What Does This Apple Order Cut Mean?

Apple Cuts Orders for iPhone Parts

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.

The Cupertino, Calif., company has also cut orders for components other than screens, according to one of the people.

Boldfaced emphasis added by me.

Is this the harbinger of Doom I’ve been expecting?

I just don’t know.

Samsung and others have been savaging Apple with appealing new form factors — especially the “phabulous” Galaxy Note — and higher-resolution screens. (Jon Ive can tout how the iPhone 5 is shaped for a human hand all he wants — Galaxy Note owners apparently don’t give a damn about that.)

But still, those are Android. Where are all the apps that iOS has?

If it’s true people with Android phones tend to use far fewer apps than iPhone users, then that huge iOS app library just doesn’t matter to them.

We haven’t seen Windows Phone sell in any significant numbers versus Android, either, so it’s not competition from that.

I’ll be worried when I see reports of Apple cutting iPad component orders by fifty percent. I think that would presage Doom.

Although with Archos coming in to attack Apple with its Titanium and Platinum tablets, maybe that component order cut is simply inevitable.

One thing, though. Now I think we know why Apple allowed Walmart to slash prices on the iPhone back in December. All of us should have seen that as a sign.

Previously here:

Samsung’s Galaxy Note Phone Is A Monster Hit
Is It #Doom #WASF Yet?

Update: BGR out-thought me, noticing this key fact:

But Apple uses the same new display type for both iPhone 5 and the latest iPod touch. Neither WSJ nor Nikkei addressed this, however — both seem to be referring to just iPhone 5 displays.

It makes some sense now. With the iPod Touch going for $299 and $399, it’s more likely that people bought the $329 iPad Mini instead, cannibalizing projected iPod Touch sales.

Doom is once again averted.



Filed under Apple: The Company

2 responses to “What Does This Apple Order Cut Mean?

  1. So the WSJ has adopted the Henry Blodgett approach to reporting? The “news” that Apple was reducing display orders was reported by Taiwanese papers last month, at the same time they were reporting Hon Hai was working overtime to keep up with demand during New Year for only the second time.

    Yes, the iPod Touch sales were probably impacted by the iPad Mini. Also, Apple had yield problems early in the iPhone 5 production cycle and likely raised component orders to cover themselves for rejects on the line. If we assume that problem is fixed, some reduction in components is needed as next quarter is typically slow (people holding off buying in anticipation of a new iPhone a quarter later plus summer is slow anyway).

    If we want to indulge in speculation: Apple has been rumoured to be looking at different display technology for a while. It is possible that they will break the 4, 4S cycle this year and instead of a 5S they could announce a 6 with a new display.

    Anyway, the quarterly results are about to be announced and I suspect they are going to look rather nice, given the sales volume Apple is generating in China.

    Where’s Walt Mossberg when the WSJ needs him?

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