A young girl plays a game on the new iPhone5c during the first day of sales of the device in Hialeah, Fla.(Photo: Alan Diaz, AP)Story HighlightsiPhone 5c is simply a new version of the iPhone 5 that is cheaper to produceLow sales of the iPhone 5c are not necessarily a bad thingApple’s gross margin has fallen year-over-year for three consecutive quarters

In the month since Apple (AAPL) released its new iPhone 5s and iPhone 5c phones, the market has been deluged with the sentiment that the iPhone 5c “is a failure.” Apple bears are rallying around reports that Apple has cut orders for the iPhone 5c, although they are not sure just how much Apple is cutting production.

All of these rumors about the iPhone 5c being a failure are flawed for one simple reason: They misunderstand the purpose of the 5c. Many observers — including me — expected Apple to release a “cheap” iPhone this year. When Apple released the iPhone 5c alongside the high-end iPhone 5s, a large contingent of Apple-watchers assumed that it was the rumored “cheaper” iPhone.

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Read also:

iPhone 5s and 5c coming to Boost Mobile on November 8th (Engadget)

Apple's iPhone 5c Is Great Marketing For The iPhone 5s (Forbes)

Shocker: iPhone 5C sales starting to catch up to iPhone 5S (report) (VentureBeat)

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