WSJ revises story about Apple iPhone 5c production cuts

On Wednesday, we passed along a story about production cuts being ordered by Apple for the Apple iPhone 5c. The story, which was sourced from the Wall Street Journal, revealed that Apple had reduced its orders for the iPhone 5c by 20% from Pegatron and by 33% from Foxconn. At the same time, the report when on to add that Apple had increased orders for the the full-featured Apple iPhone 5s. The businessman's bible, as the paper is known, did not list the number of units of each model being produced, the actual number of units being cut, and the new quantities of each model expected to be built after the changes.

Later in the day, the WSJ continued to press the idea that the offering a lower priced iPhone 5c was a strategy that wasn't working. The paper quoted an executive from Orange who said that the Apple iPhone 5c "isn't selling as well as expected because it is too expensive, and the older iPhone 4S remains an attractive, cheaper option." The latest stats show the Apple iPhone 5s making up 64% of iPhone sales with the mid-range Apple iPhone 5c at 27%. So what exactly is the problem here? Apple is selling a large number of its more expensive model. This was something that the Wall Street Journal finally caught on to with the next edition of the story which included this statement: "the fact that the 5C appears to have missed Apple's expectations may not be all bad, especially if it means consumers are buying more of the 5S, the higher-end iPhone that came out at the same time last month and sells for $100 more."

The main problem is too much reliance by the WSJ on the "supply chain" for information. Apple CEO Tim Cook even warned analysts in January that "the supply chain is very complex, and we obviously have multiple sources for things. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant for our business." 
 
Finally, we should point out that the Journal also was forced to backtrack a statement it had made about price cuts for the iPhone 5c proving that demand for the model was week. Stats generated by Canaccord Genuity from the top four carriers in the U.S. show that in September, the Apple iPhone 5c was no lower than the third best selling phone for each of those top mobile operators. On half of them, the iPhone 5c was second, ahead of the Samsung Galaxy S4. This led the Journal to change its thinking on the mid-range iPhone saying that "reduced orders could indicate weak demand, or could signal that Apple wanted to ensure adequate supply of the 5C so that potential buyers, who were more likely to be switching from competing phones, didn't have to walk out of a store empty-handed."


The paper even stated that Apple might have built up large inventories of its plastic coated model in order to meet demand from a rumored deal with China Mobile. That extra inventory could be for the the reason why orders placed online for the Apple iPhone 5c ship in just 24 hours.
source: AppleInsider