Why hasn’t Apple caught up with demand for 4-inch iPhone SE yet?

“Apple revealed on its most recent earnings call that its latest iPhone, the 4-inch iPhone SE, is seeing greater-than-expected demand. This, unfortunately for the iDevice maker, has led the company to be, in the words of CEO Tim Cook, ‘supply constrained,'” Ashraf Eassa reports for The Motley Fool.

“On the call, Cook didn’t give an indication as to when the company would eventually reach supply/demand balance for these iPhones, only saying that Apple will ‘be able to work [its] way out of this at some point,'” Eassa reports. “After recently checking Apple’s online store, it looks as though the company has yet to reach supply/demand balance for these products.”

“Although demand is clearly better than Apple had expected, the fact that these supply issues haven’t been cleared up nearly two months following the launch of the device raises some serious red flags,” Eassa reports. “I think at this point Apple is feeling a bit stunned at how poorly the iPhone 6s/6s Plus were received in the marketplace. The fact that the company is having to take all of these actions to bring down channel inventories is probably making Apple uncomfortable, and it’s almost certainly wreaking havoc on its suppliers. My best guess is that Apple is treading very lightly, hoping to manage iPhone SE builds, internal inventories, and ultimately [keep] channel inventory levels very lean.”

Read more in the full article here.

MacDailyNews Take: Death to the “S.”

As we wrote last September:

Apple, enough with the stupid iPhone ‘S’ naming already.

iPhone “S” years usher in hugely significant features, such as oleophobic displays, significant GPU improvements, world phone capability, Siri personal assistant, video stabilization, panorama photos, 64-bit processors, TD-LTE support, Touch ID, and 3D Touch, among other improvements and additions. Each year’s iPhone deserves its own number. By not doing so, Apple is shooting itself in the foot; handicapping iPhones with an “S” every other year. Why Tim Cook or Phil Schiller haven’t put an end to this stupid – yes, stupid – “S” naming is inexplicable. Why don’t you just name it “iPhone No Big Deal This Year,” Tim and Phil?

Here’s what you say onstage and in the press release when there’s no “iPhone 7s” and you jump directly from iPhone 7 to iPhone 8: “The improvements are such that the new iPhone deserves its own number.” Period. Done. Mission accomplished. It’s your naming convention, Apple, and you can correct your stupid mistake at any time.

And from last month:

Apple should strive to execute annual iPhone updates, in three display sizes if the SE is successful (which we think it will be), and drop the off-year “S” model concept. Apple is certainly big enough and rich enough to do a new iPhone family each and every year. Apple should have killed the tock year “S” model idea years ago.

What’s happened with iPhone is painfully obvious: Apple was at least a year (more likely two years) late with properly-sized iPhones. When iPhone 6 and iPhone 6 Plus finally, blessedly materialized, buyers quite literally stampeded to get them. Then, when faced with such a “tough compare” this year, Apple was still sticking with their ill-conceived “S” model concept – making the tough compare much, much tougher.

The “iPhone 7” family – three models with the same case design and all with 3D Touch — comprised of the 4-inch iPhone 7 SE, the 4.7-inch iPhone 7, and the 5.5-inch iPhone 7 Plus — should have debuted last September. That would have taken care of the current tough compare with iPhone 6/Plus. Then, this year, the iPhone 8 family, again with a new case design, but now waterproof, with dual cameras, etc. would debut this September. In 2017, perhaps Liquidmetal and AMOLED will be ready go for the iPhone 9. Etcetera. No more “S” years, Apple. Duh.

Had Apple done as we’ve just described, they’d have sold millions more iPhone units this year and millions upon millions more each year going forward.

Apple’s raison d’être is to delight customers. “S” model “tock” year iPhones do not delight customers in the same way as new “tick” year models. Obviously. They’re still the best smartphones on the planet, but they’re just okay. A bit of a meh. We all know that “S” models exist so Apple can wring out nice margins from existing designs and tooling, not expressly to delight customers. When Apple strays from its main goal is when things get wobbly. Just delight customers, Apple, and the world will beat a path to your door.

If we didn’t work for MacDailyNews, we’d have skipped the iPhone 6s Plus and held onto our iPhone 6 Plus units with no qualms – and we’re the most rabid Day One iPhone buyers you’ll ever find.

Why have an annual iPhone upgrade program, if you’re not going to wow us annually with new iPhones?

24 Comments

  1. I don’t see much in the way of that kind of mobile phone “WOW” coming from any other manufacturer on a yearly basis despite the pathetic and easy-to-please skinflint Fandroid choir who marvel like excited monkeys over the most minor of added unusable features.

    I’m happy with “cool” improvements and a “WOW!” every 3 years. Get a life and you won’t obsess over it.

  2. What it is to have Apple Inc’s ‘supposed’ problems; these navel gazers like Ashraf Eassa should gaze at the stars and leave the real business of running Apple Inc. to the professional team under Tim Cook!

    1. “Just do it!” is not what it takes to jump up production by 50%.

      When you look at all the machinery, space and people involved in product model specific operations and parts, it is NOT trivial to increase production rates.

      2 months time to increase production rate is not enough, unless you are just talking about adding a 3rd shift.

      Obviously, though, the Apple marketing department’s estimates of needed volume were way off, bad, lousy. That means Apple has lost touch with surveying its customers and potential customers. That is where the error is located.

  3. I have a 5s and probably won’t change until the Lightning connector or something like it wears out.
    Then I will probably go 4SE because my mobile needs are better served with my Macbook.
    I have an iPad, but seldom use it, so………
    Why spend the money when I don’t need to, its not a fashion item for me?

        1. In that case, 5s will work perfectly for you, until its battery no longer holds charge. And once it’s dead, your best choice would probably be whatever ends up being the successor to SE (i.e. the $400 iPhone with a 4″ screen).

          My wife is a similar kind of phone user. She doesn’t want a smartphone, and she really doesn’t like a touchscreen device. Her preference is a slider candy bar device. In late 2000s, Sony-Ericsson made a bunch of such models (Walkman phones). Today, nobody makes what she wants: old-fashioned slider phone with a good camera, microSD slot and a music player. I have to pay $100 for a good condition refurbished model from 2008! And they never last longer than about two years. She is beginning to accept the reality that one day, she’ll have to bite the bullet and move to a smartphone (i.e. iPhone), not because of her own choice, but because it will be nearly impossible to find a device of her liking.

          1. My Dad was told this Spring that his AT&T candybar keyboard phone would no longer be supported after 2016. So, I got him an iPhone SE and spent a week’s visit with him showing him how to use it. He only uses it for a phone, and plays around with Maps a bit, but isn’t interested in any of the day-to-day smartphone functionality of the device.

            He’s 94 and prefers a smaller phone, since that’s all it is to him.

  4. Of course removing S from the phone naming will solve Apple’s supply issues.
    Most likely cause is that Apple underestimated the demand for the SE and it allocated fewer production lines than it should have done in hindsight. Depending on where production is located, it may not be easy to add more lines quickly.

  5. Maybe the demand is that strong. Sales are that good. Ever think of that. Some of these writers just like to make up stuff to try and make a great thing into some scary nightmare.
    B.S.!

  6. Wicked Tim,

    We need to read between the line here. That SE is the proven fact that demand for Apple products remain strong.

    That SE, the best 4″ smartphone, is gonna be second best in a short time when Apple release their iPhone 7 line with a refreshed 4″…

    Tim and Apple are playing games with the market. I am sure they even bet on how many sell that SE would bring. I wonder who lost beside Apple customers…

    Great stuff!

  7. There is a simple answer to all this. First, almost all the analysis has focussed on the SE as an entry level phone, relatively cheap, aimed at new markets (India in particular). Hence the concern about its impact on Apple’s overall ASP. Perhaps, but this was only the 16GB model: certainly the 64GB, the only other option offered, is not a cheap entry level phone. I have seen no reports on how well the 16GB is selling, either in new or developed markets, but anectdotally it has always been in stock in London (UK) Apple Stores.

    Second, the 64GB SE, which is all that this piece refers to, is clearly doing well in developed, upgrade, markets. So well that Apple cannot meet demand. Maybe they will tell us why some time: it could be that they simply underestimated the demand and so shipped the wrong initial mix to N American and European stores. Or there may be different supply chain constraints for the 64SE, maybe even in volume supply of the memory.

    But this report underlines the fact that the SE needs to be analyses as two completely different products, aimed at different markets. I expect the 64 to be about, as the mature small smartphone design for several more iterations, with improved internal hardware but essentially the same format. It has reached the iPod touch stage of product evolution.

  8. I think that Apple greatly underestimated the demand for a smaller iPhone and many commentators tried to argue that only a large smartphone was worth having these days. Some of us have always felt that a smaller phone was the optimum size for our needs. It now seems that there are more people who think that way than anybody ever imagined.

    The iPhone SE is unique by being a small, but high performance phone. Android phones are either larger, or if they are a similar size, they are entry-level cheap phones.

    I’m astonished that there isn’t a smaller Samsung smartphone on the market by now, but have no doubt that it’s on the way after Apple has shown everybody how it should be done.

    1. In my experience from talking to people the S iterations are the most popular. Incidentally office workers / professional types have always preferred the 4 inch screen.

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