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  • iPhone X Production Problems — Not?

    October 19th, 2017

    Sometimes rumors just get so far away from the truth that the inevitable come down makes you wonder how they all got started in the first place. From the earliest days of stories about the iPhone X — when it was known as the iPhone 8 — there were reports that there would be serious production problems right at the starting gate.

    So the stories went that, since OLED displays have yet to hit what one might call volume production, Apple would have difficulty getting the quantities they needed. When it came to Face ID, well there you go! How could Apple possibly get all the complicated parts sorted out, such as its TrueDepth camera, to build an iPhone X. It will take long months for production to catch up with demand.

    Indeed, I had a guest recently who wondered whether, after ordering an iPhone X on November 3rd, he would have to wait until 2018 to actually receive one. So he planned to set up multiple devices to connect to Apple’s online store when it goes on sale in order to make sure that his order is recorded before it became backordered.

    Otherwise, you will wait.

    Of course, I suppose it’s possible that these rumors of production problems were intended to dissuade people from ordering an iPhone X. Why buy something that may take weeks or months to arrive, when you can buy something else that can ship right away? But whatever they say is going to be proven or disproven by the time the product ships. After that, it won’t be possible to fake it.

    Apple plans to reveal its 4th fiscal quarter 2017 financial results on November 2nd, the day before the iPhone X ships. I’d be surprised if Apple didn’t deliver some sort of perspective about iPhone sales, and how expectations of the new model impacted sales of the iPhone 8. Perhaps there will be questions about availability.

    However, new reports appeared this week suggesting that Apple is rapidly gaining control of iPhone X production and that they might, in fact, be caught up before long. If this is correct, and the story does seem more credible since it reveals a company with people who know what they are doing, you shouldn’t be afraid to order one. It’ll arrive before long, even if it doesn’t reach your home or office on the very first day on sale.

    Obviously there are plenty of loose lips in the supply chain, but it’s very complex, and Tim Cook has already said that you can’t take one or more metrics and come to conclusions about demand. Indeed, if there are multiple sources for parts, Apple will switch from one to another depending on their needs and the ability to deliver parts that meet Apple’s standards.

    Despite the reality of the situation, there a few years back, there were reports from the supply chain that implied a lower demand for the iPhone than was really the case. I recall a situation where it appeared Apple stock price was negatively impacted because of the erroneous perception of poor demand. Yes, there have been down quarters for the iPhone, and sales for the September quarter may be in curious shape, since the flagship iPhone hadn’t shipped, thus depressing demand.

    Maybe.

    But if the iPhone X proves as popular as expected, and there are decent supplies, any possible impact to iPhone sales would be of short duration. Again, there will be clues based on what Apple says during the forthcoming quarterly conference call and, of course, Apple’s guidance for the current quarter.

    So it all comes down to this: If the stories that Apple is overcoming early production glitches are true, just why was there so much fuss about severely constrained supplies? Was it all true, and Apple managed to get out from under production hell by a stroke of luck? Or does it perhaps mean that Apple just happens to know what it’s doing, and how to ramp up production of a new product. If there were a few hiccups along the way in the early production stages, that’s to be expected. Obviously higher-than-expected demand will still result in backorders.

    Were those reports true, or exaggerated by some journalists in search of a juicy story about Apple’s alleged production difficulties for the iPhone X? Or were they fed by one or more competitors to put cold water on demand, to, as I said, attempt to make customers gun-shy about ordering something that won’t ship for a while?

    Would that even make a difference? I suppose it’s possible that a product perceived to be in high demand would actually attract more customers. I recall one of my radio show regulars who has suggested, from time to time, that Apple might deliberately constrain supplies for a time to help boost sales on the long haul.

    Does it even make sense that Apple would hold back on production to make a product seem more popular than it really is? Isn’t there the danger that some people might just give up and buy something cheaper, or someone else’s product instead? I’m sure Apple knows the answers. I’d rather not guess.

    At least, the prospects of buying an iPhone X, and actually seeing it show up, appear to have improved greatly in recent days.



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    One Response to “iPhone X Production Problems — Not?”

    1. John says:

      If you really appreciate what the IPhone X represents Then like me you are willing to wait.

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