Apple's Tim Cook: iPhone 5C isn't our budget phone

CEO says Apple never meant it to be a cheap phone, despite initial buzz.

Donna Tam Staff Writer / News
Donna Tam covers Amazon and other fun stuff for CNET News. She is a San Francisco native who enjoys feasting, merrymaking, checking her Gmail and reading her Kindle.
Donna Tam
2 min read
iPhone 5C
Apple designed custom covers for the 5C made of silicone with a microfiber lining, with cutouts to show off your phone's true color. The cases come in white, red, yellow, blue, green, and black. Josh Lowensohn/CNET

Investors wanted to know Monday how the iPhone 5C helps Apple reach new, budget-conscious markets, but according to CEO Tim Cook, it probably won't.

In response to questions during the company's fiscal fourth-quarter earnings call about the iPhone 5C's price and the colorful phone's sales in "cost-sensitive countries," Cook said the the iPhone 5C was never meant to be a budget phone.

"That was never our intent, honestly. Our entry iPhone is the iPhone 4S," he said, deflecting the questions about iPhone 5C sales. The iPhone 5C is meant to be a mid-level phone, he said.

He said the iPhone 4 did well as Apple's previous budget phone, and the company is hoping to see the same with the iPhone 4S. When it introduces new iPhones, Apple typically has kept around a previous model as its entry-level phone.

Initially pitched as Apple's more affordable model, the iPhone 5C, isn't really wallet-friendly. Consumers pay $99 for the 16GB model with a two-year service contract, and $549 without the contract subsidy. The expectation was that the cheaper model would help Apple in markets with more budget-conscious consumers like China or Russia, but the impression has been that it's still too pricey.

In China, Apple has competition in the form of Xiaomi, a Chinese company that has been selling smartphones -- for less than an iPhone costs -- like hotcakes.

Apparently the iPhone 5C can't compete with its more expensive counterpart, the iPhone 5S. A recent study estimated that the two models account for 5.5 percent of all iPhone activations globally, but the iPhone 5S is the more popular of the two.

For all models, Apple reported Monday that it sold a total of 33.8 million iPhones in the fiscal fourth quarter of 2013.

Watch this: iPhone 5C: Colorful, less expensive, just as good as last year