Apple’s iPhone 5s is part of what you might call a good problem: the Cupertino tech giant consistently makes the best-selling smartphone in the world, year after year, but it struggles a bit when it comes time to produce something that isn’t as unabashedly high-end as the iPhone 5s.
Case in point, the iPhone 5c. Last year, for the first time, Apple’s yearly iPhone event showed off two new models, the iPhone 5s and the 5c. The 5s, of course, is the high-end model, with a super-fast processor and the quality build materials we’ve all come to expect from the iPhone line. As is the case with most iPhone models, the 5s went on to massive sales, moving more units faster than any of its predecessors.
The 5c, on the other hand, was Apple’s attempt at tweaking the way it addresses the mid-range smartphone market. Instead of just keeping last year’s iPhone on the market – which was, until 2013, the way Apple handled this sort of thing – Apple repackaged the iPhone 5 in an “unapologetically plastic” casing. If you’ve ever handled one, you know it’s about as high quality as a plastic-backed phone can get. Cupertino’s mindset was that the 5c could do what the iPod nano did back in the days when people still bought iPods: grab terrific sales figures while costing less to produce. Meanwhile, the iPhone 5s was meant to maintain the company’s hammerlock on the high-end market.
But something was missing, and the very way that Apple talks about the 5c proves it.
When Apple has a hit on its hands, it lets you know in no uncertain terms. Quarterly reports from the artsy tech behemoth continually crow about overall iPhone sales, as well as the successes of the App Store. Asked about the iPhone 5c in January, though, CEO Tim Cook said only that “the mix [of iPhone 5s and 5c sales] was something very different than what we [had expected].”
Apple doesn’t break down its iPhone sales by unit, sufficing to fill its reports on sales with corporate platitudes about how the plastic iPhone had been “well-received” and how the 5s and the 5c together both outsold Apple’s previous products.
Now, new studies are coming out showing that, while the 5c is doing okay, it’s probably not the mid-range market cure-all that Apple had hoped it would be. AppleInsider today pointed to a study from Piper Jaffray that showed consumers are much more interested in picking up an iPhone 5s than the 5c. Fully one-third of Piper’s surveyed consumers said they plan to pick up a 5s in the next three months, while only six percent said they intended to buy an iPhone 5c.
Keeping things in perspective, that amounts to nearly 40 percent of prospective U.S. smartphone buyers looking at picking up an iPhone in the next three months. Again: Apple’s iPhone 5s/iPhone 5c conundrum is a good problem to have.
So what is Apple to do? Over at 9to5Mac, they’re betting that the iPhone 5c will be a one-off: that Apple will “revert to its former strategy this year: launch the iPhone 6, and retain the iPhone 5s as the lower-cost option – with plastic being consigned to iPhone history.” That, of course, doesn’t address Apple’s strategy of keeping three levels of iPhone on the market: this year’s model at the high-end, last year’s model for the mid-range, and the two-year-old model for the low-end.
The smart money is on Cupertino staying the course. The company’s stock would likely take a significant hit were it to admit that it can’t figure out how to offer a low-cost, high-margin handset, and that is exactly what Apple is going for with the 5c. We may be more likely to see Apple push out an iPhone 6 for the high end, tuck the iPhone 5s into a plastic casing for the mid-range, and keep the iPhone 5c around in order to address the low end of the market.
Given Apple’s notorious secretiveness, though, it’s nigh impossible to know what the iPhone maker will do. Much of the pontificating on future Apple handsets is based on the notion that Apple should be in crisis mode. That’s a bit silly, though, in light of the fact that January saw Apple reporting its strongest quarterly earnings ever, with $13.1 billion in profit off $57.6 billion in revenue.
What’s more: 56 percent of that revenue was driven by the iPhone. Apple sold 51 million iPhone 5s, 5c, and 4s units in the quarter, four million more than it sold for the same quarter in 2012. One more time, with feeling: good problem to have.