Analyst Believes Apple’s iPhone 5c Strategy Will Pay Off In The Long Run

It has been rumored multiple times over the past couple of weeks that Apple is cutting down on iPhone 5c production due to weak demand. The company hasn’t officially said anything about demand for its plastic iPhone, but supply chain sources in China believe that the iPhone 5c isn’t selling as well as it was expected too. Just yesterday the WSJ weighed in as well, claiming that Foxconn had received directions from Apple to cut down iPhone 5c production by a third, whereas Pegatron was to reportedly cut production was 20 percent. After such claims, one might believe that Apple might have used the wrong strategy for the iPhone 5c, but Wells Fargo Securities analyst Maynard Um believes that it isn’t so.

In a note to investors, Um says that they shouldn’t pay too much attention to supply chain rumors because they tend to be “hit or miss,” which is partly true and something which was reiterated by Apple CEO Tim Cook earlier this year. He said that “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.” Um points towards iPhone 4S sales during the holiday season last year, when the smartphone was being offered for $99 on contract, sales picked up during November and December.

The iPhone 5c is Apple’s mid-range iPhone offering this year, going for $99 on contract, and Um predicts that casual buyers who turn up around the holiday season are likely to drive up sales, and in the long run Apple’s iPhone 5c strategy will work without the company having to offer a discount on its price. Analyst predictions tend to often be hit or miss as well, so only time will tell if the iPhone 5c continues to add a lot of green color to Apple’s balance sheets.

Adnan Farooqui
Categories: Apple, Cellphones
Tags: iPhone 5C