Apple Inc. (NASDAQ:AAPL) was faced with an interesting predicament last year: The iPhone 5 cost more than $200 to make, but when that model would see its inevitable price drop in 2013 -- in time for the release of the iPhone 5 successor, the iPhone 5s -- Apple would effectively lose money by selling last year’s iPhone for less than $100.
Apple’s solution? Make the iPhone 5 cheaper to build, and thus cheaper to sell. In other words, create a new iPhone that could perform the same as the iPhone 5, and even look similar to the iPhone 5, but build the phone with different, cheaper materials. That phone ended up being called the iPhone 5c, and analysts believeApple saves at least $30 producing each iPhone 5c compared to the iPhone 5.
The iPhone 5c strategy made a great deal of sense for Apple: The iPhone 5 was a hit amongst consumers, so if the company sold the same phone experience, but cheaper to build at a cheaper price, it would be a win for both consumers andApple. To sweeten the deal, Apple would even offer to sell the iPhone 5c in anarray of colors, which would hopefully propel the new iPhone in the same way the iPod enjoyed a second wind in the early 2000s with the release of the colorfuliPod Mini.
Unfortunately for Apple, it seems the iPhone 5c is not performing as well as hoped. In the month since the two phones’ Sept. 20 release date, the more expensive iPhone 5s has reportedly outsold the iPhone 5c. In the first week,Boston-based Localytics said the iPhone 5s was roughly 3.4 times more popularin the U.S. than the iPhone 5c, and roughly 3.7 times more popular internationally. On Monday, Consumer Intelligence Research Partners told AllThingsD the iPhone 5s has been outselling the iPhone 5c by more than a two-to-one margin, adding the iPhone 5s accounted for 64 percent of new iPhone sales and the iPhone 5c for just 27 percent. Apple will not release any specific statistics regarding iPhone sales.
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