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Apple cuts 5c orders on weak demand: Report

Wednesday, 16 Oct 2013 | 3:47 AM ET
Justin Sullivan | Getty Images News | Getty Images

Apple has told two suppliers of its lower-cost iPhone 5c that it is reducing orders in the fourth quarter, according to a report by Dow Jones news agency Wednesday, raising concerns about weaker-than-expected demand for the new product.

Apple began selling it's the new low-price option last month in 11 markets, including the U.S. and China, but consumers have focused on the more expensive 5s model, which was launched at the same time.

While demand for the costlier version, that comes with a fingerprint sensor and faster chips, outstripped expectations – especially the gold-colored version -- the iPhone 5c has failed to generate as much interest.

(Read more: Nobody seems to want Apple's iPhone 5c)

As a result, Apple told its Taiwanese assemblers Pegatron and Hon Hai Precision Industry that orders of the iPhone 5c in the fourth quarter would be cut by 20 percent and by a third respectively, according to the unnamed sources cited by Dow Jones.

Apple cuts 5C orders on weak demand
Anthony Fry, senior advisor at Espirito Santo, talks about Apple's strategy of bringing out the lower costing iPhone 5C.

The move comes at a time of increasing market competition in a crowded smartphone industry with phone makers Samsung and HTC also launching new handsets. At the time of the 5c's launch, tech-watchers said the handset was designed to beat off Apple's rivals in fast-growing emerging markets.

One market analyst dismissed concerns over Apple's slipping market dominance, however, saying that the most important issue for the company was the strength of its overall brand rather than the strength of its "sub-brands."

"Apple can afford to get things right and wrong because it has such a strong brand, I think this is just part of that overall play," Anthony Fry, senior advisor at Espirito Santo, told CNBC on Wednesday.

"It doesn't matter if you're Apple or anyone else, the mobile phone world is moving unbelievably quickly and every single phone and software manufacturer is trying to find a way of getting an edge on its competitors. So I see this as part of a long-term play against the strategy generally, not something of deep significance in the short term."

Ian Fogg, an analyst at IHS Electronics and Media said that proof of the poor performance of the iPhone 5c would only be confirmed when Apple releases earnings on October 28. The two important data points to look out for would be how many iPhones they have shipped compared to last year and what the evolution of their average selling price (ASP) is.

If the ASP has fallen then that would indicate that the iPhone 5c has been fairly popular, as the price point is lower than the range of phones Apple had at this point last year. If it stays the same, then it'll likely mean that iPhone 5c sales have disappointed, he said.


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