in and buy cheap.

  • Mohammed Sahib

    I remember reading on iDB that iP5s sales outnumber those of the 5c 4 to 1. I think this is reason enough to cut productions. And I can see Sebastian & co’s position of nullifying the ‘Apple is doomed’ theory. It is part of struggle for existence. If Apple is gone, iDB is gone. Boom, jobs lost. I can totally understand. And I don’t believe Apple is doomed, yet, either. But defending Apple’s worst decisions seems too much. Please just admit that the 5c is a failure and should teach Apple not to be too greedy and treat customers like idiots again. P.S I have deep respect to Sebastian and his team, and I love listening to them on podcasts, in spite of being not interested in JB.

  • Al

    It’s as looking if trying to view at as an Apple fan… of course you would try to look at in a different light. Easier to produce.. made to many.. time to slow down the process… Making room for other devices on the assembly line. Which could be right.. Yet, that’s a stretch.

    But by stepping back.. and just looking at the obvious… the iPhone 5c is overpriced, its that simple. True, Apple.. reminded the public that their not in the business of making cheap phones. But it’s beautiful marketing on Apple part, to push an iPhone 5c and sell it at a premium price…

  • ExcaliburEdge

    I’m not sure this logic would explain the price cuts the 5c has taken. If Apple were moving their new product, they wouldn’t reduce profits so quickly. iDevices typically don’t see price cuts until a month or so before next gen arrives.

  • n0ahcruz3

    Apple is toast, sweet!

  • n0ahcruz3

    A write down would be perfect for apple to remove that distortion field around them. $100 less than the premium aluminum 5S lol Tim Cook was probably on crack when pricing the 5c.

  • mav3rick

    First plastic 5C was not the same last year 5 in a plastic case; but here finally acknowledge “…at the end of the day, that’s pretty much what it is.”

    Now 5C production cuts needs to be “explained” as some sort of premeditated move. Really?!? OK, everybody got it: they’re are very clever. They advertise everywhere 5C in front of 5s and most of the launch keynote was about inventing “colors” and now they’re not selling that well. What a surprise! Same last year phone this time in a plastic case at the same price but not many buying it.

    What company doesn’t want to sell truck loads of their product and cut production?

    And the short supply of 5s is the real gimmick to try get those plastic moving. The stores had from before the launch day prepared the fine printed posters announcing “Due to high popularity 5s is sold out…”

  • Kavin Le

    I would rather buy a iPhone 5 then a 5C the iPhone 5 looks beautiful the 5C eh. I don’t see any adults buying the colorful colors