Apple's Dual iPhone Strategy in Doubt

Apple hoped to broaden its appeal with a cheaper version of the iPhone. But that effort appears to be faltering after a few weeks.

The company has reduced orders to assemblers for its lower-end iPhone, the 5C, people familiar with the situation said. At the same time, retailers and telecom operators report tepid demand for the device, prompting some to cut prices. The fact that the 5C appears to have missed Apple's expectations may not be all bad, especially if it means consumers are buying more of the 5S, the higher-end iPhone that came out at the same time last month and sells for $100 more. Apple has increased this quarter's orders for the iPhone 5S, said two executives at assembler Hon Hai Precision Industry Co. But it does signal that Apple misjudged with its strategy to introduce for the first time two new phone models simultaneously.