Apple iPhone 5s Vs. 5c: Why The Budget iPhone 5 Is Underperforming In Sales

Apple Inc. (NASDAQ:AAPL) was faced with an interesting predicament last year: The iPhone 5 cost more than $200 to make, but when that model would see its inevitable price drop in 2013 -- in time for the release of the iPhone 5 successor, the iPhone 5s -- Apple would effectively lose money by selling last year’s iPhone for less than $100.

Apple’s solution? Make the iPhone 5 cheaper to build, and thus cheaper to sell. In other words, create a new iPhone that could perform the same as the iPhone 5, and even look similar to the iPhone 5, but build the phone with different, cheaper materials. That phone ended up being called the iPhone 5c, and analysts believe Apple saves at least $30 producing each iPhone 5c compared to the iPhone 5.

The iPhone 5c strategy made a great deal of sense for Apple: The iPhone 5 was a hit amongst consumers, so if the company sold the same phone experience, but cheaper to build at a cheaper price, it would be a win for both consumers and Apple. To sweeten the deal, Apple would even offer to sell the iPhone 5c in an array of colors, which would hopefully propel the new iPhone in the same way the iPod enjoyed a second wind in the early 2000s with the release of the colorful iPod Mini.

Unfortunately for Apple, it seems the iPhone 5c is not performing as well as hoped. In the month since the two phones’ Sept. 20 release date, the more expensive iPhone 5s has reportedly outsold the iPhone 5c. In the first week, Boston-based Localytics said the iPhone 5s was roughly 3.4 times more popular in the U.S. than the iPhone 5c, and roughly 3.7 times more popular internationally. On Monday, Consumer Intelligence Research Partners told AllThingsD the iPhone 5s has been outselling the iPhone 5c by more than a two-to-one margin, adding the iPhone 5s accounted for 64 percent of new iPhone sales and the iPhone 5c for just 27 percent. Apple will not release any specific statistics regarding iPhone sales.

Why Is The iPhone 5c Underperforming?

Though many critics praised the new form factor of the iPhone 5c, including its “unapologetically plastic” polycarbonate enclosure that really feels more like fine ceramic than plastic, consumers aren’t totally buying into the colorfully redesigned iPhone 5.

The iPhone 5c is a great phone, but there’s one simple reason it’s not selling as well as the iPhone 5s: It’s not as cheap as many had hoped, and there’s not that much new about it.

Many believed the iPhone 5c would be a “budget iPhone,” but in reality, the iPhone 5c is still a luxury product. As my colleague Sophie Song points out, the iPhone 5c sells for the equivalent of $735 in China, which is pretty outrageous considering how so many analysts believed the purpose of this iPhone model was to bridge the gap between luxury consumers and the mainstream, especially in countries where iPhones aren’t so cheap, or subsidized by carriers.

Unfortunately for Apple, new colors and a new form factor – which is thicker and heavier than the iPhone 5 – aren’t enough to make the iPhone 5c more attractive than the iPhone 5s, especially when the latter phone packs so many new technologies into a thinner and lighter aluminum enclosure.

The iPhone 5c will have its day in the sun, even if it isn’t in 2013. By this time next year, the iPhone 5c will likely sell for $0 on-contract, which is a reasonable price for this phone, especially when it’s unsubsidized. But until then, many Apple customers will be happy to pay $100 more for an iPhone that’s thinner, lighter, faster, and better in just about every way.

About The iPhone 5C

The iPhone 5c either replicates or improves upon the features in its predecessor, the iPhone 5, but there are a few noticeable differences. First, Apple has replaced the all-aluminum unibody enclosure of the iPhone 5 with a reinforced polycarbonate solution, and the iPhone 5c will also release in five colors instead of two (black and white), i.e. blue, green, yellow, pink and white.

Inside the shell of the iPhone 5c, most of the specs look identical to those in the iPhone 5. Running on the same A6 chip, the iPhone 5c features the same 4-inch Retina display, the same 8-megapixel camera with 2.4 aperture and single-LED flash, and will also run iOS 7 upon its release. Apple has improved a few features in the iPhone 5c, including the front-facing FaceTime camera and the phone's battery, and the iPhone 5c also supports 13 LTE bands, which is more than any other current smartphone (besides its cousin, the iPhone 5s).

About The iPhone 5S

The iPhone 5s features the same 4-inch Retina display and chamfered diamond-cut edges, but the phone also comes with a number of new innards. The iPhone 5s also features a new A7 processor -- with CPU performance 40 times faster and GPU performance 56 times faster than the original iPhone -- and Open GL, just like the new Nexus 7. More notable, however, the iPhone 5s comes equipped with Apple's new M7 chip, which contains all the motion-tracking hardware Apple needs to make its iWatch a reality. By packing so many components into the M7 motion co-processor, including an accelerometer, gyroscope and compass, the M7 can continuously measure motion data for the newest generation of health and fitness apps.

The iPhone 5s also features a slightly modified battery for greater life, a new camera system for slow-motion video photography, and a fingerprint sensor called Touch ID, which lets users authenticate ownership and user passwords by simply holding their thumbs on the iPhone’s signature home button.

Touch ID is 170 microns thin, senses 550 ppi, and can scan sub-epidermal skin layers. With 360-degree readability, you can hold your thumb in any orientation and it can still be read correctly. The entire apparatus contains a tactile switch, Touch ID sensor, a stainless-steel detection ring, and a laser-cut sapphire crystal, which makes it unscratchable. Touch ID can also handle multiple fingerprints, so you can grant access to your iPhone 5s to only certain people.

The iPhone 5s also features a new camera system, which includes a new pill-shaped dual-LED flash and a tighter aperture. The dual-LED flash will help for lower-light settings, but its new camera aperture will also help control the amount of light in each photo.

For more on the iPhone 5s, check out our review and hands-on with the seventh-generation iPhone, and learn more about why it's worth the price to upgrade.

What do you think of the iPhone 5s and iPhone 5c? Are you underwhelmed by the iPhone 5s? Let us know your thoughts in the comments section below.

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