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back to article MEEELLIONS of unloved iPhone 5Cs gather dust in warehouses – report

Apple may be sitting on as many as three million unsold units of its little-loved iPhone 5c, according to reports from the Taiwanese electronics manufacturing industry. The supply-chain sleuths at DigiTimes claim that around one million units of Cupertino's plasticky handset are sitting on telecom carriers' and distributors' …

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Paris Hilton

Some hope?

They (Hapl I mean) won't be selling them of cheap then will they?

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Anonymous Coward

Nah

They've already sold the ones with the carriers - is it not Apple policy to get their money up front from the mobile carriers for their phones (http://www.insidetechnology360.com/index.php/why-the-iphone-is-bad-business-for-network-carriers-2500/)?

As for the ones at the manufacturing plant, well they'll be sold into the developing world as upgrades to iphone 4 at some point (http://www.theregister.co.uk/2014/01/15/iphone4_reborn/)..

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Trollface

Re: Some hope?

Maybe Apple can trade 5c's with Microsoft for a bunch of Surface RT tablets.

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Coffee/keyboard

What will happen to the 5s?

I wonder if Apple will adopt the same strategy with the 5s as with the 5 when the iPhone 6 comes out, i.e., stick it in the coloured plastic?

I really hope not!

The original 5 was on my list of future phones (i.e., in the same way as you can buy the 4 cheaply now), but not any more. Now I'd like the 5s, but not if it goes plastic non-fantastic.

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Shouldn't there be inventory of iPhone 5S available by now too?

It has been six months now, surely they aren't still selling them faster than they can make them anymore as people start to wait for the iPhone 6, which may be the most significant change in 4 years. You want to have some inventory, so people who want one can buy it immediately instead of having to wait as was the case for the first few months.

If they can't selling 3 million more 5Cs in the next six months then having that inventory is a problem, but I highly doubt that will be an issue.

Apple surely doesn't mind that the 5C isn't selling as many as they thought, because those customers are buying 5Ses instead which are more profitable for Apple.

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Re: Shouldn't there be inventory of iPhone 5S available by now too?

Inventory, yes. A glut of inventory, probably not.

I never understood the point of the 5C once the price became known. I doubt it increased marketshare by much and it's so ugly, it's got to have diminished their brand. Apple may not intend to make "junk phones," but this one sure looks to make a liar of Mr. Cook.

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LDS
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Re: Shouldn't there be inventory of iPhone 5S available by now too?

Guess if they have 3 million of unsold items in stock Apple minds it even if it sold more 5s. It's not having a buffer stock to fulfill sales quickly, is amassing a product that doesn't sell as expected - and forced to review productions plan fully. And if all buyers that should have been the target of the 5c really bought a 5s has to be demonstrated - they could have bough another brand instead.

At $500 each they have a stock value of 1.5bn, which is a nice sum even for Apple. And it's even a bigger issue if Apple is not willingly to sell them at a discounted price, because Cook & C. don't like to admit mistakes.

While say Apple try to sell them at $200 - it would be a $900m write-off - the same size of the Microsoft write-off of the ill-fated Surface RT....

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@vector

The point of the 5c was never to sell a bunch of phones. The point of the 5c was to shut down the analysts and other dipshits/shareholders (Icahn) who don't know what they're talking about.

The tactic is far, far older than tech. When you're getting pressure from shareholders/board members/analysts you give them exactly what they're demanding. You roll out the best engineers, marketing people, go after high profile partners, the same aggressive full court press you used so successfully for all your other products. Because it's 100% guaranteed that no board member, shareholder or analyst actually understands why (product) actually sells the thing you've built exactly as they wanted fails. Fails big and hard. Industry, product, market and target demographics are completely irrelevant. When a product is built by committee it will fail (hi there Zune, Playbook, Motorola). It isn't optional.

The magic is that the loudmouths can do fuck all about it. You've done it the same way you've done it so successfully before. You built exactly what they demanded (look here Icahn, here's an email from you and your butt buddy proxy group threatening to sue if we don't do as you demand. Read it real close. Yep all there isn't it).

We've done what you wanted and it hurt us. Having you poking around has sullied our brand. Now fuck off and go somewhere else to count your money. We're being nice, but if you come back round we will show the world how you forced your way in here and damaged the company. Man, that would make other boards and proxy firms nervous wouldn't it? People won't let you in if you costing them billions with your dumbass ideas.

It works every time. Without fail. You turn that shit around and just bludgeon them to death with it. Cook has established absolute control now and will be able to keep it as long as performance is good.

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Re: @vector

Could you venture another example of that strategy in action? Genuinely interested.

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Re: @vector

I'd agree with your analysis if it weren't for the fact that there appear to be 3 Million of these mistakes lying around.

Generally, in the scenario you posit, the company will short run the experiment, not tie up $1.5 billion worth of potential writedown just to thumb their noses at the shareholders

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Re: @vector

The entire concept hinges on the fact that enough money was lost that people are put off the idea and you have somebody to pin the losses on.

Put yourself in Tim Cooks shoes. He's stepped into one of the highest profile jobs on the planet and is replacing a very nearly legendary asshole with unstoppable willpower. Everybody expects you to be Jobs v2.0, but that's impossible, they're different people (that's what we're told anyway :). Anyone in that position has one chance to establish dominance or he will die the death of 1,000 emails and be destroyed by Icahn types.

Any time Icahn types pop heir heads out in the future they'll be reminded of what he has done. With Icahn it's even better because of his open letter propaganda parties. Icahn says (x) Cook counters with the billions of ways Icahn fucked them last time. Now Cook has some control and we'll see if he can manage it. Every one of those unsold phones is Icahn giving other Apple shareholders the finger. That power is worth a lot more than they lost on the deal.

Examples of use:

Every electric car manufactured by traditional automakers

Five or six replacements for the A-10 aircraft

The disposable Zippo cigarette lighter & the refillable fluid filled BIC cigarette lighter

The Ford Econoline pickups from the 1960's with the in cab 6-cylinder

The first generation of Chrysler air bags

About 5.3M varieties of condensed soup

The crazy big aluminum foundry in Pittsburgh, PA.

All the Snap-On garden tools

The entire DAT industry

Diplomacy in Iraq

'Transitional' wood planes

Concrete railroad cross ties

There are more. Lots more. It's a really, really old tactic.

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You guys need to understand a few things

First, Apple sold 4 million iPhones a week the first three months it was out, and while it isn't selling that fast now, it is probably at least 2 million iPhones a week. If 1/4 are 5Cs, then the 3 million 5C in inventory requires only 6 weeks of sales, and it will be six months before the 6 comes out and the 5C is (presumably) retired. They are hardly going to be left holding the bag on these, and have no need to discount them.

Second, the point of the 5C was never to be low cost - that was just wishful thinking from stupid analysts who think Apple needs to try to challenge Android on a market share basis. In the past they've just kept the identical model from before as the new low end model, but they couldn't do that this time. The 5C adds a bunch of LTE bands the 5 lacked, and has various other internal changes. You can't see two different phones under the same model name.

I think they also realized that selling last year's high end model as next year's discount model devalues that high end model. The iPhone market has changed, people keep phones for two years now rather than replacing them on a yearly basis. So they created a separate model to be the low end version, so the '5' is still high end, just last year's high end.

Maybe the reason the 5C didn't meet expectations is because they botched the design and people don't want a plastic iPhone, and selling phones in colors when people who want their phone in bright colors can put them in a case and get EXACTLY the color they want is probably a waste of time.

It'll be interesting to see if the 5S survives unchanged as the low end model when the 6 comes out, or if they tweak it into a 5GS or something like that.

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Re: @Don Jefe: Concrete railroad cross ties

I'm curious why you think that concrete railroad cross ties (or railway 'sleepers' as they're known in the UK) have been a failure? On Britain's railways, steel-reinforced concrete sleepers have been used as replacements for wooden sleepers for decades.

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Re: @Don Jefe: Concrete railroad cross ties

That 'steel reinforced' bit is the key. None of the major US trials of concrete freight rail cross ties have been sufficiently reinforced. But hey! They did try the plastic reinforcements.

It was a scandal in the 1970's, it was a 'trade issue' in the 1980's and in the 1990's it was simply good financial management to maximize the life span of maintenance equipment.

Some light rail and passenger only lines in the US have successfully used concrete cross ties, but there's only about 200 meters of that track in the country (it's more than that, but not comparable to freight rail). Nobody remotely close to the freight rail industry wants concrete cross ties. As long as that fact remains there will not be a suitable concrete cross tie that meets the 'high standards' demanded by the freight rail industry. They won't even table research studies about it anymore.

I failed to qualify my earlier statement and I apologize for that. You are correct that concrete cross ties have seen successful use.

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Re: @vector

"Concrete railroad cross ties"

We must be behind the times in Aus. All hardwood ties are replaced by concrete these days .

What exactly is the problem ? Hardwood ties were almost single-handedly responsible for deforestation of the Murray-Darling (river) basin.

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Re: @Don Jefe: Concrete railroad cross ties

Seems like this bit needs repeating (or reinforcing, har har)

"That 'steel reinforced' bit is the key. None of the major US trials of concrete freight rail cross ties have been sufficiently reinforced"

Concrete is able to stand tremendous weights, but breaks easily when twisted or pulled. Which is exactly what happens on the railroad - weight of the train is pushing the tracks apart, applying the wrong kind of force to the cross ties. It is up to the steel carcass to hold them together. And that concrete+steel combination has to be good, really good, to surpass the wooden ancestor.

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Don't overlook the bling factor.

Since iPhones have always cost far more than they are worth, they're analogous to wearing a diamond ring. The value in each is simply that people around you can see that you've spent a lot of money on it, although the intrinsic value may be quite low.

In that context, the 5c was always doomed to be a failure, as flashing one in public is similar to wearing a cheap stone, rather than the real thing.

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Anonymous Coward

Re: Don't overlook the bling factor.

Maybe in the early days that was the case but I think the appeal of the iPhone today is the straightforward interface and the unified OS and app environment. They look smart, feel nice to use, are supported for a decent amount of time and do pretty much "just work" so they tend to hold their value over time. As for what people will pay, the market sorts that out, if people are buying them then that's what they are worth.

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Re: Don't overlook the bling factor.

Damnit. I absolutely hate it when people say (thing) is worth far less than it costs. It would be valid to say (thing) doesn't seem to have value inline with its cost. That's possibly true. What something is 'worth' however, is exactly how much a customer will pay for it.

When I was a wee little fellow someone gave me one of the most useful bits of business wisdom I've ever received. He told me 'If people aren't complaining about the price you're not charging enough'. and that is absolutely true.

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Re: Don't overlook the bling factor.

He told me 'If people aren't complaining about the price you're not charging enough'. and that is absolutely true.

Spot on.

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Re: Don't overlook the bling factor.

I think Diamonds are a good analogy to Apple. People pay large amounts for them because of a perceived value rather than the intrinsic value.

De Beers controls supply and spins a myth about diamonds in the same way that Apple runs it business. Sell it as aspirational item and ensure that you control supply so that they cannot be discounted.

The android equivalent in diamonds is artificial diamonds that have the same qualities as 'natural' diamonds but are far cheaper. It's the emperor's new clothes.

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Re: Don't overlook the bling factor.

I see what you're saying, but I'm not sure I agree with the purchase justification for diamonds. If they aren't being purchased for industrial use they're being purchased because women get upset if you just hand them wads of cash in exchange for sex.

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Re: Don't overlook the bling factor.

"He told me 'If people aren't complaining about the price you're not charging enough'. and that is absolutely true."

Only if they continue to buy. If they are not buying, maybe you are charging too much - or your product is crap.

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I like mine

I'm typing this on my 5c. I have no complaints about it at all. Got it relatively cheap with a good (by mobile provider standards) deal and it's great. Yep ir's plastic. But so is my TV. And half my car probably. It's still a solid bit of kit and very light.

The only thing that annoys me is that i can't get any music on easily because the required version of itunes won't run on my PPC Mac. But that's Apple for you!

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Anonymous Coward

Could the problem perhaps be related to them looking fucking horrendous?

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apple never had an objective to sell a low-cost phone.

Then he must be very pleased with the sales figures for the 5c :-)

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Thumb Up

Re: apple never had an objective to sell a low-cost phone.

And Naughtyhorse is the first across the line by a turn and six lengths.

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Re: apple never had an objective to sell a low-cost phone.

I couldn't have done it without withnail & I

Withnail: I fail to see my family's of any interest to you. I've absolutely no interest in yours. I dislike relatives in general and in particular mine.

Marwood: Why?

Withnail: I've told you why. We're incompatible. They don't like me being on stage.

Marwood: Then they must be delighted with your career.

Withnail: What do you mean?

Marwood: You rarely are.

Ai Thankyew

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Silver badge

Even the best tennis players whack some into the net.

Apple have had some brilliant marketing results, but this time they missed.

If they are intelligent, which they are, this is going to help them understand their buyers, and the market, better.

As paleoflatus says, the bling is part of the Apple attraction and buying a blingless Apple product - to save some money - will look cheap in front of your mates. If you're tight for money, then buying an Android will save face.

Many pundits pegged this one to flop. Apple still probably did the right thing though; unless you experiment and try different strategies you will never find the bounds of the market.

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Re: Even the best tennis players whack some into the net.

They are not intelligent - the consumers, as a group, are not particularly bright, it doesn't take much brain to lead spending hungry masses by their noses;)

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IT Angle

Fetish

I have never understood this Apple fetish.

Then again, I don't shop at Boden or Waitrose and I don't Ski or play tennis either.

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TWB

Re: Fetish

It's not a fetish - I have a couple of Macs because I prefer them to other machines, and I had an Nexus 7 which I really liked*, but I am not excited by iPhones and find some aspects of Windows better than OSX.

Not all Apple owners buy and like everything Apple.

As I was told by a senior engineer when I was a trainee: 'assumption will usually let you down'

*I managed to break it (arrghhh) and did not have the money to replace it.

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Apples next court case

I think if it was even remotely possible apple with sue the public for not buying their products. Seems their only recourse for lost revenue these days is to blame everyone else and make some lawyers richer.

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Teenage girls dream phone?

If my daughter and her friends are typical, it is. They either have a 5C or want one -- pink, blue, and green seem to be the popular colors.

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Anonymous Coward

Impossible.

The warehouses are all full of unsold Xbox Ones...

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non-story

wow - 3 million 5C iphones!

Considering Apple sold 50 million last quarter, even if only a quarter are iPhone 5c - thats over 12 million sold in 12 weeks.

So the headline is Apple has 3 weeks of inventory of 5C instead of it's usual 1 week.

Not much of a story…

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Anonymous Coward

Re: non-story

Well argued but sadly the Fandroids here won't see it like that. They will never let a dose of common sense thinking get in the way of their hatred for everything to come out of Cupertino.

Shame really. Both Google and Apple need the competition to move the market forward.

I'd ask those Fruity/foxconn rebadger haters to stop and consider just for a moment what would happen if Apple stopped making phones tomorrow?

You would soon be into the Henry Ford realm where you could have any Model 'T' you liked but it had to be black.

Do you really want monoculture in anything? After all, don't you promote choice and freedom? What if there was no choice in anything because one maker had the monopoly.

Just like the days of Microsoft on the desktop.

Never mind, logic won't stop the hatred from flowing now will it?

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Re: non-story

The article did not mention the surge in sales of the 5C to European women.

See here http://www.designntrend.com/articles/11143/20140225/iphone-5c-vs-5s-comparison-sales-european-women-video.htm.

A click story!

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Anonymous Coward

Re: non-story?

Speaking personally, I've never hated Apples products, rather that I have never found the need to use them as a fashion statement and prefer to use my money sensibly elsewhere; I'm not a fan of Google either. If M$ hadn't made such a pigs ear of it, I would probably have a Windows Phone as a matter of convenient continuity.

Where the hatred came in, was the arrogance of Apple devotees in scornfully declaring that anyone choosing to use other kit, did so because they couldn't afford Apple.

That was bound to raise hackles and as usual, it was all about money and arrogance where Apple has assumed the value of a religion not universally 'enjoyed', so the war began. Same old story actually!

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Boffin

Re: non-story

Wow, quite stunningly the wrong end of the stick.

Try looking at it this way and stop assuming this is all about "everyone has it in for Apple" thereby indulging in your persecution complex.

Each Iphone 5C costs about 199 USD to make. Therefore using some of the assumptions in this whole thread, on a normal week there's about a million sold a week. That makes just shy of 200 million flowing through the coffers allowing payment of bills, more phones to be made yada yada yada.

This issue is NOW they have just shy of 600 million USD and it's NOT flowing. It's tied up in phones that have to be paid for, storage of those phones and all the fun little costs associated with warehousing boxes.

Now, who is getting the shitty end of that 600 million I don't know. Knowing Apple and their contracts team I would hazard a guess that the disties are getting it in the shorts and not Apple, but that's just supposition on my part. Regardless, 600 million USD of slow moving/dead stock is a painful number for any company, which makes it a painful mistake, or, if as another poster has claimed it's all some Machiavellian tactic to make shareholders back off, it can be reclassified as a (I believe the business term is) "f**king bad idea".

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Bronze badge

Crisi-tunity!

Switch entirely to producing 5S, stop 5C production, and innovate with the overstock: ship 'em out with a date-related, publicly-visible (read: calculatable) gradually-declining price. The public will be able to see the price history and be able to project it accurately, see how fast the stock is moving and -- by inference -- how many remain. Somewhere along that arc will be a price at which the overstock begins to bolt. That number would be one to bear in mind next time.

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Plasticky handset

It might be made of plastic but it's certainly not plasticky. In fact it feels like enamelled metal.

I must admit that after the launch of the 5S and 5C all I saw were 5Ss, even in the phone shops - the 5C was nowhere to be seen.

However over the last 3 or 4 weeks I have seen an increasing number of 5Cs, mostly (as reported above) in the hands of young (teenage) girls.

One exception is an eighty-year-old client of mine who has bought a green one.

I am tempted to get one myself to replace my trusty reliable iPhone 4 - which iOS7 has turned into a dog!

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Digitimes is a very questionable source.

Digitimes are wrong most of the time, wildly wrong sometimes.

Take this rumour with a serious grain of salt.

It won't stop the Apple stock price tanking tomorrow though.

http://techland.time.com/2012/05/14/digitimes-apple-rumors/

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Digitimes have a woeful track record for rumour accuracy.

Digitimes are wrong most of the time, wildly wrong sometimes.

Take this rumour with a serious grain of salt.

It won't stop the Apple stock price tanking tomorrow though.

http://techland.time.com/2012/05/14/digitimes-apple-rumors/

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Paris Hilton

General stock

Genuine question. At any given time how many iPhones would sit in the distribution change?

Consider:

Every Apple shop in the world probably has 50-100 in stock.

Every mobile shop probably has 10-20 in stock.

Every mobile company and Apple will have a warehouse for online orders, with, 100s or 1000s?

Add in the supply chain warehouses

I'm guessing in the millions even assuming it was flowing? Presumably the real problem is the stock isn't flowing.

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Could this be that rare thing -

A Digi-Times rumour being true? Unicorn-shit or just the normal bovine variety?

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jai
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But....

but YOU (being the IT-related new media in general, not just El Reg) were telling us last year how a plastic iPhone was the only thing that could save Apple's future and if they didn't make one they'd be doomed.

how come you told us this, and yet, no one wants one? surely ALL of the IT-related news media couldn't ALL have been wrong about this could they?

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Easy fix

Apple needs to add these two options - black back for the black screened phone, and a white front for the white backed one. Do that and they'll sell fine. Give up on the dayglo colours as cases do that but a nice all black or all white phone of the 5c design wouldn't be so fisher-price. I'm running a white iPhone 4 and am looking to run it for as long as possible but when replacement time comes I would like something that is as aesthetically pleasing and the 5c in all its colours isn't.

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Re: Easy fix

I'm holding out for Flower-power and Dalmation

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"Demand for the iPhone 5c has not been as strong as the demand for its blinged-out brother, the iPhone 5s"

So you're just going to state that as fact, when even your "source" is a story based on... 3rd party research?

5c outsells 5s - that's the dirty little secret everyone with actual data knows. I hope someone at Apple is laughing at you.

Call me a fanboi, meh, I don't care - you're the ones proclaiming to be a news org and yet regurgitating BS from uninformed researchers with a product to sell.

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