Misreading Apple’s supply chain and iPhone XR demand

“Apple’s supply chain scale is truly unprecedented,” Ben Bajarin writes for Tech.pinions. “Through all these years, Apple has learned how to build one of the most fluid supply chains in the history of manufacturing.”

“Most companies do not face the kind of manufacturing challenges Apple does because most companies do not ship technology innovation at the scale that Apple does. This makes most companies supply chain a bit easier to manage,” Bajarin writes. ” But when I say Apple’s manufacturing is fluid, what I mean is that they can respond to waves of demand and other market changes in real-time.”

This is “why we get a range of supplier reports where one quarter an Apple supplier has a huge quarter, and in the same quarter, another supplier will suggest a decline,” Bajarin writes. “Apple may have all the components they need on hand to scale up or down iPhone XR unit sales for the next six months or longer, but a critical point I think is missed is that the current December quarter should never have been expected to be a big iPhone XR sales quarter as a part of the iPhone mix. Most of the buyers who purchase in the December quarter are the type of consumers who want the latest and greatest and therefore they tend to buy the higher end more premium iPhone.”

Read more in the full article here.

MacDailyNews Take: Shh! We were hoping for sub-$185/share!

If there actually is an issue with iPhone XR sales — and the jury is still way out on that one — that could be a good thing for Apple as it could mean that when spending over $750 on an iPhone, more people than ever say to themselves, “Well, I might as well get the very best one available,” and buy the iPhone Xs Max over iPhone XR. This would positively impact Apple’s iPhone ASP, of course. — MacDailyNews, November 9, 2018

Even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business… There is just an inordinate[ly] long list of things that would make any single data point not a great proxy for what’s going on. Apple CEO Tim Cook, January 23, 2013

SEE ALSO:
Apple supplier AMS cuts forecast – November 15, 2018
Apple: Ignore the noise – November 14, 2018
Dialog Semi says not seeing hit to demand from Apple – November 14, 2018
Don’t panic about iPhone sales just yet – November 14, 2018
Apple stock: This is not a repeat of 2015-16 – November 14, 2018
Apple’s Asian suppliers fall on report of canceled iPhone XR production boost – November 6, 2018
Nikkei claims iPhone XR production cuts, Apple stock drops over 3% – November 5, 2018
Apple’s revolutionary iPhone X was the world’s best selling smartphone in Q118 – June 14, 2018
Nikkei again claims ‘weak demand’ for iPhone X despite much evidence to the contrary – February 20, 2018
iPhone X drives smartphone revenue dominance; Apple made more money in Q417 than the rest of the smartphone makers combined – February 16, 2018
Apple iPhone took more than half of worldwide smartphone revenue share in Q417, a new record – February 15, 2018
Apple supplier says report of iPhone X production cuts was overstated – January 30, 2018
Another January, another misleading iPhone supply cuts story from Nikkei – January 29, 2018
Apple stock drops after Nikkei report of iPhone X production cut – January 29, 2018
Canalys: Apple shipped 29 million iPhone X units in Q4 2017; world’s best-selling smartphone over the holiday season – January 23, 2018
Reports of Apple cutting iPhone X orders make no sense – January 2, 2018
Apple stock tumbles on one poorly-sourced report of low iPhone X demand – December 26, 2017
Apple and suppliers shares drop on report of weak iPhone X demand – December 26, 2017
Nikkei: Apple to decrease iPhone production 10% in first quarter of 2017 – December 30, 2016

4 Comments

  1. ‘December quarter should never have been expected to be a big iPhone XR sales quarter as a part of the iPhone mix. Most of the buyers who purchase in the December quarter are the type of consumers who want the latest and greatest and therefore they tend to buy the higher end more premium iPhone.”

    Umm…. In my view.. that holds true for preorders and early adopter enthusiasts… but not the whole of december quarter.
    i believe/ed XR will//would be very popular in the holiday gift season.

  2. Classic business practice is to offer an affordable option to give consumers “permission” to consider the low end device (Xr) and once that threshold is crossed, once purchase time comes, a substantial number will say an Xs is just 250 dollars more and up sell themselves.

    1. I concur with your logic. I would consider the $250 delta cost over the planned life of the device – say three years – and then ask myself if the higher-end device is worth another $83.33 per year, or $6.94 per month – basically the cost of one fast food combo per month, or a couple of fancy coffees.

      That is the way that most things are marketed and sold to consumers, and most of us are accustomed to assessing value in that manner.

  3. I trust Ben B more than some of the talking heads on CNBC for example. Ben Bajarin is the son of Tim Bajarin. The elder Bajarin was one of the few tech writers analysts who Steve Jobs trusted and allowed personal interviews.

    6 months stock means those negative press talking iPhones affected for Christmas are just stupid

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