Analyst response to iPhone 5C: Apple is ‘clueless’

Analyst response to iPhone 5C: Apple is ‘clueless’Without (re)opening a can of worms, or “bile”, I mentioned yesterday in iPhone 5S and iPhone 5C: what the **** did you expect? that the Apple naysayers with nothing better to do than criticise anything and everything Apple are this: pathetic.

Now it’s Wall Street’s turn to talk even more BS, and it seems they’re a wee bit embarrassed about incorrectly predicting a budget iPhone when in fact Apple did this much to suggest they were working on such a device: nothing.

Looking at StreetInsider, Goldman Sachs describes iPhone 5C pricing as a “key disappointment” while Deutsche Bank astutely observes that the ‘C’ in iPhone 5C doesn’t stand for ‘Cheap’.

More damningly, Fred Wilson of Union Square Ventures cries: “The reality of much of the world is that people don’t sign two year contracts like we do here in the U.S. They buy pre-paid sim cards and stick them into unsubsized phones.

“And on that basis, the 5c is a big disappointment. It will sell for $100 less than the 5S in the unsubsized market, which means $549 for 16gb and $649 for 32gb. The C in 5C does not mean ‘cheap’ as I had hoped. It means clueless, as in clueless about how the vast majority of new smartphone users are paying for their phones.”

Actually, it appears that poor Fred is "clueless" when it comes to spelling 'unsubsidised'. Oops.

I’m no financial expert, but why is no one criticising Lamborghini for failing to offer a wallet-friendly car? Why is no one criticising Apple for not producing a £200 notebook?

And without sounding like a dick, what’s the point in selling cheap phones to people who don’t have a lot of expendable income to blow on apps? From a business point of view, a cheaply-made iPhone with little mark-up doesn’t make much sense.

Hell, over in China, Huawei has reportedly decided to focus on high-end devices due to its “inability to compete with China-based low-price white-box vendors”, yet we're told that Apple should do the opposite. Why?

On a more positive note for Apple, Lazard Capital is impressed that the iPhone 5C boasts “juicy NAND margins”. The $100 mark-up on the 32GB model comes at a cost of just $20 to Apple. Hmm, it’s almost as if they know what they’re doing.

Read more about: Apple iPhone 5cApple iPhone 5siOS

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26 comments

barrybarryk  Sep. 12, 2013 at 14:10

The Chinese market is one of the reasons 4 major banks have dropped Apple stock down to neutral. They were predicting 170m handset sales there thanks to their mid range handset and a deal with local telecoms. Now no such handset or deal has materialised they've tweaked their estimate to 6m handsets.

Also this site was predicting a mid-tier iPhone as well in case you forgot

matt101101 / MOD  Sep. 12, 2013 at 14:12

“And on that basis, the 5c is a big disappointment. It will sell for $100 less than the 5S in the unsubsized market
That's the only part of what he says which makes sense. Unsubsidised (note: spelt without a "z") the 5C makes no sense. By the time you've spent £469 on a new phone, what's another £80 to not have last year's model in a new case? The 5C will only make sense if it's sold on contract at a significantly lower monthly price than the 5S.

Also, the 5C is missing the home button fingerprint scanner, which is the coolest thing I've seen on a phone in a very long time. The Atrix might have been first (bar some obscure Windows Mobile devices) but the iPhone's implementation will undoubtedly be much better (like being on the home button, which people use to wake up the device).

corgi74  Sep. 12, 2013 at 14:23

“And on that basis, the 5c is a big disappointment. It will sell for $100 less than the 5S in the unsubsized market
That's the only part of what he says which makes sense. Unsubsidised (note: spelt without a "z") the 5C makes no sense. By the time you've spent £469 on a new phone, what's another £80 to not have last year's model in a new case? The 5C will only make sense if it's sold on contract at a significantly lower monthly price than the 5S.


Totally agree. If the 5C is free on £25 a month contracts it will sell shedloads.

lcurdie / MOD  Sep. 12, 2013 at 14:29

The question we're hearing a lot is: "Why not spend the extra £80 and get an iPhone 5S?" But an equally valid question is surely: "Why spend the extra £80?" The fingerprint scanner? The slow motion video?

My OH, for one, is infinitely more impressed by the bright colours on the iPhone 5C than the 64-bit processor on the iPhone 5S, and I'd say she's probably more in tune with your average smartphone buyer than I am/we are.

I expect we'll see a lot of these bad boys kicking around in the months to come. Er, based on my one-person market analysis.

socialjeebus  Sep. 12, 2013 at 14:33

The Chinese market is one of the reasons 4 major banks have dropped Apple stock down to neutral. They were predicting 170m handset sales there thanks to their mid range handset and a deal with local telecoms. Now no such handset or deal has materialised they've tweaked their estimate to 6m handsets.

Also this site was predicting a mid-tier iPhone as well in case you forgot


If they were predicting 170 million sales then they were clearly on drugs.

That would mean them going from 7th place overall now to 2nd or even 1st overnight.

It was never going to happen, they won't get near that in the whole of Asia.

That's also discounting the very strong (particularly price) offerings coming from Lenovo, Xiaomi, and Huawei.

Analysts are also underestimating the NSA crisis as a factor.

Most consumers in China (and here in Korea) are fully aware that they are being spied on by their own government (and there's a degree of acceptance) however throw the US government into the mix and there's a huge red flag (of course the NSA will be spying on them anyway but they're less likely to trust a US product now).

barrybarryk  Sep. 12, 2013 at 14:40


If they were predicting 170 million sales then they were clearly on drugs.

That would mean them going from 7th place overall now to 2nd or even 1st overnight.

It was never going to happen, they won't get near that in the whole of Asia.

They're bank execs, ofcourse they're on drugs. It still doesn't change that everyone and their dog were expecting apple to at least attempt to compete on price.

And without sounding like a dick, what’s the point in selling cheap phones to people who don’t have a lot of expendable income to blow on apps? From a business point of view, a cheaply-made iPhone with little mark-up doesn’t make much sense.
Right because anyone with money to spend on apps will happily drop £500 on a new phone every year. It made sense to every other smartphone manufacturer

matt101101 / MOD  Sep. 12, 2013 at 14:51

The question we're hearing a lot is: "Why not spend the extra £80 and get an iPhone 5S?" But an equally valid question is surely: "Why spend the extra £80?" The fingerprint scanner? The slow motion video?

My OH, for one, is infinitely more impressed by the bright colours on the iPhone 5C than the 64-bit processor on the iPhone 5S, and I'd say she's probably more in tune with your average smartphone buyer than I am/we are.

I expect we'll see a lot of these bad boys kicking around in the months to come. Er, based on my one-person market analysis.

Don't take this as sexist, but I think "MORE POWER" and cool toys like fingerprint scanners are more likely to appeal to blokes (especially younger more well off blokes) than women. A massive generalisation, yes, but that's my opinion. I have no data to back it up, but it seems to fit the general tech and car buying pattern.

You do have a point, I think we'll see lots of spoilt kids and younger women using the 5C in the months to come. We do forget how much the average consumer is attracted by shiny things (or in this case, colourful things).

As for why spend the extra £80, so that if you're keeping your phone for 2 years it's 2 years old at the end of the contract, not three (as the 5C is basically a 12 month old iPhone 5 in a new, colourful case). Also, if you can have the best for only £80, why not?

As I said, I feel the 5C's success will largely hang on the network's contract pricing though, which I feel will undercut the 5S by more than a total of £80 over 2 years.

matt101101 / MOD  Sep. 12, 2013 at 14:51

“And on that basis, the 5c is a big disappointment. It will sell for $100 less than the 5S in the unsubsized market
That's the only part of what he says which makes sense. Unsubsidised (note: spelt without a "z") the 5C makes no sense. By the time you've spent £469 on a new phone, what's another £80 to not have last year's model in a new case? The 5C will only make sense if it's sold on contract at a significantly lower monthly price than the 5S.


Totally agree. If the 5C is free on £25 a month contracts it will sell shedloads.

Couldn't agree more, they'll sell loads to spoilt kids over the Xmas period at £25 per month.

lcurdie / MOD  Sep. 12, 2013 at 15:30

And without sounding like a dick, what’s the point in selling cheap phones to people who don’t have a lot of expendable income to blow on apps? From a business point of view, a cheaply-made iPhone with little mark-up doesn’t make much sense.
Right because anyone with money to spend on apps will happily drop £500 on a new phone every year. It made sense to every other smartphone manufacturer


People who buy cheap phones don't spend as much on apps. Indeed, Android owners on the whole don't spend as much as their iOS counterparts, despite the higher market share. Which again proves my point: market share means nothing. Loads of cheap Android phones sold, and their owners aren't buying apps. Everybody loses. It's the perfect business model, admittedly.

Google Play still miles behind App Store in revenue (April, 2013)

When you say "every other smartphone manufacturer", you mean the guys who are struggling to make any profit in a world utterly dominated by Samsung and Apple?

Apple and Samsung grab more than 100% of smartphone profits in 2012

barrybarryk  Sep. 12, 2013 at 15:36

http://techcrunch.com/2013/08/12/google-play-revenue-up-67-over-past-6-months-fueled-by-japan-s-korea/

"Which again proves my point: market share means nothing"
Then where's my new PowerPC Mac?

JanSt / MOD  Sep. 12, 2013 at 15:36

Here's the thing (as already hnited at by Mr Curdie) - surely, Apple could make more phones. More this and more that. Maybe, maybe... ach, whatever

pulsex0r  Sep. 12, 2013 at 15:40

They should have kept the iPhone 5 and phased out the 4. So Apple would have the 4S, 5, 5C and the 5S in it's arsenal. 5C should have been priced more competitively with products such as the Nexus 4 - not necessarily as cheap as that but enough to be able to sway possible consumers to the possibility of choosing an iOS device over Android.

Contract prices have been released by O2 already if you Google around. The reality is, as good as the product is; and I wholeheartedly agree that the fingerprint sensor is the single coolest thing in a while introduced by Apple, that they didn't really adhere to the 5C being a "budget" phone. But hey, I might be completely wrong, the 5C might sell **** loads compared to the 5S. Interesting approach by Apple by diversifying the iPhone, shows they bowed down to consumer/market pressure.

JanSt / MOD  Sep. 12, 2013 at 15:51

The question we're hearing a lot is: "Why not spend the extra £80 and get an iPhone 5S?" But an equally valid question is surely: "Why spend the extra £80?" The fingerprint scanner? The slow motion video?

My OH, for one, is infinitely more impressed by the bright colours on the iPhone 5C than the 64-bit processor on the iPhone 5S, and I'd say she's probably more in tune with your average smartphone buyer than I am/we are.

I expect we'll see a lot of these bad boys kicking around in the months to come. Er, based on my one-person market analysis.


Agree - we will see a lot of the "Lumia clones". We will also see a lot 5S because of the fingerprint scanner, Have you any idea how many "hide your photos/folders/" cover your a*s apps are downloaded every second?
People have secrets. People WANT the illusion of privacy. They have girlfriends, boyfriends, colleagues. Nosy teenage kids etc etc... All the security experts who ridicule the scanner: stfu. Talk about PRISM and the billion dollar Antivirus scam! Talk about backdoors. And don't you pretend you care about the endusers. YOU LYING SCUMBALLS!

lcurdie / MOD  Sep. 12, 2013 at 15:57

http://techcrunch.com/2013/08/12/google-play-revenue-up-67-over-past-6-months-fueled-by-japan-s-korea/

"Which again proves my point: market share means nothing"
Then where's my new PowerPC Mac?


The fact that China, proposed home of the budget iPhone 5C, doesn't even get a mention in that article speaks volumes.

My point about market share is: say Apple did release a budget iPhone 5C (shedding its reputation as a manufacturer of premium products in the process), and many millions of consumers were tempted to buy it over one of the many Android equivalents, so much so that Apple clawed back a huge slice of market share... so what? What does market share even mean? What does Apple care if it has 15% or 35%? What matters is the profit on handsets, and nabbing a slice of App Store sales, neither of which would benefit greatly from a truly budget handset.

The Lamborghini analogy is perfect. Why is no one telling them that they must release a budget car for the Chinese?

barrybarryk  Sep. 12, 2013 at 15:57

Um they do talk about PRISM, all 3 major big data players were recently slammed as unfit for enterprise users. ALL OF THEM. Even Intel admits their on chip random number generator has been compromised by the NSA. Blackberry (The guys that claim to be the safest) were even caught selling back doors to government agencies around the world.

People have been openly discussing it for years, but the real challenge isn't the companies non-disclosure, it's that the public just aren't interested

barrybarryk  Sep. 12, 2013 at 16:02

My point about market share is: say Apple did release a budget iPhone 5C (shedding its reputation as a manufacturer of premium products in the process), and many millions of consumers were tempted to buy it over one of the many Android equivalents, so much so that Apple clawed back a huge slice of market share... so what? What does market share even mean? When you lose it, dev support follows. Look at OSX now, their main advertising feature for Macs are that they can run Windows/ WIndows software as well. Look at how Apple completely lost their dominant space in professional computing inch by inch to IBM PC clones despite PowerPC being more capable.

By only catering to the high end crowd they'll make the same mistakes they made in the PC market, dev support will evaporate and it'll be back to niche computing for Apple. And we'll all be stuck with Google who'll have a share far too large to dent by then

JanSt / MOD  Sep. 12, 2013 at 16:04

Um they do talk about PRISM, all 3 major big data players were recently slammed as unfit for enterprise users. ALL OF THEM. Even Intel admits their on chip random number generator has been compromised by the NSA. Blackberry (The guys that claim to be the safest) were even caught selling back doors to government agencies around the world.

People have been openly discussing it for years, but the real challenge isn't the companies non-disclosure, it's that the public just aren't interested


Nonsense.

barrybarryk  Sep. 12, 2013 at 16:08

http://www.youtube.com/watch?v=dxnp2Sz59p8
That's William Binney, an exNSA director that's been trying to get that story out for YEARS , he spoke to anyone that'd listen and even some high profile appearances at the likes of DefCon and still no one listened until the Guardian wrote some articles.

JanSt / MOD  Sep. 12, 2013 at 16:13

http://www.youtube.com/watch?v=dxnp2Sz59p8
That's William Binney, an exNSA director that's been trying to get that story out for YEARS , he spoke to anyone that'd listen and even some high profile appearances at the likes of DefCon and still no one listened until the Guardian wrote some articles.


I KNOW that... Assange laid out most of what Snowden published 2 years ago.
Schmidt frienship with genocidal maniacs is no secret, either. IT'S IN HIS BOOK.

But the public acting inappropriately does NOT mean the public does not care.
I am so fed up with talk of the sheeple mentality...the zombie behaviour.
In fact, I'm so fed up with that cynical condescending callous BS that I shall now withdraw from this discussion in this thread.

barrybarryk  Sep. 12, 2013 at 16:18

What do you want to happen? Everyone has already been told pretty much every form of communication has been compromised, they now know that. Mass riots and protests? That isn't happening, short of the IT literate (who all knew this was happening already) no one else really seems to care. Hell even here in the UK GCHQ has been receiving massive funding from the US and the only political question brought up over the scandal was were the UK involved and not why weren't our government protecting us.

I'd like to see much more happening and people really getting the gravity of the situation but it's just not happening. Calling for more disclosure won't help because no one trusts a word they'll say. Hell they openly denied PRISM existed for years.

loofer  Sep. 13, 2013 at 08:38

Porsche Turbo - Porsche Boxter... nuff said!

corgi74  Sep. 13, 2013 at 09:44

Just seen the contract pricing from 3. Oh dear
500 mins, Ultd Text & Net £49 upfront and £37 per month.

loofer  Sep. 13, 2013 at 10:54

Just seen the contract pricing from 3. Oh dear
500 mins, Ultd Text & Net £49 upfront and £37 per month

I would say that's not too far off a decent deal though definitely not my cup-of tea even if I was after the iPhone 5s
The deal you quoted (37 x 24)+49= £937
Benchmark comparison as Buy Sim Free and equivalent Sim Only over 24 months
(£15 x 24) + £549 =£909

Even better deal if you can get by on a more modest allowance
Three £12.90p/m (£858.60)
GiffGaff £10p/m (£789)

corgi74  Sep. 13, 2013 at 11:04

Just seen the contract pricing from 3. Oh dear
500 mins, Ultd Text & Net £49 upfront and £37 per month

I would say that's not too far off a decent deal though definitely not my cup-of tea even if I was after the iPhone 5s
The deal you quoted (37 x 24)+49= £937
Benchmark comparison as Buy Sim Free and equivalent Sim Only over 24 months
(£15 x 24) + £549 =£909

Even better deal if you can get by on a more modest allowance
Three £12.90p/m (£858.60)
GiffGaff £10p/m (£789)


Not a bad deal on a straight RRP and SIM free comparison but I think it's crazy contract pricing.
If it had been free on a £25 to £30 contract then I think it would have sold loads.
At this price I can't see where it sits when the 5S will probably be not much more upfront on the same monthly contract. £130 upfront for a 5S compared to $50 upfront for a 5C.
Get a quidco deal and the difference becomes less of an issue.

matt101101 / MOD  Sep. 13, 2013 at 12:15

Just seen the contract pricing from 3. Oh dear
500 mins, Ultd Text & Net £49 upfront and £37 per month

I would say that's not too far off a decent deal though definitely not my cup-of tea even if I was after the iPhone 5s
The deal you quoted (37 x 24)+49= £937
Benchmark comparison as Buy Sim Free and equivalent Sim Only over 24 months
(£15 x 24) + £549 =£909

Even better deal if you can get by on a more modest allowance
Three £12.90p/m (£858.60)
GiffGaff £10p/m (£789)


Not a bad deal on a straight RRP and SIM free comparison but I think it's crazy contract pricing.
If it had been free on a £25 to £30 contract then I think it would have sold loads.
At this price I can't see where it sits when the 5S will probably be not much more upfront on the same monthly contract. £130 upfront for a 5S compared to $50 upfront for a 5C.
Get a quidco deal and the difference becomes less of an issue.

Yep, I think Apple have managed to price the 5C out of the market, unfortunately.

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