Unsold Phone 5c Inventories Estimated At Over 3 Million Units Say Upstream Supply Chain Insiders

Digitimes’ Monica Chen and Joseph Tsai report that due to lower than expected sales performance, recent market rumors have indicated that iPhone 5c shipments drastically deceased at the end of 2013 and inventory volumes have built up to more than three million units, consisting of about two million units at ODM Pegatron Technology and over one million units in total with telecom carriers and distributors, according to Taiwan-based supply chain makers. Apple did not confirm the reports.

Chen and Tsai note that Apple previously announced its quarterly smartphone sales had reached a new high at 51 million units, but the mix of iPhone 5s and 5c did not provide much of a benefit to sales as demand for the iPhone 5c has always been weak compared to its predecessors or higher-end counterpart, the sources said, also pointing out that the iPhone 5c’s main problems are its higher-than-expected price point and 4-inch display, which is small by the latest standards. They add that Apple already stopped placing orders for the iPhone 5c at the end of 2013, but inventories are still a big issue for the US-based vendor and its partners, and that due to their contracts with Apple and high purchasing prices, most telecom carriers and retailers are unlikely to offer significant price cuts in the short term for the iPhone 5c. Currently, iPhone 5c is priced at US$99 (16GB) and US$199 (32GB) with 3G service bundle plans, and US$549 (16GB) and US$649 (32GB) for the smartphone itself, the sources noted.

Frankly, the rationale for offering a slightly cheaper iPhone with a substantially inferior spec to the 5s has always eluded me. Unless someone really liked the colored plastic case concept, it was hard to imagine anyone buying a 5c rether than a 5s, unless they were really strapped for cash, in which case they would probably opt for an Android handset anyway.

It’s kinda’ the same dynamic as with the iPad Air vs. the Retina iPad mini and especially the holdover iPad 2, both of the latter selling for just $100 less than the Air. Reportedly Apple was surprised by the Retina mini’s sluggish sales performance over the holiday period, and iPad 2 sales fell off a cliff. There’s a case to be made for the mini if size is a dominant priority, but the downsizing of the full-sized iPad has somewhat minimized even that advantage.

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http://www.digitimes.com/news/a20140305PD216.html