Apple has added a lower-cost, lower-capacity 8GB iPhone 5C to its lineup of phones in Europe. In the UK, an unlocked version of the device costs £429, a difference of £40 from the 16GB model. The model is also available on the French Apple Store. As press time, it was not available on the U.S. Apple Store.
A lower-cost iPhone is a tacit admission that Apple’s strategy with the 5C—marketed as “for the colorful” in reference to its brightly colored plastic case—has not worked as well as the company anticipated. Apple has been under intense pressure to lower the price of its entry-level iPhone in order to expand its market share, especially in developing markets such as China. Wall Street widely expected the ‘C’ in iPhone 5C to stand for ‘cheap,’ but analysts were surprised at the phone’s price when it was released. Traders dinged Apple for the move by knocking $40 billion off the company’s market capitalization the day the 5C was unveiled. Apple CEO Tim Cook admitted in January that he had misjudged demand.
“The fact is, Apple doesn’t know what demand for the iPhone 5C will be in developing markets,” Piper Jaffray’s Gene Munster toldFortune the day the iPhone 5C was unveiled. Rather than give away more margin than necessary, he said, the company decided to start high and make adjustments later. Now, it looks like Apple is making those changes.