Apple is believed to have cut Q4 orders for iPhone 5c

Apple Inc told manufacturer of its new iPhone 5c that it will cut orders of the smartphone for the final three months of the year, a source familiar with the supply chain situation said.

Pegatron Corp, a major manufacturer of Apple’s new phone, had 5c orders reduced by less than 20 percent, the source told Reuters on Wednesday, declining to be identified because the information is sensitive.

Hon Hai Precision Industry Co, Apple’s other manufacturer of the 5c, has had its orders for the same period reduced by a third, the Wall Street Journal reported.

The iPhone 5c (Review) and iPhone 5s (Review) were launched in September ahead of the year-end holiday season when sales tend to hit a peak. In the United States, the 5c is $100 cheaper than the premium 5s, which is retailer for $649 for the 16GB model. 

The cut in 5c orders will reinforce investor sentiment that the phone was overpriced and would not be well-received by consumers, some analysts say.

“This reflects failure in Apple’s pricing strategy, “said Bevan Yeh, a Taipei-based senior fund manager at Prudential Financial Securities Investments Trust. “The price differentiation between 5c and 5s is too small. It’s an iPhone 5 with plastic casing and isn’t worth the price.” 

Spokesmen at Pegatron and Hon Hai declined to comment, while Apple could not be immediately reached for comment.

In China, one of Apple’s most important markets according to Chief Executive Tim Cook, the 5c’s reception has been lukewarm. Some local bloggers say the price difference between the 5c and 5S is too narrow.

Apple said previously that sales for the 5s and 5c in the first three days of their launch in September totaled 9 million, and that demand for 5S exceeded initial supplies. I did not give separate figures for the 5c and 5s.

Prudential, which does not own Apple shares, forecasts assemblers will ship around 5c units in the final three months of this year and 10 million in the first three months of next year.

Some analysts caution against correlating the cuts to Apple’s supplier orders with poor sales, because of the complexity and opacity of the company’s supply chain.

“We’ve seen this several times. There are too many moving parts in the supply chain to draw any conclusion,” said Benedict Evans, who covers mobile and digital media at Enders Analysis, a research consultancy in London.

“We don’t know what other suppliers they use or what inventory they already have.”

iPhone 5s motion sensors delivering inaccurate readings: Report

The motion sensors on Apple's iPhone 5s are not working properly and delivering inaccurate results, if a new report is to be believed.

The various sensors of the phone, including the Level, Gyroscope, Compass, and Accelerometer, were put to test by Gizmodo, and the site found out that the readings were way off compared to the ones taken by the iPhone 5's sensor. Both the phones were running iOS 7, which implies that it's not a software problem and cannot be fixed through an update.

The site found a major difference between the iPhone 5s' internal inclinometer/ level readings and a real measurement of inclination. Compared to a Stanley spirit level, the iPhone 5s level's reading in iOS 7 compass software was 2-3 degrees off. The reading was accurate on the iPhone 5. The results were similar even on a third party app. Same was the case with the Gyroscope impacting gameplay on the phone.

Testing the Compass, Gizmodo found out that there was a difference of 8-10 degrees between the iPhone 5s and iPhone 5. Compared to a real compass both the phones' readings were off but iPhone 5's reading was more accurate. This issue could affect mapping and navigation apps leading to differences in location detection.

The iPhone 5s' Accelerometer registered more latent motion than the iPhone 5's Accelerometer. This would again impact gaming and motion tracking-based fitness apps.

It's also possible that the iOS 7 software is not accurately calibrating the iPhone 5s' sensors for which a firmware update bringing a fix could be released. However, different users are reporting different levels of discrepancies on forums. It's also possible that the sensors have not been calibrated properly in the factory, as the report notes. 

iPhone 5s costs $191 to make, cheaper than iPhone 5: IHS

While the iPhone 5s includes of new features that set it apart from Apple’s previous model, the actual cost to make the phone hasn’t changes very much, according to a new study.

An IHS Inc. teardown of the new smartphone found that the components make up a 16-gigabyte iPhone 5s (Review) cost $190.70. Manufacturing costs add another $8, bringing the total production cost to $198.70.

In comparison of iPhone 5 that will be hit the market last year ago that costs up to $197 to make.

According to a Andrew Rassaweiler, the IHS director the cost of the benchmarking service has been noted the iPhone 5s includes the extra new features that gives extra functionality to this smartphone, such are 64-bit apps processor and a finger-print identification sensor without any kind of significant jump in the costs of this iPhone.

Also the research firm also dissected a 16-gigabyte iPhone 5c (Review), a cheaper version of the 5s, and put its total production cost at $173.45, including all the manufacturing costs that are $7.

In the last press interview, Rassweiler said the 5c is basically an iPhone 5 wrapped in plastic, nothing that it has basically the same features, but benefits from typical components price drops, along with its cheaper plastic enclose.

The starting price of iPhone 5c is $549, but it will sell for $99 with a two year wireless contract. It’s Apple’s least-expensive iPhone ever and is an effort to boost sales in China and other areas where people don’t have as much money to expend on new gadgets as they do in the U.S. and Europe. But critics have said that the phone is still too expensive to sell well in emerging markets.

IHS said that while I cost substantially less to produce an iPhone 5c than it did an iPhone 5, those costs are still on the high side.

It added that in order to merit the low-end smartphone pricing of $400 that many industry observers had expected while maintaining typical Apple profit margins the company would need to reduce its 5c production to about $130.

Monday Apple reported that it sold 9 million of the two new models since their launch on Friday – its strongest iPhone launch ever – and that demand was exceeding supply.

In midday trading, shares of the Cupertino, Calif., company slipped $5.98 to $483.12.

iPhone 5s fingerprint scanner Touch ID 'hacked' by German group

A group of German hackers claimed to have cracked the iPhone fingerprint scanner on Sunday, just two days after Apple Inc launched the technology that it promises will better protect devices from criminals and snoopers seeking access.

If the claim is verified, it will be embarrassing for Apple which is betting on the scanner to set its smartphone apart from new models of Samsung Electronics Co Ltd and others running the Android operating system of Google Inc .

Two prominent iPhone security experts told Reuters that they believed the German group, known as the Chaos Computing Club, or CCC, had succeeded in defeating Apple's Touch ID, though they had not personally replicated the work.

One of them, Charlie Miller, co-author of the iOS Hacker's Handbook, described the work as "a complete break" of Touch ID security. "It certainly opens up a new possibility for attackers." Apple representatives did not respond to requests for comment.

CCC, one the world's largest and most respected hacking groups, posted a video on its website that appeared to show somebody accessing an iPhone 5s (Review) with a fabricated print. The site described how members of its biometrics team had cracked the new fingerprint reader, one of the few major high-tech features added to the latest version of the iPhone.

The group said they targeted Touch ID to knock down reports about its "marvels," which suggested it would be difficult to crack. "Fingerprints should not be used to secure anything. You leave them everywhere, and it is far too easy to make fake fingers out of lifted prints," a hacker named Starbug was quoted as saying on the CCC's site.

The group said it defeated Touch ID by photographing the fingerprint of an iPhone's user, then printing it on to a transparent sheet, which it used to create a mold for a "fake finger." CCC said similar processes have been used to crack "the vast majority" of fingerprint sensors on the market. "I think it's legit," said Dino Dai Zovi," another co-author of the iOS Hacker's Handbook. "The CCC doesn't fool around or over-hype, especially when they are trying to make a political point."

Touch ID, which was only introduced on the top-of-the-line iPhone 5s, lets users unlock their devices or make purchases on iTunes by simply pressing their finger on the home button. It uses a sapphire crystal sensor embedded in the button. Data used for verification is encrypted and stored in a secure enclave of the phone's A7 processor chip.

Two security experts who sponsored an impromptu competition offering cash and other prizes to the first hackers who cracked the iPhone said they had reviewed the information posted on the CCC website, but wanted more documentation.

"We are simply awaiting a full video documentation and walk through of the process that they have claimed," said mobile security researcher Nick DePetrillo, who started the contest with another security expert, Robert Graham. "When they deliver that video we will review it."

The two of them each put up $100 toward a prize for the contest winner, then set up a website inviting others to contribute. While the booty now includes more than $13,000 in cash, it was not clear that the CCC would receive the full payout, even if DePetrillo and Graham declared them winners. A micro venture capital firm known as I/O Capital, which had offered to pay $10,000 of the prize money, issued a press release late on Sunday saying that it would make its own determination about who won the contest.