There are a lot of reports and even rumors out there that Apple suppliers are cutting back on the production of parts for the iPhone X. Is this true? Or to what extent is it true? There are a ton of sources giving this kind of information, so either it’s a lot of people exaggerating/making something up. Or there is truth to it. Apple’s earnings are set to be released on Thursday, February 1. The earnings release will focus on Apple’s holiday quarter sales from October to December. They will release official numbers for revenue including income and unit sales for iPhones, iPads, and Macs.
The Wall Street Journal is reporting that some component orders have been cut by as much as 60%. This is caused by the fact that sales for the iPhone X have been taking a hit. If true, what does this mean for Q2 earnings? Probably nothing to be alarmed about. There’s a chance that Apple can still do well in Q2. Apple does make most of its money from the sale of iPhones, but Apple relies on more than just one single model for sales. Sales for the iPhone 8 and iPhone 8 Plus appear to be inline with estimates. It also seems like some of the older, discounted models are still performing well.
It’s also worth noting that even if iPhone unit sales are flat year-over-year, total revenue will likely still spike as iPhone X pushed the lineup to a new price ceiling, with the most expensive iPhone now costing $1149. But let’s talk about this for a minute. Does this even really matter? Sure, sales aren’t great, but in all honesty, should we be surprised? Apple has had a crummy year, in my opinion. There have been a ton of glitches in terms of their software. But also, we have been seeing a lot of products being delayed. Ok, maybe not a lot, but the iPhone X for sure and the HomePod. Which is significant as Apple doesn’t release a lot of products every year. (That’s why I said “a lot”.)
On one hand, I want to say that this is meaningless in terms of what’s going to happen with Apple. But on the other hand, if you only release a handful or products every year, I think you have to be on point with all of them. Not only that, but people are watching Apple very closely. We are very critical of what is coming down the pipes. For whatever reason, as a society, we demand perfection. Including myself. But not because I expect it. For me, I think Apple has painted a picture of themselves, where this is now an expectation. I mean, this can be seen by how hard people are on Apple when something doesn’t work. I’d say me included, but I always try to give everyone the benefit of the doubt. Which is kind of what I’m trying to do here, but it doesn’t always come across that way.
While Apple has had some missteps over the last year. I think (and I hope) they use that to have better quality assurance processes in place. I hope they do more iOS bug testing before they release the latest version. Because they push so hard for the Apple Ecosystem, and that’s what you’re buying when you buy more than one Apple product, they need to make sure that everything is working. Otherwise, people will stop buying your products and your sales will continue to decrease.