Apple is planning to reduce the number of iPhone X units it manufactures by as much as 50 per cent, according to a report on Nikkei.
The company is reported to be disappointed with Christmas sales volumes for the top-spec, fancy-pants iPhone X, apparently ignoring the possibility that the $1,000 price tag might have something to do with it.
And anyway, it’s not like no-one bought it – that could not be further from the truth.
According to researcher Canalys, the iPhone X sold 29 million units – that’s actually more than any other handset in the final quarter of 2017.
So what’s the problem here? Is this really a story about poor sales or a story about unlimited corporate greed? What more could Apple want from the iPhone X if it’s already the best-selling smartphone?
And why is that seen as some sort of failure, prompting near-panic on the stock market and Apple shares to nosedive? What the pants is going on?
It turns out that Apple was hoping for unit sales of 40 million for the iPhone X, not the 29 million it actually sold over the Christmas holiday period, because that’s only $29 billion and that’s only 11 digits.
Apple is responding to this disastrously tiny $29 billion sales figure by cutting production of iPhone X from 40 million to 20 million going forward.
But in reality, the quarter immediately following the holiday period is when most companies reduce supply because the market generally demands less anyway.
Maybe reducing it by half looks a bit drastic, but Apple apparently decided to go for a large initial production run and see what the market for the iPhone X was, before it decided on its next production run.
Also, the challenges of manufacturing such an advanced gadget in large quantities may also be a factor.
Many entirely new technologies were either specifically developed for the iPhone X or adopted by Apple for the needlessly over-expensive device.
Some of Apple’s manufacturing partners on the iPhone X project – which includes Foxconn, Taiwan Semiconductor and even Sony and Samsung – have been complaining that there are too many never-been-tried-before technologies in the iPhone, which meant they had to change large parts of their production processes.
But Apple’s infuriating habit of asking too much of everyone does have positive side-effects. Its sensor- and chip-laden iPhones and iPads have sold so many units – more than 2 billion so far – that they have brought down the cost of mass production of those components.
Sensors and chips which may have been too expensive for many hardware development startups in previous times are now affordable because of Apple’s bothersome ways.
And some might say, even if Apple made a loss on the iPhone X – unimaginable as it seems – it’s a project that a company like Apple should continue with because it’s like the big car companies and Formula One racing.
None of the big car companies makes any significant amount of money directly from Formula One racing, but they get to test their most advanced technologies for use in prototypes and future production cars they might release to the mass market.