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iPhone 5C Price Cut — in China

Paul Ausick

When Apple Inc. (AAPL) released its new iPhone 5S and 5C a couple of weeks ago, one of the countries included in the lucky first 11 was China. A basic unlocked iPhone 5C cost about $733 in China, compared with U.S. list price of $549.

A unlocked gold iPhone 5S was selling for as much as $1,634 in China. Yet the 5S outsold the 5C by nine to one. Of the new iPhones sold over the first weekend, the 5C managed to grab just 9% of sales. The list price for an iPhone 5S in the United States is $649.

According to Caijing, retailers cut the price of the 5C in China to around $650 at launch and have cut the price further to about $604 in an effort to move the phone nobody wants.

Did Apple foul-up on pricing here? The 5C is essentially the iPhone 5 with a plastic case in a choice of five colors. But its price is just $100 lower than the top of the line 5S. The argument about this pricing strategy rages, but clearly customers have voted with their wallets.

Apple's problem is that these early buyers are the ones who can afford to pay for a 5S. There are plenty of them, but there are many more who will look elsewhere for a smartphone. Both new iPhones are too expensive for them.

Should or will Apple lower the price on the 5C? Yes, Apple should cut the price, if it is serious about addressing the large economy-minded market. But the company does not appear to be serious about that, so it likely will not cut the 5C’s price. Like the Cubs, maybe next year.

Shares of Apple are trading up about 0.9% in the premarket on Thursday, at $485.69 in a 52-week range of $385.10 to $682.17.