Apple iPhone 5c Sales Lagging Far Behind iPhone 5s: Barely Outselling 4S in 2012

When the iPhone 5c was starting to leak, tech watchers wondered what the "C" stood for - color, cheap, or China? It turned out the latter two do not apply, as Apple seems to be viewing its new "lower" priced iPhone 5 variant as a mistake.

If a brand new 16GB iPhone for only $99 with a two-year contract sounds cheap to you, you might live in the first world. Off contract, the option that makes more sense for people with lesser means to pay a wireless bill every month for two years, at least, the cheapest iPhone 5c costs closer to $550 - a price that makes it impossible for the 5c to reach a broader audience, even poorer parts of the U.S.

Apple iPhone 5s Outselling 5c 2-to-1

So maybe it's not a surprise when AllThingsD reported on Monday that the iPhone 5c is failing to find a consumer base: according to an analysis by Consumer Intelligence Research Partners, the iPhone 5s is actually outselling the iPhone 5c two to one in the United States. Put exactly, the numbers from the research group's surfvey shows that iPhone 5s sales accounted for 64 percent of total iPhone sales in September, while the iPhone 5c accounted for just 27 percent.

The takeaway? High-end shoppers want their brushed gold iPhone 5s, and the iPhone 5c apparently doesn't bring enough to the table for its mid-tier price. In fact, the iPhone 4S, selling at 9 percent in September, is still going strong this year. When the 4S was demoted to a $99 legacy iPhone with the release of the iPhone 5 last year, the iPhone 4S sold at 23 percent, meaning the brand new candy colored iPhone 5c has managed to expand Apple's reach to the mid-tier by exactly 4 percent: not much of a return.

Low Demand, High Profits

Meanwhile, Apple has reportedly cut production of the iPhone 5c by half recently, due to lagging demand for the iPhone 5c in China. While iPhone 5s sales have been consistent, according to Boy Genius Reports, sales of the iPhone 5c - which can cost up to 4,488 yuan or $727 U.S. dollars in China - have plummeted.

The Consumer Intelligence Research Partners' co-founder Josh Lowitz told AllThingsD that the iPhone 5c could still see an uptick in demand as it goes forward, though based on the change in design, his optimism is guarded: "Over time, the lower-priced phones have tended to gain share versus the flagship phone, after the initial rush of dedicated upgraders to the newest device. So we expect that the 5c will account for a higher percent of total U.S. iPhone sales in the coming months, but the design changes may alter that dynamic. The iPhone 5c may appeal to different buyers than the legacy 4S did last year, or the new 5s will this year."

The iPhone 5c's flagging sales numbers, compared to the iPhone 5s, may be good news for Apple - since one worry was that the iPhone 5c could have eaten into profits from high-end iPhone 5s sales, as happened to the iPad after the launch of the first iPad mini. 

iPhone 5 "Cheap" is Not Cheap Enough

Still, the failure of the iPhone 5c to catch on so far - seen as Apple's first foray into the wider world of wireless - may have investors and analysts worried. As CNN Money reported just after the iPhone 5c's unveiling, several analysts on Wall Street were concerned about the 5c's pricing. Timothy Arcuri of Cowen, for example, saw the iPhone 5c's price point as choosing profits over market share, saying, "The "low-end" 5C was nowhere to be found; in its place debuted a more colorful costed-down version of the iPhone 5 masquerading as a new phone w/ better battery life and some innovative new manufacturing elements." Merrill Lynch's Scott Craig said, "Overall, we view the lack of a true 'low end iPhone' as disappointing... We believe the 5C is unlikely to be competitive in the lower end smartphone market, where phones tend to be [less than] $300."

Indeed, StatCounter's Global Statistics overview of Apple's global market share shows Samsung overtaking Apple in the summer, and Apple's share continuing to fall, even after the iPhone 5c launched across the planet.

At least for now, people who want a low-cost smartphone off contract will probably find better value in an Android smartphone.