Apple To Cut 2017 iPhone X Shipments In Half As Even Wozniak Says "I'd Rather Wait"

Tyler Durden's picture

After reports the iPhone 7 was outselling the iPhone 8 sent Apple’s stock lower on Wednesday, more troubling news about the company’s complication-plagued supply chain for the iPhone X, its special tenth anniversary model, emerged this morning courtesy of Nikkei, which is reporting the company has halved its planned shipments for the number of iPhone X’s it will sell by year’s end to 20 million.

Initial shipments of Apple's highly anticipated iPhone X are expected to total around 20 million units, only half the planned amount for this year, The Nikkei has learned. The reduction stems from the California-based company's struggles to solve technical issues with components supporting the model's new face authentication feature.

 

The X is the first iPhone to adopt an organic light-emitting diode display and do away with the home button. At the beginning of mass production, defects occurred in the bonding process for the OLED panels, and although the problem was largely resolved around July, problems continued in assembly of the face authentication module. Manufacturers were only able to improve the first pass yield -- the number of good units - toward the end of September.

 

The iPhone X is currently being produced at a rate of 10 million units per month, but with the sales scheduled to begin on Nov. 3, Apple is likely to only provide 20 million units this year.

Since the market has largely ignored the news, the production troubles could benefit the company by restricting supply at a time when demand for new iPhones appears unusually weak. Last week, Taiwanese media reported Apple had cut its iPhone 8 orders in half as the new iPhone model undersold its older peers, an unusual phenomenon for Apple. Some attributed it to the fact that it appeared fewer Americans were exercising upgrades for their data plans, a two-year cycle that tends to be a major sales driver. Others said users were delaying purchases to wait for the iPhone X. Whatever the reason, early indicators suggested demand was particularly weak in China, which Apple has repeatedly cited as a key growth market.

The iPhone 8 and iPhone 8 Plus accounted for a collective 16% of total U.S. iPhone sales during the third quarter, according to Consumer Intelligence Research Partners, far behind the iPhone 7 and iPhone 7 Plus, which accounted for 43% of sales when they went on sale in September 2017.

The Apple X is expected to open for preorders at midnight Pacific Time Friday. And a survey by brokerage Bernstein suggests that the weaker demand for the iPhone 8 could be related to the fact that the iPhone X is expected to receive substantial, but not exceptional, demand, with about a quarter of the survey’s respondents saying they planned to buy the phone. But if this is accurate, it raises the stakes for Apple to resolve its supply issues quickly, before some buyers, unwilling to wait for the new phone, which is priced to start at a whopping $999, to settle for the iPhone 8 or, worse, a Samsung.

Many of the respondents to the Bernstein survey said that, though they were “excited” about the iPhone X, they didn’t intend to purchase it. However, an overwhelming majority still intend to choose an Apple device. "Consumer loyalty to iPhone remains remarkably strong, despite persistent complaints about high prices and worries about declining innovation, with only 3 percent of respondents stating that their next phone would *not* be an iPhone," Bernstein said.

Most of the production problems involving the iPhone X are related to the phone’s breakthrough dot projector, a component in the 3-D sensor module used for facial recognition, which famously malfunctioned during the phone’s unveiling demonstration last month.

According to Nikkei, Apple is believed to have already started negotiations with other manufacturers over additional production of certain parts, and there is a chance that output volumes could improve rapidly.

The company is expected to confirm details about the early sales of the iPhone 8 when it reports fourth quarter earnings early next month. Despite the bad news, the company’s shares were up slightly in premarket trading, though they remain below an all-time high reached in early September.

And in an ironic twist that might shed some insight on why the Apple 8 hasn’t proven as popular as its predecessors (well, aside from the ‘delayed demand’ theory), Apple co-founder Steve Wozniak said he's not in a hurry to buy the next iPhone, even though he usually rushes to buy one the first day they’re out, CNBC reported.

"I'd rather wait and watch that one. I'm happy with my iPhone 8 — which is the same as the iPhone 7, which is the same as the iPhone 6, to me," Wozniak said, speaking from the sidelines of the Money 20/20 conference.

 

"For some reason, the iPhone X is going to be the first iPhone I didn't — on day one — upgrade to. But my wife will, so I'll be close enough to see it."

There you have it, folks.

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medium giraffe's picture

You wouldn't be saying that if your life was so devoid of meaning that you had to define it by excitedly purchasing mass produced trinkets with which to express your 'individuality'.

crazytechnician's picture

They should bring out the iPhuck XXX , shaped like a dildo and only shows porn films with a local slut finder app ..

Whoa Dammit's picture

Wozniak needs to buy a refrigerator with facial recognition that will lock him out after a certain point. 

Apple is cutting supply to create artificial demand because there is no real demand.

j0nx's picture

$1100 for a phone? Not in this life.

TIMBEEER's picture

In my country the base warranty for an iPhone is only one year. Can that be true? Pay 1100 (USD) for a phone with a mere 12 month warranty? Sounds bad for those dreamy slowflakes who buy them on credit.

Agent P's picture

But it can turn your face into an animated panda...in real time!!!

The Dreadnought's picture

I'm going back to Blackberry... 

gespiri's picture

Bullshit!  It's not due to technical issues......it's because the market is exhausted.  

There is no reason to buy a $500+ phone every two years.  The iPhone X is more expensive than my very useful 1995 Mazda Miata.  Let's put things into perspective here.

BRING BACK THE MOTOROLA STARTAC PHONES!!

Consuelo's picture

 

To this day, nothing beats the phone-line sound of analog...    Talking on my old StarTac (special edition black, by the way...), was nearly indistinguishable from speaking to someone on a line phone.   Even long distance calls from cross country were crystal clear.

truthalwayswinsout's picture

This is what happens when the gay boys run a company.

At Apple you have to be a gay boy to get a promotion or to be the boss. 

 

E.F. Mutton's picture

Wozniak used to bang Kathy Griffin.

All together now.....ewwwwwwwww

baldknobber's picture

Who was the loser in that transaction?

kbohip's picture

I actually had to look that one up as I thought you were joking.  I think that might be the bedroom scene shown daily in hell.

bcking's picture

How much longer can they ride on the fumes of Steve Jobs' corpse. Apple sucks.

A. Boaty's picture

That depends on how many insanely great ideas he had left over.

PrivetHedge's picture

His most valuable 'great ideas' were 'do I like this?' and 'Would I buy this?'.

Because unlike Tim, Steve was actually INTERESTED IN THE PRODUCT.

The answer to those questions for a lot of products now is 'no'.

Infinite QE's picture

Only thing keeping Apple afloat is central bank buying of their stock via proxies.

Endgame Napoleon's picture

Apple is a company that produces high-quality, attractive products, but it would make more sense to charge more when manufacturing the high-end products here in the USA, getting the Made-in-the-USA sales. Unfortunately, you cannot buy any tech product that is 100% made here, and if you can in the future, it will be because mostly robot workers made it.

The iPhone X’s depth-producing camera with full shading capacity sounds good enough to justify the purchase for the top 40%, the only group of Americans who have the money to splurge on much of anything unless you count the welfare/taxfare mommas, with their $6,269 pay-per-birth, child-tax-credit reproduction bonuses in April.

The month of April would be a good time to launch the X. The single mommas with the highest womb productivity can afford to purchase 6 paid-in-full iPhone Xs with just one year’s refundable, sex-and-reproduction bonus from the US Treasury Department, as can illegal aliens with a sole, male breadwinner.

Those child tax credits are given out by the billions to mommas, working hard at the welfare-reform minimum of 20 hours per week to stay below the income limit for welfare. Due to the ease of working for nothing when unearned, womb-related income covers major bills, those mommas and illegal aliens drive down wages for Americans who have nothing but earned-only income to cover all household bills, including unaffordable rent.

Many Americans are facing rent that absorbs half or more of their pay, with no $6,269 checks from Uncle Sam for copulating and having more kids than they can afford to feed. They will have to put shelter and groceries ahead of the iPhone X or any other luxury, regardless of how much harder they work by comparison with the pay-per-birth citizens and noncitizens.

But marketers should take note: Those child tax credits are freed up for mom luxuries due to their free or reduced-cost rent, their free EBT food, their free electricity and their monthly cash assistance.

The tax-cut propsal extends this child-tax-credit, sex-and-reproduction cash infusion from the Treasury Department to married mommas with spousal income that covers their rent/house note. Hey marketers: Those moms, too, will get more in a tax-time, womb-productivity bonus than many single, childless workers are paid for 4 months of full-time work. The moms will get their $6,269 checks when just working part-time jobs.

From what I have noticed, most of the single mommas prefer to spend their pay-per-child tax cash on trips to Florida with boyfriends and master bedroom furniture at Ashley Furniture. Babies — the justification for those yearly, tax-cash, sex-and-reproduction windfalls — might prefer the iPhone X. Who knows?

The married mommas might choose to spend their $6,269 reproduction bonus on a top-grade phone, especially since hubby’s income pays for the Florida trips and furniture. It is possible.

The single, childless citizens, the noncustodial parents and the older, single moms, with just one earned-only income to cover rent, groceries and everything else, get tax returns of $300 or less when working full time at the same wage level as the moms. Our tax return would buy 1/3rd of an iPhone X, while the part-time-worker moms, particularly those with the highest womb productivity, can purchase 6 full, top-of-the-line iPhone Xs with their yearly child tax credit.

Oh well. The facial recognition is a drawback for me, anyway. I do not regard the iphone X as a husband substitute, not even a substitute for a bad husband. I do not want my phone to recognize my face. Good thing dual, high-earner couples and low-earning, part-time-worker moms, whether single or married, can can buy the iPhone X with earned or unearned, womb-productivity income, turning that feature off if they prefer less intimacy with their phones. Intimacy with a phone will not get you a $6,269 check from Uncle Sam each April on top of free rent, free food and monthly cash assistance.

PrivetHedge's picture

A decent Canon or Nikon compact for $2-300 will wipe the floor with an iPhone for optics. The 30X optical zoom helps too...

absente reo's picture

Too much bloviating verbiage. If you have a point to make, make it.

buttmint's picture

...Napolean...

spot-on diatribe! I guess you are not running for office in NiggahTown soon, eh?

PrivetHedge's picture

I'm still waiting for the world's richest company to update the Airbook 13 to a decent screen. None of their other laptops have usable ports or the magsafe so are rather pointless.

Seriously - how many $billions does it take to turn the Macbook 12 from a potential winner into an epic failure by missing out USB ports and magsafe? No wonder Apple's not selling anything - they're totally failing to make anything people want to buy.

medium giraffe's picture

Buy an intel based laptop, stick a locked down version of linux on it, sellotape up all of the vents and you have yourself a new macbook for 1/3rd of the price.  You'll have enough left over to buy a few black rollnecks and pumpkin lattes.  Maybe even some advocado toast.

You're welcome.

PrivetHedge's picture

The Dell XPS 360 with Linux looks about a decade ahead of the Apples now.

Lenovo also make far better quality folding laptops.

Apple's laptops have an LCD strip on the keyboard. Others have decent screens, touchscreen folding, bigger storage for less, USB ports etc.

medium giraffe's picture

And since Apple moved to Intel chips, what difference does it make now, really? You pay a lot of premium for the same product if it has an Apple logo on it. 

I like Lenovos, my favourites being the old Thinkpads (previously IBM).  I have one from 2004 that is still going strong, has been dropped god knows how many times, nice clacky keyboard and pointy nipple, all ports still work, screen is fine.

It's worrying for Apple that these technologies and devices have been around so long now that consumers are moving from 'oooh' to 'meh'.  Whilst they have shored up the technology-as-fashion consumer end of the computing market, they've made no inroads into business computing - the very market that has given IBM, MS, Cisco etc such longevity. 

Apple used to make world class graphics and media production machines - the old Power Macs with ARM RISC chips, but even that market has slipped away from them.

It's not looking great.

Ralph Spoilsport's picture

The nice thing about installing Linux on Thinkpads is that everything will work with no screwing around with drivers. I'm still running a T420 (i5) with Linux Mint.

Two Theives and a Liar's picture

I also carry a bootable live USB stick with Knoppix. Totally self-contained. Just tell whatever PC's BIOS to boot it and you have "your own computer" on whatever happens to be around ;)

Two Theives and a Liar's picture

So true!

I like to rock the older "indestructible" Thinkpads with Knoppix or Lubuntu. People just don't know how much they can do for little to no $$$.

I've been looking into a Linux phone. Any fight club members trying it?

brushhog's picture

I dont do cell phones but I heard the new Iphones are like 1k. People are taking out loans to afford them. Ridiculous.

Griffin's picture

I guess those phones are so expensive because they are not just phones, but also small computers.

How much you spend should be determined by how you intend to use the thing. 

 

medium giraffe's picture

They are small computers, but it's not like you can really leverage the advantage of carrying a small computer about when it's locked down with a closed system and limited software ecosystem. 

I used to log into servers via ssh, write scripts, run scripts and do some significant O/S customisation with my old android phones - no chance of that with an iphone.  But now I can't bring myself to trust google much either, especialy since they moved further away from their open-source roots and closer to .gov.

Back to hefting a laptop and a dumbphone - other options are now too unpalatable.  Progress!

Haloween1's picture

The latest IOS update took away some nice features on my wife's Iphone SE.  It looks even more like a toy now, with the new GUI and the loss of some features such as field test mode.  She wanted to put a new battery in it, but the only ones available are knock offs which start deteriorating after about a month.  The OEM battery is tightly controlled by Apple, requires certification from an authorized tech outfit before they'll release a battery for replacement in her phone.   It feels like the phone isn't even her property.  In fact it's the playground of Apple and the Government and a trove for hackers and spies, not much different from our crusty old HP laptop.  Fortunately she only uses it to download dinner recipes from braindead Facebook, so I guess I'll have to live with it.

 

Ralph Spoilsport's picture

The new IOS update also screwed up texting on the SE. 

PrivetHedge's picture

So why is the quad core Raspberry Pi so cheap then?

That's basically the computer in an iPhone, right there.

HenryKissingerZuckerberg's picture

I guess those phones are so expensive because they are not just phones, but also small computers. How much you spend should be determined by how you intend to use the thing.

yeah right, you NEED an iphone X because... millenial bs here

Last of the Middle Class's picture

Suddenly I'm happy with my iphone 6 too. People are not buying the 8 because of production issues like people aren't going to NFL games because of the weather. It's a saturated market of people who want their facial recognition data in the hands of Apple. Imagine that. For that matter I don't want to be anywhere near an 8 or X phone. Just exactly how many facial recognition images does it store? And where? This issue is really the turning point for Apple, they're in the intelligence business selling shiny new iphones for the uninitiated.

Debugas's picture

last phone i bought was Huawei for 200 eur

NickyGall's picture

Apple thrives on one thing - the world's need to have the "latest".  Without that, it is nothing more than a modest "toy" production company.

Bai Suzhen's picture

For the last 2 years, maybe 3, the latest phones offer no real world improvement over what went before... with the possible exception of the new Samsung Galaxy Note, which evidently doesn't blow up and catch fire like the one it replaced.  So, yeah, that's an improvement.  These companies have to face it, the era of the cell phone as something desirable is over.

Mr.BlingBling's picture

What marked the peak was Apple’s new “spaceship” headquarters.

It’s just like when a real estate developer buys a Gulfstream; you know the foreclosures will soon follow.

PrivetHedge's picture

The building of a new vanity office HQ ALWAYS heralds the fall of a company. 

It's the outward visible sign that they stopped listening to customers and are only thinking about their own corporate bullshit.

Consuelo's picture

 

 

What you're looking at there is a future FEMA Panopticon...    When AAPL's bubble finally bursts (this has to happen every 20-odd years or so for a company to 'reset'), they'll sell that multi-$Billion dollar, highly unnecessary pet project for $pennies on the dollar to .gov

 

 

ThanksIwillHaveAnother's picture

Phones in most cases are no longer subsidized so you have to pay full price upfront.   The people who live month to month with no savings find this a problem.

ThanksIwillHaveAnother's picture

If I get a iPhone 10/X, how do I unlock it while driving and the phone is in its holder on the middle of the dash???

pods's picture

$1000 for a phone that could help put you in jail? Where do I order?

pods