Advertisement

Blog

iPhone Forecast Raises Eyebrows

While tech geeks may be bummed that Apple didn't introduce a new hardware product at last week's developers' conference, some in the electronics supply chain are still scratching their heads wondering how the company's iPhone 5 forecast is holding up.

News from the conference focused on the iTunes Radio service and the iOS7 unveil and got the iPhone 6 rumor mill spinning again, but other reports raised some supply chain issues worth watching.

A couple issues causing minor headaches could be linked to higher-than-needed order targets and iPhone 5 production delays. Much of the head-scratching appears linked to Citi analyst Glen Yeung's recent research note, citing Citi's “field work in the hardware supply chain,” a report major news outlets around the world picked up.

Take this report in International Business Times, citing Yeung, for instance. The analyst believes Apple is forecasting an 80 to 85 million iPhone production run (a combined number for a mix of iPhones including iPhone 5, iPhone 5S, low-cost iPhone, iPhone 4S) during the second half of the 2013 calendar year.

But, as IBT reports, Yeung also thinks Apple won't hit this number. Pointing to discussions with suppliers throughout the electronics supply chain, there's evidence that the number will be closer to 65 to 75 million units, and Citi is forecasting 68 million, the paper reports.

As quoted by IBT, Yeung says, the skepticism is due to “ongoing iPhone production order cuts through June (because of higher-than-expected 1H13 iPhone inventory), Apple's typical pattern of setting a higher-than-needed order target, and a modest delay in iPhone 5S production” of about two to four weeks probably related to display issues.

A DigiTimes story published this week lends some credence. Citing unnamed sources, the paper says cover glass makers and backlighting module makers are expected “to see their shipments decline by as much as 60 percent in the second quarter of the year as Apple readjusts its reserves but are later expected to bounce back in the following quarter when Apple prepares to launch new iMac products.”

Lone wolf
Sure, we could dismiss this as one guy's take on the situation, and his take happens to be bearish one. There are plenty of other analysts who are more upbeat in their predictions.

Frankly, though, it's not about whether or not an analyst is right. It's whether or not the supply chain — and all the planning that goes into it — is working right.

The more interesting issue is the repeating nightmare that haunts the electronics supply chain. Doesn't this statement — “Apple's typical pattern of setting a higher-than-needed order target” — set off bells and whistles?

It's the cat-and-mouse supply chain game that forces suppliers to figure out which forecast and order projections are right, to place a bet on many parts will actually be needed by top-tier customers (who also have no good way of accurately forecasting demand), and to plan an appropriate supply chain.

The difference between 65 and 85 million devices is a pretty significant number. And, that's just a bet being placed on one company's projections. The complexity gets worse when you multiple it across the entire supply chain.

55 comments on “iPhone Forecast Raises Eyebrows

  1. Daniel
    June 17, 2013

    Jennifer, Apple had announced about their new software iO7, but so far they hadn't made any announcement about their new version of IPhone (v6). Any update about this?

  2. Ashu001
    June 17, 2013

    Jacob,

    It genuinely amazes me how much time we (Supply Chain Watchers) spend Analyzing Apple today.

    It really does.

    If you really wanna see a Great Company (doing really awesome stuff in the Supply Chain Space) today;You have to see Samsung.

    Without a Doubt that company has not just Eclipsed Apple but Lapped it over and over again!

    Regards

    Ashish.

     

  3. Ashu001
    June 17, 2013

    Jennifer,

    I am most amazed that Apple still continues to churn out such Over-charged Advisories/Targets for their Over-priced Phones.

    Just look what the France Telecom CEO had to say recently

    http://www.bloomberg.com/news/2013-04-03/france-telecom-ceo-says-frugal-buyers-threaten-sales-of-iphone.html

    Let's see now-Europeans Find the Iphone Expensive,Japanese find the Iphone Expensive ,most of Asia and Africa is too poor(Yes its true,even today) to afford the Iphone ;which leavs us with just North America.

    Even here I have seen Most consumers THINK TWICE before splurging on a New Iphone when they can get the previous generation phone for practically free today.

    Simply moving to a Budget Iphone alone will not help matters,they have to innovate better than the best and also Cut prices on ALL their products.

    That's the only time you can see some Growth in Apple Sales today.

    Else its all DOWNHILL from here.

    Regards

    Ashish.

  4. Wale Bakare
    June 17, 2013

    If i may also say this, how would the new features of the expected iPhone 6 hold it against Samsung S4? It's been speculated to have the next iPhone  to feature Retina or IGZO screen display, A7 quad core chip processor, iOS 7, 128GB internal storage, 13 mega-pixel camera, and longer battery life.

    What about wider screen and price?

  5. Wale Bakare
    June 17, 2013

    >>most of Asia and Africa is too poor(Yes its true,even today) to afford the Iphone ;which leavs us with just North America<<

    In the last few years most Africans were struggling with high end phones, iPhone especially but there's a big hope for Apple in Africa markets now on. Although, it needs to have a presence there so as to push its market forward there. Majority of people still facing challenges on its software in particular.

  6. elctrnx_lyf
    June 17, 2013

    Demand forecast of Apple is critical for many suppliers along the chain. If there is any difference in the projection and actual volumes could cause huge disruption in revenue of the suppliers. This will create jitters to any supplier.

  7. Ashu001
    June 17, 2013

    Wale,

    I look at the latest features in the Iphone and Its always atleast a Generation(if not more) behind the Samsung Galazy Series.

    Apple has to work way harder and deliver much better Quality at much lower price if it has to catch up with Samsung(& even Nexus-Google) today.

  8. Ashu001
    June 17, 2013

    Electric,

    Its not just Apple but any of the Big 5[PC and Smartphone] Vendors are big enough to create massive Flutter in the market if their demand falls below expected rates.

    We need to stop over-doing the Apple fixation here.

    The Electonics Industry is no longer just about Apple.

  9. Ashu001
    June 17, 2013

    Wale,

    That sounds good to hear.

    Its good to see that the Benefits of the Resource Boom (in Africa) thanks primarily to China's over-sized Demand has benefitted the Middle-Class there.

    Unfortunately the Chinese Boom is coming to a close now,which means its going to be more or less entirely about Internal Demand in Africa now.

    Which means African Services for the African People.

    How does the Service Sector stack up there today?

    I am not surprised to hear Apple messed up one more potential Growth market in Africa-Thats how its been for last few years with Apple.

  10. Tom Murphy
    June 17, 2013

    It seems like the Apple supply chain, which was running like clockwork under the company's CEO Tim Cook before Steve Jobs' death, has slowed, particularly with regards to new products.  This is have a profound impact not only on Apple's sales, but on competitive supply chains and all the parts used in both Apple phones and those made by companies like Nokia, Samsung, even Rim.   

    I sense a change in leadership.  Do others agree?

  11. Tom Murphy
    June 17, 2013

    Tech4People: I absolutely agree. Apple's role in the growing smartphone market is only as significant as its share, which appears to be shrinking.

  12. Wale Bakare
    June 17, 2013

    I think Apple is more than satisfied with its fanbase and not bothered about gaining new followers.

  13. Wale Bakare
    June 17, 2013

    >>I sense a change in leadership<<

    @Tom, if happens eventually do you think an insider would do better than having someone from outside?

  14. Mr. Roques
    June 17, 2013

    It must take a lot of guts for Apple to release a forecast. For any company actually. Do suppliers wait for Apple to place an order or are they required to trust them? What happens when one single element backs up the entire operation? Everyone loses?

  15. Lavender
    June 17, 2013

    Wale,

    Despite the large fanbase, the strong growth momemtum of Samsung and Chinese' manufacturers still post large threat to Apple. It seems Apple has stopped in adding new fans, which acturally is a kind of failure in today's world. 

  16. Anand
    June 18, 2013

    It must take a lot of guts for Apple to release a forecast.

    @Mr.Roques, I agree with you. Its pretty to hard to release a forecase especially when the economy is not doing so good and when Android mobiles are slowly capturing bigger market share.

  17. Anand
    June 18, 2013

    the strong growth momemtum of Samsung and Chinese' manufacturers still post large threat to Apple.

    @Lily, ver true. Infact according to research firm IDC Samsung grabbed more smartphone market share from archrival Apple in the latest quarter, with sales of its phones jumping to account for one third of the global market. I am sure Apple will face such stiff competition which will impact its sales.

  18. Anand
    June 18, 2013

    I think Apple is more than satisfied with its fanbase and not bothered about gaining new followers.

    @Wale, but the fact is Apple is growing lot slower than Samsung. For example according to reports Samsung user base increased by 76% whereas  Apple user base increased by just 29%.

  19. Anand
    June 18, 2013

    I sense a change in leadership.

    @Tom, I think lot will depend on how the market will react to the next iPhone release. If sales of next iPhone doesn't impress then I am sure Apple will seriously think about change in leadership.

  20. Anand
    June 18, 2013

    The Electonics Industry is no longer just about Apple.

    @tech4people, so true. Apple's clout in the electronics world could be gauged by how easy it is to connect devices tailor-made for a connection to an iPhone or iPod. But looks like Apple's iron grip on the digital accessories in hotel rooms, store shelves and living rooms is starting to slip giving Apple customers more freedom to switch to other smartphones.

  21. Anand
    June 18, 2013

    I have seen Most consumers THINK TWICE before splurging on a New Iphone when they can get the previous generation phone for practically free today.

    @tech4people, I totally agree with you. People think twice before buying costly phones like iPhone and Galaxy s4 because they are getting similar features  in other smartphones at 50% discounted prices. For example in India Micromax mobiles are very popular because they offer the same features as that of top end phones at very less price.

  22. Ashu001
    June 18, 2013

    Tom,

    I agree.

    Apple's market-share is shrinking very-very fast today.

    Its a simple matter of Cost vs Value[As another Commenter here clearly pointed out ];if you can get more or less the same Feature-Set for Half the price;Why on earth would anyone Splurge their Hard-earned Money on an Over-priced(&over-rated) Gadget like the Iphone???

    Makes one wonder .

     

  23. Wale Bakare
    June 18, 2013

    >>For example in India Micromax mobiles are very popular because they offer the same features as that of top end phones at very less price<<

    Do you think Apple really interested in emerging markets? May be issues about  risk takers vs goal getters.

  24. FLYINGSCOT
    June 18, 2013

    Does anyone have the latest cost estimates for the Iphone 5, 5s and 4s.  I would not be too surprised to see the 4s costing nearly the same as the newer models.

  25. Tom Murphy
    June 18, 2013

    I'm in the SF Bay Area and, on a daily basis, I witness the unbridled — almost cultish — devotion to owning an iPhone vs a feature-loaded Droid. The question of value for some of these consumers has become overshadowed by brand.  However, we've seen this before.  It wasn't long ago that most iPhone owners were addicted to their “crackberries.”  So it's clear to me that most – though not all — of Apple's smarthphone marketshare could be at risk.  IMHO, it needs a major advance in phone technology to hang onto its share.

  26. Ashu001
    June 18, 2013

    Wale,

    Wow!

    If that really is the case,Then Any(&every shareholder) of Apple is in BIG-BIG Trouble!!!

    Also one should'nt forget this fundamental fact about Technology-Complaceny is the Beggining of the End for most Tech Companies.

    It seems Apple is also following through this(well trod) path today.

    Try explaining that to all the Apple Fanboys out there!!

  27. Tom Murphy
    June 18, 2013

    Wale:  It may be splitting hairs, but I think Apple may be “interested” in emerging markets but poorly positioned to compete in them.  Emerging markets will go to those companies that can provide the cheapest, feature-laden phones.  That is not Apple's game.

  28. Ashu001
    June 18, 2013

    Tom,

    The way I look at it is like this-There will always be the FanBoys(and you can be assured they will continue to remain Loyal fans atleast for a while).

    However,for the vast majority of Smartphone users out there;Functionality ,Practicality and simply Ease of Use score over everything else.

    On all these issues today;I wonder(and so do most ordinary Consumers who already have a Decent and perfectly fine working Phone-The Big Question is primarily this-

    “Why Upgrade to the Latest Iphone?”

    What is so Great/Super-awesome about this phone that I don't have in my old Phone?

    Apple has unfortunately failed to Answer this Question effectively enough today.

    I am reminded of this Video from Jimmy Kimmel(Highly recommended if you have'nt seen it previously).

    http://youtu.be/rdIWKytq_q4

    Regards

    Ashish.

     

  29. Ashu001
    June 18, 2013

    Anand,

    It has everything to do with Apple's Poor Corporate Behavior so far.

    For far too long Apple has treated both Consumer and Corporate Concerns as nothing;For them to remain Relevant today that has to Change.

    ANd Change Fast.

  30. Tom Murphy
    June 18, 2013

    Ashish: That video is hysterical! Thanks for sharing that!

    People see what they want to see, and believe what they want to believe.

    On the other side of the coin, I think there are some really good products — the Nokia Lumia and (yes, really) the Surface Pro — that don't get the respect they deserve. 

    Case in point: I read a dozen bad reviews of the Surface and then went to a Microsoft store and tried one.  I found it was far more intuitive and functional than any other tablet (Droid, iOS) I'd tried.  And the price is much lower.  I heard one analyst say, correctly I think, that it may fail in the marketplace but it is raising the bar for Apple and Google.

  31. Tom Murphy
    June 18, 2013

    Tech4 People:  I don't expect Apple's corporate culture to change any time soon, unless the revenue starts sliding and the stock plummets further. Right now, the company is focused on building it's billion-dollar “spaceship” headquarters than on the innovation that made it possible.  What it needs is the second-coming of Steven Jobs. Everyone said it at the time: the company faces a huge challenge without him. Those folks were right.

  32. Ashu001
    June 18, 2013

    Anand,

    My point precisely.

    Does it really matter if your Smartphone has a Camera with 6MegaPixels or with 24 Mega Pixels?

    (Especially when most Social Networking Sites demand Lower Resolution Snaps)…

    You have to think practically and this is where I strongly believe Apple has failed(and Why I also believe Apples so called Value Phone will be a FLOPSHOW).

     

  33. Ashu001
    June 18, 2013

    Tom,

    Hubris is the beggining of the end for any Major Enterprise today.

    You have to remain Humble and Focussed on the End-game constantly.

    This is what happens when Finance/Supply Chain Guys take over a Product Focussed company.

    You lose focus on the Game almost entirely.

    Remember how they established a Hedge Fund to play around with the Billions of Cash they used to generate???

  34. Ashu001
    June 18, 2013

    Tom,

    Don't forget the Xperia Z Series from Sony.

    Honestly there is a lot of cool stuff happening out there on the market which most consumers are unaware of today as they simply get swept up in the Apple-Samsung Wave.

    Sad but true.

    Unless you do your own research effectively you won't get anything independent outside the DUOPOLY today.

    Regards

    Ashish.

  35. Daniel
    June 19, 2013

    “It seems like the Apple supply chain, which was running like clockwork under the company's CEO Tim Cook before Steve Jobs' death, has slowed, particularly with regards to new products. “

    Tom, you are right. After the death of Steve Job, it seems that the entire processes are bit slow and running behind the schedule. I think Samsung is the biggest gainer from this delay.

  36. Tom Murphy
    June 19, 2013

    No question, Jacob. Samsung and Apple are fighting a powerful duel on the world stage — in stores, in courts, in the supply chain.  And you know what happens when two giants fight? They create a market opportunity for a third player.  Keep your eyes open: we may see Nokia or a Chinese vendor seize this opportunity.

  37. Tom Murphy
    June 19, 2013

    Good thinking Ashish. I blame the tech media to some extent for this.  It seems like every time Apple or Samsung burp, the media falls all over itself to analyze what it means.  I hate that, and you won't see much of it here at EBN.  We cover the market leaders, but in proper perspective.

  38. Tom Murphy
    June 19, 2013

    Ashish:  It's a curious thing that Apple now has so much cash that, with a crafty hedge fund manager, it can actually generate large profits through investments.  When that is the case, the incentive to spend that cash in high-risk innovative development is lessened.  I hope that Cupertino won't go down that road.

  39. Ashu001
    June 19, 2013

    Tom,

    I Agree wholeheartedly!!!

    This is what makes EBN so special for the Vast majority of the Readers here!

    Its a massive-Massive Breath of Fresh Air in the Electronics and Supply Chain Space!

    Keep up the Good Work!

    Regards

    Ashish.

    P.S

    When it comes to MSM(Mainstream Media Coverage) of the Big Two;its all Down to the fact that  they are Major-Major Advertisers on MSMs and Nobody (and I mean absolutely No One);wants to Bite the Hand that Feeds you.

  40. Ashu001
    June 19, 2013

    Tom,

    That can be both a Blessing and a Curse(if you don't know how to utilize the cash pile well).

    I am reminded about a Company I read about recently in the Journal.

    Reliance Industries-They own the World's Largest Crude Oil Refinery and its Chairman is amongst the Richest Men(with the Most expensive House on Earth).

    For the last two-three years they have been making more Money from amongst their Treasury Division(which basically means all their Profits are getting reinvested in Government Bonds) than from their Core Business.

    This very Issue created a lot of Heartburn amongst Institutional Shareholders in the Company and almost led to a Shareholder Revolt.

    Finally they placated Shareholders by annoucing Major Acquisitions as well as Major Plans to Diversify into other Businesses which will Hopefully provide better ROC and ROI.

    But I am surprised I don't see similar Heartburn amongst Apple Shareholders over this large Cash pile.

    Inspite of the fact that they are in such a Competitive Business that its so easy to get obsolete really soon.

    Guess time will tell what happens next.Right?

     

     

  41. Tom Murphy
    June 20, 2013

    Tech4People:  The really interesting thing about Apple and many other US tech companies is that they have all that money “trapped” in another country. If they bring it home, they will face tax on it and have to pay their fair share.  It is ironic that at a time the US government is cutting services to the poor, these companies are not paying tax that could help pay for those services while selling high-priced phones to those who can afford them.   This is not, imho, the American way.   If I earned money overseas, I would pay a US tax, so why shouldn't a corporation?

  42. Daniel
    June 24, 2013

    “Samsung and Apple are fighting a powerful duel on the world stage — in stores, in courts, in the supply chain.  And you know what happens when two giants fight? They create a market opportunity for a third player.  Keep your eyes open: we may see Nokia or a Chinese vendor seize this opportunity.”

    Tom, if Nokia will be able to gain out of it, we are very happy. I want to seek that Nokia in prime position once again.

  43. Ashu001
    June 24, 2013

    Tom,

    I will be honest with you here.

    Individual Taxpayers routinely get screwed by the Government in America(Remember that America is the only Government in the World which Taxes its citizens based on WORLDWIDE Income as against Income earned in America);because Citizens have no say/Lobby in Governance.

    I know so many American Passport Holders who have never even been to America yet have to Pay Taxes to Uncle Sam on Income Earned in Europe/Japan/Asia,etc.

    Only America does this.

    Its a Big Joke the platform on which Obama was elected(supposedly to take care/help empower  the people backed by Grassroots Support) and what he's doing-Pandering to One Lobby after another(if its not Banking,Then its the Auto Industry,If its not them then the Labor Unions,else its Big Pharma,etc,etc)….

    In contrast,Corporations routinely get One Taxbreak after another because of their Strong Lobbies in DC.

    I could give you Dozens of examples of this case but this case of Facebook will best illustrate what I mean here.

    http://ctj.org/ctjreports/2013/02/facebooks_multi-billion_dollar_tax_break_executive-pay_tax_break_slashes_income_taxes_on_facebook–.php

     

    There is also another very fascinating chart I would like to share with you-The ROI on Lobbying is way-way higher than what you can get by doing Honest Work today.

     

    http://unitedrepublic.org/big-pharma-gets-77500-return-on-lobbying-investment/

     

    Tells you a lot does'nt it?

     

    Regards

    Ashish.

  44. Ashu001
    June 24, 2013

    Jacob,

    Quite right.

    There are a lot of Smaller(less well known players) who are out-manueovering Apple and Samsung(primarily on Cost but also on feature-sets) in Fast growing Emerging Markets like Africa and Asia today.

    What Apple has figured out(very,very late in the game) is that there are many Consumers in Asia and Africa for whom Affording a Iphone today is but a dream because they are too expensive.

    If only they are figured this out earlier and come out with cheaper phones(retailing for no more than $150);they could have been a much-much bigger player than they are today.

    Regards

    Ashish.

  45. Daniel
    June 26, 2013

    Ashish, I too agree that cost is a major factor. But in IT world, technocrats are just behind the brand values. For them cost is not a factor, but obviously when coming to common peoples cost is a major deciding factor.

  46. Ashu001
    June 26, 2013

    Jacob,

    True.

    That is why Most Technocrats are routinely out of touch with the Real world thinks and feels.

    is'nt that why we call them Geeks in the first place???

    Regards

    Ashish.

  47. Daniel
    July 1, 2013

    “That is why Most Technocrats are routinely out of touch with the Real world thinks and feels.  is'nt that why we call them Geeks in the first place???”

    Ashish, they know many things but nothing, that's the situation.

  48. Ashu001
    July 3, 2013

    Jacob,

    Basically they behave as if they know everything?

    Correct?

     

  49. Wale Bakare
    July 3, 2013

    >>is'nt that why we call them Geeks in the first place???<<

    May be this:

    Boston University says that iPad, iPhone, and MacBook Air products include an infringing thin film semiconductor device. It's not clear if that's Apple's A6 processor, or some other chip – almost certainly built by Samsung or another partner – but in the antique language of patents, this inclusion causes Boston University “substantial and irreparable damage.”

    Read full article here


  50. Ashu001
    July 4, 2013

    Wale,

    Wow!

    29 Billion in Losses???

    That's a Gigantic amount of losses to suffer for the US Economy!

    Even if we work with the assumption that this is a Higher-end estimate(what do Most Professors know about Markets or the real world???);I still find the Numbers really,really Huge.

    The Article though is Hugely Biased (in favor of Apple).

    Have Apple really infringed on these Issues?

    I guess we will have to leave that for the Court system to decide now.

    Is'nt this why Apple spends so much on Lawyers?

    This is something equally interesting(on Cost Differential of Iphones Globally ) that I came across

    http://investing.covestor.com/2013/04/iphones-are-insanely-expensive-in-russia-cheapest-in-the-u-s

    Tells you a lot about Subsidies and Taxes does'nt it?

  51. Wale Bakare
    July 4, 2013

    I believe there's strong tie between US universities, where inventions do take place and commercial firms. Funding univeristies' reasearches do come from the big players in the industry like Apple, Intel, Microsoft, Google and etc. Just wondering why university like Boston could make this known to the public.

    Nevertheless, If Boston University claim founds to be true. Why hasnt Apple paid or settled royality on that particular technology for so long? Another prolong court battle over patent infringement involves Apple? That's my worry after Samsung/Apple's saga.

  52. Wale Bakare
    July 4, 2013

    >>what do Most Professors know about Markets or the real world???<<

    What do you think about inventions taking place in the universities?

  53. Ashu001
    July 5, 2013

    Wale,

    You are making a lot of suppositions in your post here(which may/may not be true).

    This is why I believe its best for the Courts to decide this issue properly.

    The way I look at it is this is just a way for Boston University to Skim some cash off Apple.

    Why is that?

    The Patent was filed so long ago-Not just that but also Ipads have been selling for over 3 years now.

    Suddenly their Legal Department woke up(citing Patent infringement issues)???

    I find it hard to believe.

    Its just that two years are left before they lose all rights on their patent;Hence their Legal Department is just fishing(like all Lawyers in America;everyone just wants Easy Money).

    Regards

    Ashish.

  54. Ashu001
    July 5, 2013

    Wale,

    If you mean by Research/Patents today;then I agree wholeheartedly(Majority Patents filed by University Professors) but if you say Inventions which have practical use;then the Private Sector  Still Dominates here.

    After all,Work experience matters enormously here.

  55. Daniel
    July 8, 2013

    “Basically they behave as if they know everything? Correct?”

    Ashish, exactly. May be they are brilliant and have a good knowledge about many high-funda things, but poor in basics and with common things.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.