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Did Apple's iPhone 5C UK Price Drop Confirm It Flopped?

Did Apple's iPhone 5C UK Price Drop Confirm It Flopped?

The iPhone 5C has been plagued by negative reports since the day it arrived last September.

Only one carrier -- Virgin Mobile, a pay-as-you-go provider -- seemed to benefit from its release.

Now Apple (NASDAQ: AAPL) has released a cheaper version of the iPhone 5C in select markets. The new model has reduced storage (8GB vs. 16GB) and sells for roughly $70 less than the original.

Pacific Crest Securities analyst Andy Hargreaves told Benzinga that this announcement was a "bit of a surprise."

"[But] I don't think it's necessarily an indication that the iPhone 5C has been selling bad," he said. "We know that [and] they know that, relative to their expectations, it has been pretty inline with what typical mid-range iPhones sell. It just didn't sell more."

Related: iPhone 5S Sales To Rise, iPhone 5C Sales To Plummet

Hargreaves believes that Apple released a cheaper iPhone 5C to test the elasticity (how much sales increase/decrease) in those markets. Will consumers be persuaded by the iPhone 5C, which is somewhat of a newer phone, or would they prefer a two-year-old handset in the same price range?

Trip Chowdhry, the Managing Director of Equity Research at Global Equities Research, was much less optimistic. He said that this was a "normal" and "ordinary" move for a company that is anything but ordinary.

"Apple is an exceptional and exclusive company," he said before reiterating his belief that CEO Tim Cook should be replaced.

The "New" Old iPad

Speaking of replacements, Apple also announced that it has replaced the three-year-old iPad 2 with the 18-month-old iPad 4. The change means that consumers can now purchase the fourth-generation model (which includes a Retina Display) for $399.

Hargreaves said that the move was "not a huge surprise."

"iPad 2 is pretty old and there's efficiencies to be gained by having things produced on more similar platforms," he added.

Apple has yet to confirm or deny the existence of a 12- or 13-inch iPad, however.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.


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