Apple Scales Back Orders for Its iPhones

[sigh]

Here’s WSJ from January 2013:

Apple Inc. has cut its orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation said Monday. Apple’s orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, two of the people said.

http://www.wsj.com/article_email/SB1000142412788732359620457...

So WSJ says 50% drop in orders for the January-March quarter. Yet when you look at Apple's actual results for that January to March quarter iPhone experienced a YoY increase.

http://www.apple.com/pr/library/2013/04/23Apple-Reports-Seco...

Fool me once WSJ...

Journalists should be very careful when quoting component manufacturers. Apple often buys all the components a manufacturer can make (and then buys them a factory to make more, and then buys all the machines in the world that can be used to make the parts, etc). Apple quite literally can make or break a component manufacturer (GT Advanced comes to mind...), so manufacturers willing to talk to the press usually have an angle or axe to grind.

For an alternative analysis:

http://www.marketwatch.com/story/apple-iphone-and-china-fear...

As has been pointed out, New year predictions of falling iPhone demand due to supply chain reports is now an annual tradition. One day it will be true, but in the sense that if you keep crying wolf eventually, one day, there might well be a wolf. I suppose the Journal can claim that they are only passing on reports, which is their job as journalists, but if they want to do so with any honesty or integrity the least they can do is point out the times they Passed on reports of exactly same thing in previous years.

Article is misleading and not well researched. These two comments at bottom of article reveals:

First Foxconn subsidy news is wrong:

The $12 million in payments referred to in this article were actually issued for the 2014 calendar year.

http://newpaper.dahe.cn/hnsb/html/2016-01/06/content_1352344...

http://hn.ifeng.com/a/20160106/4169476_0.shtml

And then this comment says news websites has formed this as habit at the start of the year:

Doesn't this happen every year? Headlines from March 2015: "Apple's iPhone Juggernaut Slowing Down Across The Globe"

(http://www.forbes.com/sites/chuckjones/2015/03/16/apples-iph...

This comes up every year and has been false every year so far.

Largely mobile phones are feature complete. There's very little that can be added that makes it worth upgrading at this point. Unless there's some game changing new feature, expect people to upgrade less as they are completely satisfied with their phones and will keep it until it breaks.

This doesn't seem surprising. The market for smartphones is starting to get saturated and we should expect the growth of demand to slow as we start to crest the top of the S curve. It's pretty clear that Apple is still going to sell a ton of iPhone 7s, probably at a new record rate, but the level of growth just won't be the same.

I went to the Apple Store in my not-so-big town before lunch this morning to return an item I purchased at Christmas time.

Being 11am in January, there was nobody in the mall -- I grabbed a Starbucks (1 customer sitting down) and headed over to do my return. There is a rather long queue in front of the store and 2-3 Apple people taking names to let you in the store. Inside, there are probably about 100-150 customers. It's literally like standing on a train platform -- packed. In the 20 minutes that I was waiting, I counted about a half dozen iPads, 5-6 Macs and about two dozen iPhones walking out the door.

Apple is still on fire -- when I worked retail in the 90s, January-April was death. Hardly any midweek business whatsoever. They probably did more business in a half hour than the CompUSA I worked at in 1998 made in a day in January.

The Wall Street Journal, in the early 1990s, reported that Apple had been bought by Sun Microsystems. They never retracted the story. This may be a generally credible newspaper, but this article sounds just like the constant stream of Apple Doom-And-Gloom I've been reading going back 30 years.

There is a reliable indicator of Apples expected sales-- and it's forward looking. This is the CapEx expenditures, which Apple forecasts out in its reports. When they expect to sell a lot of new phones, they buy more equipment to be able to make those phones. Apple hates to have lack of supply when they release a new product and there is huge demand (And Apple never has huge warehouses of unsold products they have to unload like other companies do.)

The idea that the s products are "lackluster" is silly... they have been following a tick-tock strategy for 5 years now and it has been working effectively, but every tock year we hear about how "nothings different" (because apparently to these people if the case is the same the internals must be too.)

Usually, despite the claim Apple was sold, you don't see this level of poor journalism in the WSJ. But I guess that's the nature of the "news game" now.

They build it up and then they tear it down. Eventually they will be right, but something is telling me (Christmas sales forecasts) that Apple is about to demolish another quarter.

I wouldn't be surprised if most bought the 6 last year due to its larger size and hence have no need to upgrade to the 6s this year. I did and enjoy the 6s, because I upgraded from the 5 (even that jump was slightly underwhelming). I bought it for the camera and screen size.

I'm pretty sure this same story has been told for each major rev of the iPhone. "s-years" tend to be stronger because it is a proven product design, etc., so more people buy them.

Quarterly report will tell, until then, it is only speculation