Apple's new iPhones: The good, the bad, the ugly
The company is reportedly stepping up production of the popular iPhone 5s model, while cutting iPhone 5c orders. But the rumor mill can be a vicious, ugly place.
By Chris Ciaccia
NEW YORK (TheStreet) -- It's no secret that Apple's (AAPL) new iPhone models -- the iPhone 5s and iPhone 5c -- are popular, judging by first weekend sales. It's still up for serious debate, however, which of the two is more popular, going by industry reports.
Citing people familiar with the situation, The Wall Street Journal reports Apple has notified two of its production assemblers, Pegatron and Hon Hai Precision, that it is reducing orders for the iPhone 5c for the fourth quarter, as questions come into play about weak demand for the phone. At the same time, however, Apple is raising production orders from Hon Hai for the iPhone 5s, due to the popularity of the device.
Pegatron was reportedly told to cut orders by up to 20 percent for the iPhone 5c, while Hon Hai was told to cut orders by up to one third, The Journal noted. Additionally, one component supplier was notified of a 50 percent cut in iPhone 5c orders.
Apple could not be reached for comment on this story.
This isn't the first time we've heard rumors of an Apple cut to the iPhone 5c. Retailers such as Wal-Mart (WMT) and Target (TGT) have cut the price of the 5c, with Wal-Mart going as low as $45 for the 5c. Target has it for $49.99 on its website, though it's unclear whether it's Apple or the retailers themselves who are taking the profit squeeze on the iPhone 5c.
Taking a look at Apple's website, the iPhone 5s is still back ordered. All models of the champagne gold, space gray and silver models have an availability date of 2 to 3 weeks. Conversely, the iPhone 5c is ready to ship within 24 hours.
Apple's supply chain is extremely complex, and CEO Tim Cook has said in the past that it's good to question any rumor around the tech giant's build plans. Speaking on Apple's fiscal first-quarter earnings call, Cook addressed the chatter that constantly swirls around the iPhone maker. "I suggest it's good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on."
It's abundantly clear that the iPhone 5s is selling well, despite being $100 more expensive than the 5c. The 5s offers the new A7 64-bit chip, as well as the M7 motion sensor chip, TouchID fingerprint sensor, and an enhanced iSight camera. The gold version of the iPhone 5s has become very difficult to find, despite Apple reportedly increasing purchase orders from its manufacturing partners.
The 5c is largely the same as the iPhone 5 internally, except it has an "unapologetically plastic" casing, coming in five colors.
Apple is slated to report fiscal fourth-quarter earnings on Oct. 28, with the consensus estimate from Thomson Reuters calling for the Cupertino, Calif.-based firm to earn $7.88 a share on $36.76 billion in revenue. There has not been a cut to consensus estimates for fiscal fourth-quarter earnings in the past week. Apple is expected to earn $13.80 a share on $55.44 billion in the all-important holiday season, so if the iPhone 5c order cuts are true, which I place a great deal of skepticism on, it will likely be seen in these estimates.
The rumor mill is a vicious, ugly place, and it's difficult to read too much into one supplier or manufacturing partners. Given that the iPhone 5s is selling exceptionally well, shareholders likely shouldn't worry too much -- the 5s probably has higher margins than the iPhone 5 did, since it's using the same body.
Even if the 5c isn't selling as well as Apple hoped.
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Everyone has such strong emotional attatchments to the Apple vs. Samsung debate. I've been on both sides. Had the first Galaxy...it was awful. Slow to the touch, froze all the time, was too big for the hand. Switched to something different. Now I have an iPhone 5 and I really like it, probably won't go back to Samsung. But really, if either stopped existing, I wouldn't take up arms for it or anything.
Everyone just needs to calm down, they're PHONES. Are you going to get this upset because the person you go out to dinner with doesn't like onions and you do?
Kind of pricey, many phones that work just as well, cost about a third.
Anyway...when my iPhone 5 contract was up I was able to flip it for $250 and buy the iPhone 5c for $99 and pocket the difference. Same phone...less fancy/fragile feeling...$150 in my pocket. Not bad.
Step right up and trade your Apple iPhone 5 from 2007 for a brand new iPhone 5S, also from 2007. Really apple sheep, when are you going to realize that there are so many phones on the market that are far superior to the iPhone.
A week ago I was with a friend trying to find a house, he was lost. He whipped out his iPhone that his job provided and we could still not find the house that we were within 2 blocks of. My HTC had us navigated in seconds, right to the correct house. I was impressed though that the iPhone didn't take us onto some active runway, or off a pier.
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