Tim Cook (iPhone 5c, Bloomberg Businessweek 001)

During yesterday’s earnings call with Wall Street investors and analysts, Apple CEO Tim Cook has officially admitted to the iPhone 5c not meeting the company’s internal sales goals. Although the handset proved popular with first-time smartphone buyers, the majority of customers have opted for the flagship iPhone 5s.

If The Wall Street Journal is to be trusted, Apple is expected to “scrap the plastic exterior used in the iPhone 5c” in 2014 and will instead release two iPhone models, one with a 4.5-inch screen and the other featuring a five-inch display…

The iPhone 5c experiment has officially failed, Cook asserted, as the iPhone mix was “different than we thought”. He underscored Apple may have underestimated demand for the iPhone 5s as sales exceeded internal projections.

It took us some time in order to build the mix that customers were demanding. As a result, we lost some units for part of the quarter in North America.

Apple sold a record 51 million iPhones during the Christmas quarter, but the company did not provide a breakdown of handset sales by model.

I absolutely love the bright iPhone 5c colors and its plastic design.

Although it’s just a year-old handset repackaged in a new casing design and sold discounted just like past previous-generation iPhones, I’m sad it turned out a dud.

From my vantage point, part of the problem are unrealistic expectations that had been fueled by the rumor-mill which in the months leading up to last September’s double-iPhone launch insisted Apple would create a budget handset for the masses.

green iPhone 5c front and back

As a reminder, the handset costs $99 with a two-year contract, or $549 contract-free.

That’s a tough sell given a $100 more buys you the iPhone 5s with the latest 64-bit A7 processor and M7 motion coprocessor, an improved camera, Touch ID and more.

Cook acknowledged as much:

I think the iPhone 5s, people are really intrigued with Touch ID. 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.

He also said during the Q&A portion of the earnings call that Apple has “zero issues” coming up with new ideas, hinted at mobile payments being “one of the thoughts behind Touch ID,” confirmed that the iPod business has been declining for some time now and lots more.

Tim Cook photo by Adam Amengual for Bloomberg Businessweek.

  • David Gitman

    I think 5 is better than the 5C

    • Tom Barron

      I thought the 5 was discontinued in favour of the 4S, 5C and 5S?

      • David Gitman

        Indeed but its better

      • EJ Dagus

        I dunno but i think 5C is better (except for the plastic build part): it has more LTE bands, bigger battery, tiny changes in camera i think especially the FaceTime and iOS 7 is integrated better

    • Prasoon Singh

      They both have the same specks.

      • Ricky

        but the build quality is better in the 5 than in the 5c

      • hkgsulphate

        iPhone 5 is much lighter

    • onebyone_

      that’s why I got iPh5 instead of ugly plastic 5c.

    • jack

      hey Sherlock Holmes is on iDB

    • N&LH

      The only difference between iPhone 5 and 5C is the back housing. One of the reasons has made iPhone 5C not really popular is that, it is not worth the money. It is very expensive. So logically people are happy to pay an extra $100 to get iPhone 5S. As you know there is a big difference in specks between the two phones

  • Royce Otero

    I’m pretty sure if they drop their price this year to 99 cents 2 year contract it will sell. I know a bunch of people that instead of getting the latest iPhone they ended up with the 99 cent iPhone.

    • Rowan09

      Why would they do that and sell at a lost on each phone? It would be up to the telecos to make that move.

      • smtp25

        Apple still gets full price for the phone. The carrier pays the difference to keep you as a customer

      • Rowan09

        Yes I agree and that’s why I said the phone companies would be the ones to lower the price not Apple.

    • blu

      Best Buy had the 5c for free with 2 year contract a few weeks ago. My sister, her husband and my mom all got one (they were looking at the 99 cent 4s up to that point).

      I personally think if they had just kept the 5 as is for their mid price budget phone it would have done better.

  • Nuno Xavier

    Well the least they could do is to cut it’s price in half, then they would see it’s sales rise

    • Sean Clark

      You know it costs money to produce these phones, right?

      • Nuno Xavier

        Yes, but today’s tech price, won’t be the same in the next year, so if material’s price get’s reduced, then the final product can also get it’s price reduced, also most of the i5C components came from the i5, so it’s already ~2years old tech at the same value…

      • Sean Clark

        iFixit appraised the production cost of the 5C to be about $173 at initial release. I don’t see where they can save $225 without destroying their profit margin.

  • Guest

    I have had issues on my 5c because screen started to bounce in some places. This happens because the screen disassemble from the plastic housing. The problem is how 5c parts are gather to form its body.
    It is not popular in US because for the price is worth to get the higher model. I hope they low the price a bit for the next gen, even using an alluminium back.

    • TDD140

      Actually, I believe it was the third most sold smartphone in 2013 in the US.

  • Anthony Mozambique

    oh really!?
    of course anyone will expect that… the rumours talked about a cheaper iPhone and they show us a device made with plastic and only 100 bucks cheaper…
    The greater fail was not the design of the device, was the marketing bellow and the retail price… if they lowered the price more 100 euros, they will sold a lot of more devices

    • MacDevil

      This. The problem was they decided to cut costs on one of the most visible pieces of the device: the casing. Every time you pick up a 5C, you are reminded that this is the “cheaper” iPhone. No matter how “nice” the plastic feels, it’s still not as nice at the aluminum casing and premium feel of the 5/5S. All this would be OK if Apple had priced the 5C at a greater discount over the 5S. But they put it at the same $100 discount that they used to use for the previous year’s model.

      So, we had a phone that was noticeably cheaper in terms of materials sold at the SAME PRICE as the old model premium iPhone used to be. Consumers felt like they were getting less for the same money that used to get them the premium iPhone (even if it was the year old model). Couple that with the fact that the 5S was a SIGNIFICANT upgrade for only $100 more. I’m pretty sure a first year business school student could have told you it was going to be a flop.

  • Denis Leshukov

    To be successfull iPhone 5c needed to be: a) internally the same as iPhone 5s and b) also available in black (dark grey) color.

    • And the same question comes again:
      Why I would buy an 5C if I can get the 5S? Because with the same specs they wouldn’t make it cheaper, thats for sure.

      And if they could make it cheaper, again, comes the question but in the opposite direction: Why I should buy an 5S if the 5C has exactly the same specs and its a lot more cheaper…

      • Denis Leshukov

        I meant someone (like me) could prefer “5s hardware” in a super-duper plastic (i.e. scratch protected) housing…

  • Im a little bit tired of saying this but since the facts are here now:

    iPod sales, down every year. iPhone 5C poor sales.

    How to fix this? End the iPod Touch and at the same price range, sell the iPhone 5c. This would make the 5S a “premium device” and the 5C will sell like hot cakes. Most people that I know can only experience the iOS because of the iPod Touch, and own android devices (the cheap ones) as a smartphone.

    With a cheaper iPhone, they won’t find the need of having an cheap Android phone and Apple wins that market and probably will make them want even more the so called “premium” device. Because that people will make their next goal of having an iPhone “premium” as their next phone.

    • TinTonB

      ^ This. 100% This.

    • RarestName

      Then how do they maintain their high profits? The cellular radios aren’t free.

      • People wouldn’t mind if they get rid of the LTE 4G and make it 3G only. Apple needs to look at the market. There’s a huge target here. And at $349, contact free, would make them still get a really nice profit.

      • 4p0c4lyps3

        Ppl wldnt mind regressing to 3G? Are you out of ur goddamn mind? On tht note, let’s just go back to 2G. The giant telecos with all the pricey 4G infrastructure in place proly wldnt mind either, considering mobile tech hinges on their networks.

      • If they would pay less, they wouldn’t mind for sure. Not every phone have 4G LTE network, specially the “cheap” phones.

        And 4G it’s still growing. I have an iPhone 5 and in my carrier I never got 4G and most people that I know, that gets 4G network (with different carriers and from different countries) get a really poor coverage, low bars and the upstream and downstream speeds are much more closer to a 3.5G than to a real 4G…

        Maybe in 2, 3 years we will get a really nice 4G infrastructure. And in that time, Apple can bring back the 4G to his cheaper iPhone.

      • smtp25

        We are talking budget phone though – you want faster speed you get the premium model. He’s talking about pricing it barely above iPod

      • blu

        For their first smart phone (or a kids phone) it would be just fine. Pay less for the phone,the carrier could charge less since they won’t use as much bandwidth and you would have a winner.
        They could afford to give you true unlimited on 3g since it is so slow, people would not use it for lits of large downloads, just the occasional download or data based text app.

    • mav3rick

      The iPhone is their bread and butter with the highest margin profit accounting for over 50% of their revenues. You’ll not see a cheaper iPhone even if it’s made of paper…

    • Sean Cua

      So true.

  • TonyVee73

    If the 5C would of cost $300-400 no contract and free with a contract, we wouldn’t be having this conversation.

    • ConduciveMammal

      My thoughts too. It was intended as a cheaper alternative yet the pricetag really was a bit extreme

    • Jason Baroni

      You can get these prices with Virgin for the unlocked versions.

  • Bobby

    Iphone 5 is still better than iphone 5c

    • Jason Baroni

      It is still more beautiful, for sure, but the 5c has some battery and frontal camera updated.
      Not that it is true power, nor that I prefer the C, I love the 5, but we gotta be honest.

      • and the 5C 4G LTE radio system can now use much more frequencies.

      • Jason Baroni

        True. In my country this is the first time we are seeing 4G on iPhone.

  • mav3rick

    Sequel of “The misunderstood 5C” next?

    It looks users pretty got the idea: plastic case for last year hardware at the same price. Yeah, in colors… but they were really invented long before…

  • Framboogle

    No shit

  • H5ire

    iBuyers : iPhone 5C not as cheap as we expected.! 🙂

    • Rowan09

      Apple never said anything about a cheap iPhone it was all analysts who built us up about a cheap iPhone. If a Gucci bag costs $800 on average and it’s being sold for $650 it would be considered cheap, but the reality is $650 is still not cheap when compared to other bags, but it’s cheap for Gucci.

    • TDD140

      Right you are! The polycarbonate shell is reinforced by a metal interior to give it rigidity.

  • Marlber Cruz

    “iPhone 5c not as popular as we expected”
    No shit Sherlock! I said that from day one!

  • jocastro

    i could of told you that

  • 4p0c4lyps3

    Tssss, rlly Mr Cook?

  • Anonomous.TECH.man

    Should have been off contract price of say nexus 5 price then they would of sold like hot cakes.

    • Rowan09

      The Nexus 5 is not selling like hot cakes so I don’t know how true that statement really is.

  • Rowan09

    I really don’t know why he’s surprise. People see Apple as a luxury brand and if they release a cheap phone that lacks most of the features in the more expensive model they will be upset. It’s a lose lose situation because cheap for Apple is different than cheap for other companies. Other companies can give up features when compared to the luxury model but Apple does not have that luxury.

  • Dante Arellano

    I still no like this guy but is just CEO he is no like Jobs -jonny is like Jobs that’s why he should be the CEO of apple

  • Dante Arellano

    Iphone 5c is no bad idea and it has their own market young people and new consumers but for people than already has an iphone well I won’t change my iphone 5s for the iphone 5 and c cux it’s the same iphone 5 the problem was the i5c is sell it for the same price of iphone 5s which is ridiculous but for this year they will rip off iPhone 4S and leave iphone 5c as the chipper iphone that’s for sure.

  • eKoknight

    I feel the iphone 5c brightness colors remind me of the 60s and just looks like an unattractive phone. If they woul of deepen the colors I’m sure the popularity of it be much better. Like many say iphone 5 color look better and I agree

  • romeodesigns

    Don’t get me wrong, the iphone 5C is a nice phone, but you can’t use old technology, slap a bright, eye appealing colour to it and expect it to generate a massive profit. What’s new, what’s ground breaking, what demographic does this apply to; other then teens who can’t afford it without their parents help?
    Scrap the iphone 5C, and focus on innovation. Don’t lose sight.

  • joseph letera

    i love the 5s and 5 then the 5c

  • Burge

    No shit Sherlock

  • ✪ aidan harris ✪

    Well duh! You make the 5c $100 less than the 5s then of course it’s not going to be very popular. It needs to get cheaper or ditched altogether…

  • El Arqui Tecto

    Genius…

  • David Hvilivitzki

    Too expensive for a “C”heap iPhone

  • Andy

    I always felt they should have just removed the 8GB iPhone 4s from the lineup and price the 16GB iPhone 5c at $399 instead. That would have worked a lot better. Let’s be honest, with the way the 5c is currently, the majority of people would rather pay $100 for the latest and greatest iPhone 5s.

  • n0ahcruz3

    Its the price genius! $100 less than the flagship is a dumb move even if it has an apple logo on it.

  • Beck Hoefling

    The iphone 5c was a flop, it didn’t make sence to make a plastic phone to replace the 5 when the five is the same but better quality. Apple should stick to what it does, no one expects apple to be cheap, if you want a cheap phone then apple isn’t for you. The iphone 5s could have been a lot better if they didn’t spend so much time working on the iphone 5c.

  • Stefano

    Off topic but my iphone 5 screen has bounce, or cushion to it as well like one user said below. Also. It’s bent on the left side by the (-)volume button , I read the bending has to do with heat and expansion of battery and aluminum body. Can anyone confirm this?

  • Ted Forbes

    iPhone 5c would have been a smash, a home run, a slam and a dunk if it were a larger screen. I screamed and hollered this all through 2013, but you didn’t listen Tim.

    The best advise comes:
    Not from those you pay millions of dollars but from those you don’t pay a cent.
    Not from those you dine and play gulf with but those you ignore and pay no attention to.
    Not from your friends and engineers but from your customers and fans.
    iPhone 5c would have been a perfect strike if you were not living in a bubble, dude. Check this blog and you would see that you were very well advised right here and elsewhere, for free.

  • Craig Wayman

    The 5c is the 5 except instead of being built well… with that metal finish. what happened was….. the iPhone 5 was supposed to sell for $99 with a 2-year contract when the 5s released just like all previous year models do. But greedy Apple wanted to make more money and skimped on the product (WHICH STEVE JOBS NEVER WOULD’VE FONE FOR), and wrapped the iPhone 5 in plastic TO MAKE THE 5c. So in my case I have an iPhone 5, was going to get a family member an iPhone 5 for a gift. However I wasn’t getting them that plastic P.O.S. & I wasn’t about to get him the 5s, so what did I do? I got him a Motorola Droid Mini. Way to go Apple! Way to push some possible customers away.

  • gittlopctbi

    Well, duh. It wasn’t as cheap as we expected.

  • oralarts

    I love my 5s, but the 5c never felt like the right move for Apple IMO. The curious color choices really limit the potential customer base.

  • Your Mother

    price. its over priced.