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Friday, October 11, 2013, 08:21 am PT (11:21 am ET)

Apple's iPhone 5c orders lower than expected, insider says

Well-connected analyst Ming-Chi Kuo of KGI Securities has slashed his projected iPhone 5c shipments for the just-concluded September quarter by 33 percent, as price cuts for the new mid-range plastic handset continue at major U.S. retailers.



Kuo now projects that Apple shipped 11.4 million iPhone 5c units in the September quarter. He also expects shipments to drop sequentially by 10 percent, to 10.4 million units, in the December quarter.

Though the numbers are lower than expected, Kuo did not come to the conclusion that overall iPhone shipments will disappoint. He said sales of the iPhone 5s and legacy iPhone 4S, which is available for free on contract, remain strong.Apple doesn't break down sales of specific models, but concerns are growing that the iPhone 5c could be off to a slow start.

Kuo has a strong record of predicting Apple's moves, and was the first to reveal that the iPhone 5c would replace the iPhone 5 and become Apple's new mid-range phone, while the iPhone 4S would live on. Prior to that, market watchers expected the iPhone 5c would be made available at a more affordable price to target emerging markets and entry-level handset buyers.

The revised estimates come as retailers in the U.S. continue to offer the iPhone 5c at discounted prices, just three weeks after the handset went on sale. Starting this Sunday, Target will offer the iPhone 5c for $50 with a new two-year service contract, matching discounts already offered by Best Buy, RadioShack, and Walmart.

Checks at Apple's retail stores also indicate that the iPhone 5c remains in strong supply, while availability of the flagship iPhone 5s is constrained. Still, Apple has focused on promoting the iPhone 5c in advertisements, pushing the device as its new mainstream handset.

The iPhone 5c has largely the same components as the now-discontinued iPhone 5, but comes with a new plastic back that's available in a range of colors: yellow, blue, green, pink and white. The 16-gigabyte model is regularly priced at $99 with a new two-year service contract, while an off-contract model can be bought for $549.

When Apple reports its quarterly earnings later this month, it's unlikely that the company will break down sales of the new iPhone 5c as compared to the flagship iPhone 5s and legacy iPhone 4S. Historically Apple has declined to reveal sales of specific models for competitive reasons. Collective sales of the iPhone 5s and iPhone 5c hit 9 million during last month's launch weekend.