Launching a modest iPhone 8 upgrade on time and delaying the very attractive iPhone X must be a cause of concern for Apple.
If Apple had a choice, the company would have liked to take orders and ship all three phones, iPhone 8, iPhone 8 Plus and iPhone X at the same time. That way, customers could readily balance features against cost. There would be a spectrum of users, especially those holding an iPhone 6.
This chart from Business Insider shows that the iPhone 6 is the most active iPhone as of April 2017. The 6s is next. The iPhone 6 shipped in 2014. And so, with an expected upgrade cycle of 2 or 3 years, one would expect that those who passed on the iPhone 7 are really quite ready for a new iPhone this fall. And the prices are more conventional: $699 for the base model iPhone 8.
That effect, the upgrade cycle and the iPhone 8 pricing may well save Apple amidst the excitement over the iPhone X. But….
A Bad Scenario
On the other hand, the iPhone 8 (family) doesn’t have significant advances over the iPhone 7 (family). Both have the same size and resolution display. Both have equivalent cameras. Both are IP67 water resistant. The iPhone 8, however, has a glass back for wireless charging and the A11 Bionic chip is faster than the A10 Fusion in the iPhone 7.
Is this enough to stir the souls of customers who’ve been hearing about the iPhone X? Will customers who’ve recently spent about a thousand dollars on an iPad Pro consider that also the going price for an awesome iPhone X with a Super Retina 2436 x 1125 OLED display?
And then there’s the success of Apple’s marketing machine which will create demand for a terrific iPhone X which, by all accounts, will be in short supply on November 3rd. Will customers end up being frustrated by Apple’s ability to ship promptly? That, in turn, could affect Apple’s sales numbers for the fiscal first quarter (Oct – Dec). By that, I mean how many customers will wait, bypassing the iPhone 8, and then order an iPhone X—which could be delayed?
Apple gave themselves an extra five or six weeks to build up inventory for the iPhone X. That appears to be a judgment call, balancing expected inventory against a reasonable calendar delay. Will Apple be able to meet demand? In the past, demand for very popular new iPhones have exceeded supply for months, and nothing has been more exciting than this iPhone X.
I doubt that Apple was able to foresee these issues when the 2017 product line was sketched out. It seems, now, as if Apple is doing the best it can to cope. Back when the iPhone X was dubbed the iPhone 8, our Jeff Gamet summarized the issues which have come to realization.
The latest report comes from KGI analyst Ming-Chi Kuo who says OLED production issues will keep the iPhone 8 from shipping until October or November. [Spot on.]
In a report to investors he said design issues with the OLED display and necessary changes to the cameras and sensors are slowing down the process. He also said the Apple-designed A11 processor running the iPhone 8 will use a new 10 nanometer design that’s leading to more potential production delays. [Well called.]
Coping With Customer Zeal
My surmise is that Apple would have preferred to roll out all three iPhones at the same time. Because that’s not possible, Apple will be watching closely to see how iPhone 8/Plus orders go.
One piece of non-scientific evidence comes from 9to5Mac readers. (Non-scientific because those eager to acquire an iPhone X opted in. That’s in contrast to a random sample from the population.) In this poll, the preference for iPhone X is about 9 times that of the iPhone 8.
Whether that’s true of the customer population as a whole will likely mean the difference between a normal iPhone Apple quarter and a disappointing one.