Bad News Apple Can Take to the Bank

Sorry, I want the more expensive one.

Photo by Justin Sullivan/Getty Images

Amid widespread expectations that the iPhone 5C would become the new “normal” iPhone, with the more expensive 5S serving as something more like a “pro” model, Reuters has some bad news:

Apple Inc is cutting production orders for its plastic-backed iPhone 5C a month after launch, a source familiar with its supply chain said on Wednesday, fueling speculation the cheaper model of its main gadget may have been priced too high.

Fueling! Speculation! But wait:

Apple has asked one of its largest suppliers to increase production of the top-tier 5S, which went on sale at the same time, the Wall Street Journal reported.

In other words, Apple appears to be doing better than expected at moving its premium product. That seems like the best possible kind of “bad” news. I still think there’s a strong case for a genuinely cheap iPhone that could connect with buyers who are genuinely priced out of iPhone ownership right now. But given Apple’s strategy, strong 5S sales seem ideal. People with money to spend want the best, and that’s the market segment Apple is best at serving.