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 Apple aims to boost iPhone 5c sales with cheaper 8GB model

Apple has launched a new entry-level version of its iPhone 5C smartphone, with 8GB of internal storage and a lower price of £429.

The handset went on sale from the company’s online store in the UK and other countries this morning, sitting alongside the existing 16GB and 32GB models, which sell for £469 and £549 respectively.

Operators are already selling the cheaper 8GB model from their own websites, with O2 the first to make it available. Apple said in a statement: “The 8GB iPhone 5C model will be available in the UK, France, Germany, Australia and China on 18 March.”

Ever since its release in September 2013, the iPhone 5C has been subject to speculation that its sales were disappointing, although Apple has not published official sales figures breaking down iPhone sales between the currently-available 5S, 5C and 4S models.

Most recently, analytics firm Umeng suggested that the 5c was much less popular than the 5S in China, while last October, a survey of US iPhone buyers in late September by Consumer Intelligence Research Partners claimed that 64% were buying the more expensive 5s, while 27% were buying the 5C. Data from Mixpanel also bears that out: its US-based datashows the 5C at 6.4% of iPhone users, compared to 20.7% for the pricier 5S.

Apple’s decision not to sell the low-end 5C in the US at first, but to offer it in China - where in January it tied up a deal with the world’s largest carrier, China Mobile, using its 4G service - suggests it is chasing mid-range buyers in markets where carriers offer lower or zero subsidies on handsets. Kevin Restivo, senior smartphone analyst at the research company IDC, commented: “the launch of the 8GB iPhone 5c will help Apple gain share and dampen aspirations of HTC and others with mid-tier targets.”

The research company Canalys noted that the low-end smartphone market is expected to show a compound growth rate of 34.5% over the next four years, while the $600+ segment - in which Apple competes - will stagnate.

Apple CEO Tim Cook admitted to analysts in the company’s last quarterly earnings call in January that he had been surprised by the mix of iPhone sales the previous quarter after the introduction of the 5C with the 5S.

“I think last quarter we did a tremendous job, particularly given the mix was something very different than we thought,” he said. “It was the first time we’d ever run that particular play before, and demand percentage turned out to be different than we thought.”

Cook added that Apple was not scared of making changes if necessary. The 8GB iPhone 5c is the result, although it will be battling numerous similarly-priced – not to mention even cheaper – Android and Windows Phone handsets in the increasingly crowded smartphone market.

Apple has not yet stopped selling the 8BG iPhone 4S, which dates from October 2011, and is now the only device in its lineup which still uses the 30-pin adapter introduced in 2003. As of 18 March, Apple stopped selling the iPad 2, replacing it with 2012’s iPad 4 with a “retina” display.