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  • Shares of AAPL Plummet on iPhone 5C Pricing Disappointment


    Although shares of Apple tend to dip around the time of a new iPhone announcement, today's sell-off feels uglier than usual.

    Despite ample hype leading up to Tuesday's media event in Cupertino, Apple appears to have disappointed investors and traders again, but primarily with regard to one issue - the pricing of Apple's new iPhone 5C.

    Expected to be the low-end, entry-level iPhone model capable of giving Apple a much-needed edge in emerging mobile markets around the world, the iPhone 5C doesn't necessarily come with a bargain price tag.

    Many Wall Street watchers were hoping for an iPhone 5C price of around $400 without a contract subsidy. But that's not what they got yesterday. The iPhone 5C starts at $549 (although it's just $99 with a two year contract).

    "Bank of America-Merrill Lynch downgraded Apple to 'neutral' from 'buy,'" ABC News reported this morning. "Similar actions were taken by analysts for Credit Suisse, Piper Jaffray and UBS."

    Wall Street's reaction to Apple's iPhone 5C pricing was no less brutal. As of early afternoon today, shares of Apple were down nearly 6% - a whopping $30 per share.

    Source: ABC News
    This article was originally published in forum thread: Shares of AAPL Plummet on iPhone 5C Pricing Disappointment started by Michael Essany View original post
    Comments 32 Comments
    1. laju8's Avatar
      laju8 -
      Apple is about over pricing.
    1. bigboyz's Avatar
      bigboyz -
      I too was disappointed. I thought the 5C would be around $399 off contract. Why are you selling the phone for only $100 less off contract? Should have kept the 5 and priced this way. 5C is $399 off contract and $99 on contract. iPhone 5 is $499 off contract and $150 on contract. iPhone 5S is $649 off contract and $199 on contract. The deal is Android has many choices and iPhone up until now only had one choice. I just figured 3 options is better than two. If you felt that one was eating the other, discontinue at that time.
    1. Carvensno's Avatar
      Carvensno -
      Let the arguing and remarks begin Lol. I have no issues with being on contract since I have 2 lines and 1 is a basic phone line. So I just go back and forth each yr for upgrade also plan to get the 5S and have my iPhone 5 sold for 420.00 already.
    1. Donnutt's Avatar
      Donnutt -
      Quote Originally Posted by bigboyz View Post
      I too was disappointed. I thought the 5C would be around $399 off contract. Why are you selling the phone for only $100 less off contract? Should have kept the 5 and priced this way. 5C is $399 off contract and $99 on contract. iPhone 5 is $499 off contract and $150 on contract. iPhone 5S is $649 off contract and $199 on contract. The deal is Android has many choices and iPhone up until now only had one choice. I just figured 3 options is better than two. If you felt that one was eating the other, discontinue at that time.
      Maybe because the 5c is still a really nice phone that STILL costs more than most Androids to make! It is better than an iPhone 5, why should it cost less? Tim Cook already said several times that he has no interest in making a cheap iPhone! I don't see why this is so hard to understand... Apple doesn't make cheap devices, period.
    1. Zokunei's Avatar
      Zokunei -
      Why do people always say the price is lower on a contract? Don't you pay the exact same amount by the end of the monthly device fee? The down payment is lower, not the price.
    1. politicalslug's Avatar
      politicalslug -
      Plummet? Another apt verb from M.Essany. Isn't there a law that says you can't yell fire in a building that IS NOT burning? Pathetic drivel as usual. Keep up the good work!
    1. Zokunei's Avatar
      Zokunei -
      Quote Originally Posted by Donnutt View Post
      It is better than an iPhone 5, why should it cost less?
      What are the differences other than the housing? I think there are a couple but I'm not sure what they are.

      I see, the camera and battery are a little better, and the 5c has better LTE connectivity.
    1. cpotoso's Avatar
      cpotoso -
      Quote Originally Posted by Donnutt View Post
      Maybe because the 5c is still a really nice phone that STILL costs more than most Androids to make! It is better than an iPhone 5, why should it cost less? Tim Cook already said several times that he has no interest in making a cheap iPhone! I don't see why this is so hard to understand... Apple doesn't make cheap devices, period.
      Maybe because the investors (who after all own Apple) do care. If this does not come around, Tim's head is on a platter... I switched from iphone4 to a Google Nexus 4 (cost < $300 off-contract) and it is VASTLY SUPERIOR in terms of hardware to the 5C. So, yes, consumers do care. Most surprising is that with these prices they will not make a dent into the growing international market (where subsidies are not common, hence Android has a tremendous advantage). Apple is loosing the train there.
    1. ahayes's Avatar
      ahayes -
      Quote Originally Posted by Zokunei View Post
      Why do people always say the price is lower on a contract? Don't you pay the exact same amount by the end of the monthly device fee? The down payment is lower, not the price.
      Because most people don't understand the difference between price and cost and they just want to complain.
    1. Lohand's Avatar
      Lohand -
      Apple Think: There is no such thing as a "cheap Ferrari". Sayin...
    1. oneinfour's Avatar
      oneinfour -
      Quote Originally Posted by Zokunei View Post
      What are the differences other than the housing? I think there are a couple but I'm not sure what they are.

      I see, the camera and battery are a little better, and the 5c has better LTE connectivity.
      ?? Why are people saying that the iPhone 5 is inferior to the 5C? The iPhone 5 is superior to the 5C...they have the same processor, screen, camera, etc. Only difference is housing of the 5C is vastly INFERIOR to the iPhone 5 in terms of that..thicker, plastic, the color schemes are awful in my opinion.

      Basically Apple is increasing their margins by decreasing the cost to produce their mid-range offering..the 5C. If they were to offer the iPhone 5 at $100 it would cut into 5S sales since most people wont see the difference between the 5 and 5S, because the camera is still 8 MPs, just a better lense and flash. The only other addition is the fingerprint sensor, and to me I could live without that if it means saving $100.

      So it's a win-win for Apple. They significantly decrease production cost by offering a iPhone 5 in a plastic colored shell, and make the consumer either settle for a crappier mid-range product or feel the need to upgrade to the premium 5S. I don't know why Apple's stock price is plummeting because their new offerings only increase margins, especially since they will be invading China at launch with the China Mobile partnership. Investors should be all over it.

      But, my initial point is, you are getting ripped off with the 5C..big time.
    1. rasputin007's Avatar
      rasputin007 -


      But they did not say in what direction
    1. politicalslug's Avatar
      politicalslug -
      Quote Originally Posted by bigboyz View Post
      I too was disappointed. I thought the 5C would be around $399 off contract. Why are you selling the phone for only $100 less off contract? Should have kept the 5 and priced this way. 5C is $399 off contract and $99 on contract. iPhone 5 is $499 off contract and $150 on contract. iPhone 5S is $649 off contract and $199 on contract. The deal is Android has many choices and iPhone up until now only had one choice. I just figured 3 options is better than two. If you felt that one was eating the other, discontinue at that time.
      Frankly, it's amazing they are able to maintain their profit margin just by going to a plastic case. Remember, the battery is larger (higher part cost). How is the cost of building the phone going to magically drop enough to reduce the cost of the iPhone 5 to $499 from $649 in just a year? The cost of building the device determines the profit margin, that alone suggests the margins on the 5C are a good deal below that of the iPhone 5. Apple is playing this game to make money, not enjoy a wild ride in a race to the bottom of profitability like their competitors. The components they shove into these Android phones is ridiculous and it is killing their margins. Adding another gig of ram to a phone costs $15-30, yet suddenly this year's Android spec race necessitates all highend phones have 3GB of ram, per Samsung's lead. That's nuts. They are selling at the same price and losing even more money for what? Certainly not a profit. Yet somehow Apple stock is "plummeting" because these market analysts can't understand how the market really works. They want Apple to adopt Samsung or HTC's business model, yet those companies don't make anywhere near as much money as Apple selling a single device.
    1. Christophxr's Avatar
      Christophxr -
      Quote Originally Posted by politicalslug View Post
      Frankly, it's amazing they are able to maintain their profit margin just by going to a plastic case. Remember, the battery is larger (higher part cost). How is the cost of building the phone going to magically drop enough to reduce the cost of the iPhone 5 to $499 from $649 in just a year? The cost of building the device determines the profit margin, that alone suggests the margins on the 5C are a good deal below that of the iPhone 5. Apple is playing this game to make money, not enjoy a wild ride in a race to the bottom of profitability like their competitors. The components they shove into these Android phones is ridiculous and it is killing their margins. Adding another gig of ram to a phone costs $15-30, yet suddenly this year's Android spec race necessitates all highend phones have 3GB of ram, per Samsung's lead. That's nuts. They are selling at the same price and losing even more money for what? Certainly not a profit. Yet somehow Apple stock is "plummeting" because these market analysts can't understand how the market really works. They want Apple to adopt Samsung or HTC's business model, yet those companies don't make anywhere near as much money as Apple selling a single device.
      Well-put.
    1. Eagleye's Avatar
      Eagleye -
      Quote Originally Posted by Lohand View Post
      Apple Think: There is no such thing as a "cheap Ferrari". Sayin...
      You nailed it on the head. There shouldn't be a cheap Ferrari because then it takes all the desire out of owning one. Similar to Apple products... the cheaper they make them (in quality AND subsequently, in price) the less desirable they will be because they won't be made in the same standard as what we're used to from Apple. If Ferrari made a car at the Honda Civic price point... ugh, I don't even want to go there.
    1. Zokunei's Avatar
      Zokunei -
      Quote Originally Posted by oneinfour View Post
      ?? Why are people saying that the iPhone 5 is inferior to the 5C? The iPhone 5 is superior to the 5C...they have the same processor, screen, camera, etc. Only difference is housing of the 5C is vastly INFERIOR to the iPhone 5 in terms of that..thicker, plastic, the color schemes are awful in my opinion.

      Basically Apple is increasing their margins by decreasing the cost to produce their mid-range offering..the 5C. If they were to offer the iPhone 5 at $100 it would cut into 5S sales since most people wont see the difference between the 5 and 5S, because the camera is still 8 MPs, just a better lense and flash. The only other addition is the fingerprint sensor, and to me I could live without that if it means saving $100.

      So it's a win-win for Apple. They significantly decrease production cost by offering a iPhone 5 in a plastic colored shell, and make the consumer either settle for a crappier mid-range product or feel the need to upgrade to the premium 5S. I don't know why Apple's stock price is plummeting because their new offerings only increase margins, especially since they will be invading China at launch with the China Mobile partnership. Investors should be all over it.

      But, my initial point is, you are getting ripped off with the 5C..big time.
      I understand that they made the 5c plastic to reduce production cost, but it does have some of the camera improvements the 5s has, and the battery is better than the 5. You can look up a comparison. You also didn't mention that the 5s comes with a better processor than the 5 and 5c.

      I'm not sure if I would mind too much having a white 5c instead of a 5. The colored ones look cheap and terrible though. I think the battery is worth it, but of course it would be better with the aluminum housing.
    1. buggsy2's Avatar
      buggsy2 -
      Nobody knows WHY the market didn't like Apple's show. I wasn't impressed by anything yesterday.
    1. rockyseay's Avatar
      rockyseay -
      Quote Originally Posted by Donnutt View Post
      Maybe because the 5c is still a really nice phone that STILL costs more than most Androids to make! It is better than an iPhone 5, why should it cost less? Tim Cook already said several times that he has no interest in making a cheap iPhone! I don't see why this is so hard to understand... Apple doesn't make cheap devices, period.
      How is it better than an iPhone 5?
    1. BhadKarma's Avatar
      BhadKarma -
      Quote Originally Posted by Christophxr View Post
      Well-put.
      Agreed
    1. confucious's Avatar
      confucious -
      Quote Originally Posted by TechnoUniversity View Post
      How is it better than an iPhone 5?
      It has a C - does your iPhone have a C?