Apple Reportedly Cuts iPhone XS and iPhone XR Production Orders Amid Lower-Than-Expected Demand

[Thresher]

iPhones are just not as exciting anymore. It's more like a commodity nowadays. Even the iPhone 7 does everything the average user needs, so there is little preassure to have the latest and greatest. Plus the devices are super durable.

I have been thinking the same thing. I'm just not interested in their PC products anymore. I hated the keyboard enough on the new MacBook that I returned it. I got the X last year and returned it (type was too small, did get the XS Max though). New iPad Pro is a meh since my 3 year old Pro still works fine. I sold my iMac and I'm not replacing it because I don't need another screen and the Mac Mini doesn't have dedicated graphics.

If I didn't have all my data on an old MacBook Pro, I'd probably get a Windows laptop. I already have a Windows desktop. I am not sure who Apple is trying to appeal to. Anyone that can afford a Mac at this point either sees it as a luxury good or sees that it's a terrible value and buys a loaded Windows machine for much less. And Windows laptops are the crap they used to be, either. Apple has created a premium segment and the Windows manufacturers are stepping into it.

 

[I7guy]

I am using a Note 9 and an iPhone X simultaneously. Skype works beautifully.

As I said, I don’t have to negotiate with 50 people some third party solution for Group FaceTime or even video calling. It all just works and Group FaceTime is awesome.

 

[harrisondavies]

Price lower = Sell more. Doesn’t take a genius. Everyone mass email Tim.

 

[Radon87000]

So let Samsung buy them. Samsung is not buying Huawei.

Those companies are competing with Samsung because Samsung lets them. Lets not forget some of the components powering all those phones are Samsung. If Samsung ever decide to play hardball, its over for those companies

And as far as Apple not reporting unit sales, we can hypothecate about this until the cows come home.

No need to hypothecate. Apple's founder has stated that hiding sales means its not doing well.

 

[alexnyc8]

2007-2008 all over again, only this time the mega-money-print option that brought "the recovery" has already been used.

 

[Radon87000]

As I said, I don’t have to negotiate with 50 people some third party solution for Group FaceTime or even video calling. It all just works and Group FaceTime is awesome.

It doesn't work with non-Apple solutions. Hence its inferior.

 

[AmazingRobie]

DELETED

 

[Baymowe335]

It doesn't prove that at all. Thats a really simple way of looking at things. £750 for a second tier device is a lot of money. You can either say the XR isn't successful because its too cheap or you can say that apple have basically made all their phones too expensive and people are completely breaking from the idea of replacing their phones every year or even 2 years.

The fact they have reduced all expectations on their iPhones tells your they have screwed up somewhere. Whats the betting its on pricing....

Only one problem with your logic. There is no "fact" that any of these iPhones have reduced expectations for the following reasons. These are facts:

1) We haven't seen the sales data.
2) Apple doesn't report their unit sales expectations (never have) so it's impossible to know their expectations of a product.
3) Apple blew out their most recent quarter and had a record year, growing revenue 20% and EPS 40%.
4) Apple guided for up to $93B in sales, which would be a record. BTW, they beat guidance in Xmas quarters the last 2 years by at least $1B. So we are potentially looking at $94B in sales. How big of a flop could these iPhones be with $94B in revenue?
5) Every single year, we get the same report and the real numbers prove otherwise.

 

[Gaprofitt]

I went Android long ago, not locked into the Apple ecosystem, better hardware and features. I now have the Huawei Mate Pro 20. 40 megapixel camera, 3 lenses including ultrawide, inbuilt fingerprint and face ID, bigger battery. Long ago being locked into Apple's world made sense, because the tech was so much better. Those days have left long ago.

 

[I7guy]

Those companies are competing with Samsung because Samsung lets them. Lets not forget some of the components powering all those phones are Samsung. If Samsung ever decide to play hardball, its over for those companies

Those companies have alternatives and Samsung will go down in flames if they cut their nose off to spite their face.

No need to hypothecate. Apple's founder has stated that hiding sales means its not doing well.

Tim Cook has this under control. A lot of the past is not relevant in 2018. But there are those who will hang onto every word as if it’s a universal truth through the ages.

 

[Villarrealadrian]

In recent weeks, Apple slashed production orders for its latest iPhone XS, iPhone XS Max, and iPhone XR models due to "lower-than-expected demand," among other reasons, according to unnamed sources cited by The Wall Street Journal.

The report claims the production cuts have hit the iPhone XR hardest, with Apple said to have slashed its production plan for the device by "up to a third of the approximately 70 million units" it had asked some suppliers to produce between September and February, amounting to a reduction of up to 23.3 million units or so.

And in the past week, the report claims Apple told several suppliers that it cut its production plan again for the iPhone XR, as it battles a mature smartphone market and increasing competition from Chinese vendors like Huawei.

The production cuts are said to have "reignited frustration" among iPhone suppliers and "raised worries about Apple's ability to forecast demand."

We've heard this narrative before. Last year, a flurry of reports variously referred to the iPhone X as a "failure," "disappointment," and "flop." Another report said the iPhone X "did not live up to the hype." Yet, the iPhone X went on to become not only the top-selling iPhone at Apple, but in the entire world.

Apple also reported record-breaking iPhone revenue of $61.5 billion in the iPhone X launch quarter, so the device was anything but a flop.

Apple CEO Tim Cook has dismissed these kind of reports in the past. During an earnings call in January 2013, he noted that the company's supply chain is very complex and that conclusions shouldn't be drawn from singular data points:Apple's financial chief Luca Maestri has also cautioned about trying to determine iPhone demand based on potentially misleading supply chain reports.

It is possible, however, that Apple is increasingly struggling to forecast iPhone demand. Today's report claims that Apple was "excessively optimistic" about its initial production forecast for the iPhone X, which it proceeded to slash "by some 20 million units" for the first three months of 2018.

Unfortunately, iPhone sales will be less transparent going forward, as Apple announced that it will no longer disclose iPhone unit sales in its earnings reports starting with the first quarter of its 2019 fiscal year.

Justifying the move, Maestri said unit sales are "not particularly relevant for our company at this point," as they are "not necessarily representative of the underlying strength of our business." He added that Apple may provide qualitative commentary related to unit sales if the info is valuable to investors.

Apple will still disclose iPhone revenue on a quarterly basis, however, and any significant year-over-year decline in that amount would help indicate if iPhone XS, iPhone XS Max, and iPhone XR demand is truly lower than expected.

AAPL is down nearly 15 percent since Apple's earnings report on November 1.

Article Link: Apple Reportedly Cuts iPhone XS and iPhone XR Production Orders Amid Lower-Than-Expected Demand

Lower the price to $650 and problem solved!

 

[omihek]

I'm just wondering how would it be the top selling iPhone in the entire world but not at Apple or vice versa? Those two mean the same thing so "but" in between is not needed.

Read it again. Their grammar is fine, and "but" is used correctly.

 

[MrXiro]

I love how everyone is a financial genius on this thread.

Yes, Apple lower your prices because the plebeians here can’t afford your product and jump for joy over the rumor of you cutting your production.

Doesn’t matter that you became the first billion dollar company AFTER the exact same rumor a year ago...

 

[I7guy]

It doesn't work with non-Apple solutions. Hence its inferior.

It works beautifully with Apple solutions which is why it’s superior. Don’t have to argue about which third party solution. Plus I’m sure the implementation of Group FaceTime is superior to the competition.

 

[Act3]

You are speculating and the numbers say you're flat out wrong. Their "stupid strategy" is working brilliantly.

Where is your data that "die hard fans are struggling to pay £1000+"?

Where is your upgrade rate data? Apple sold more iPhones in 2018 at these new higher prices than they did in 2017. Fact. iPhone revenue was HUGE. More units, higher prices.

My data shows revenue was up 20%, EPS was up 40%, and iPhone unit sales were UP in 2018. Apple has never had a better year, so the strategy is WORKING.

More data, less speculation please.

Asking their suppliers to reduce demand by as much as 30% is a great strategy for their stock price? Sounds like they need to hire some folks that can better forecast their sales. This is at least second year in a row we've had reports about cutting back suppliers. Maybe get it right the first time and we wouldn't have this negative news which is tanking the market today. Similar things year after year. In the past, it would take weeks to find iPhone models in stock, now we have an abundance, yet the price keeps going up. Overstock usually means drop the price to compensate.

 

[erniefairchild1]

If that’s what prices were then phones would be out of stock still.

Apple put themselves in this hole. No one wants to spend $1200 for a new phone every year.

But who would be paying $1200 every year for a new phone? Most likely, they’re either on an upgrade program so they’re paying about HALF of the full price (is iPhone upgrade program, where half the loan is forgiven and a new loan started for the new phone) or the person is selling their current phone to offset most of the cost of their new one (iPhones have great resale value).

Do you think most people are buying a $1200 phone and throwing it in the garbage in order to buy a new $1200 phone?

Apple is raising prices somewhat as the global smartphone market plateaus and as they pivot their business toward services. It’s not as if they’ve been hiding this.

So people want a cheap phone, but one that will last them for 5 years at least. Or do they want slightly cheaper phones, and they’ll buy a new one every year? I’d personally rather pay $999 for a phone that will last me about 3-4 years rather than pay $499 for a phone, rinse and repeat for the next 3-4 years.

 

[MrXiro]

Lower the price to $650 and problem solved!

Why stop there? iPhones for $1!!!!!

 

[groadyho]

I went Android long ago, not locked into the Apple ecosystem, better hardware and features. I now have the Huawei Mate Pro 20. 40 megapixel camera, 3 lenses including ultrawide, inbuilt fingerprint and face ID, bigger battery. Long ago being locked into Apple's world made sense, because the tech was so much better. Those days have left long ago.

This right here. My galaxy syncs right up to the Surface pro. Recieve and send texts, answer calls. We 2015 macbook that never gets used anymore, the wife never used it to start with

 

[Baymowe335]

It's companies like Hauwei who are beginning to hurt Apple especially in the far East markets which have become very important to Apple. Then you have companies like OnePlus who are really starting to get consumers interested in a flagship killer at half the price of the iPhone. And to be perfectly honest even the old iOS Android debate is no longer enough to put customers off.

If you have two phones pretty evenly matched (for the average consumer) and one is half the price of the other, why is it savvy to pay for the one which costs twice as much?

Where is your data to show Huawei is hurting Apple or that iOS vs Android isn't enough anymore? Ready for my facts based on data?

People bought 218M iPhones in 2018 at far higher ASPs than 2017. That's more units, higher prices. iPhone revenues were up 18% in China and went from $141B in 2017 to $166B in 2018.

Apple grew revenue 20% and EPS 40% in their most recent quarter. The numbers prove people are willing to pay more dollars for iPhones and unit sales STILL were up.

Alibaba recently reported iPhone was the best selling smartphone during their "Singles Day 2018"

https://www.cnbc.com/2018/11/12/ali...e-was-the-top-selling-mobile-phone-brand.html

 

[harrisondavies]

Why stop there? iPhones for $1!!!!!

So you’re happy to be ripped off every year?

 

[ghanwani]

I think what Apple is doing is good. It means they are committed to increasing the useful life of a device. This benefits the environment and bucks the trend in almost every industry of "sell as much poor quality stuff as you can". I hope more companies follow. I think Tim Cook deserves praise for this.

Apple could easily have started engineering the quality out of the iphone and selling it cheap. There is probably tremendous pressure to do so. And they decided not to follow that path fully knowing what it would do to the stock price in the short term.

 

[lenard]

I went Android long ago, not locked into the Apple ecosystem, better hardware and features. I now have the Huawei Mate Pro 20. 40 megapixel camera, 3 lenses including ultrawide, inbuilt fingerprint and face ID, bigger battery. Long ago being locked into Apple's world made sense, because the tech was so much better. Those days have left long ago.

You do know this is MacRumors where the conversation is on Apple products.......

 

[nameischarles]

They usually announce this news a few months before the next iPhone is going to be released but I don’t remember being this early that production has been slashed.

 

[coolfactor]

Need to cut the price, not the orders.

I was eligible for a device upgrade from my provider (Bell in Canada) after two years with an SE. The XR (64GB version) was offered for free, although I did have to change my plan. The end result was just a $15 increase over what I was paying before. Still expensive overall, but I walked out of there with a brand new XR at no up-front cost.

While there, I talked to one of the sales associates that told me about his journey of switching from Android, to iPhone, back to Android, as if the operating system doesn't matter. He talked about how Android's "openness" was attractive to him. To each his own, I guess.

 

[Mydel]

Good. Maybe Apple will learn the lesson that you can't just keep raising the prices. At some point, you make your products unreachable by a tremendous swath of middle class Americans and you shoot yourself in the foot. For the same reason, you can't just raise taxes an unlimited number of times -- you'll eventually end up with less money coming in.

Remember folks, when we heard that Apple was going to be more aggressive with prices to increase units sold? Remember that? What happened to that? Remember: we were going to get a less expensive MacBook Air, a less expensive (but not gutted) iPhone, etc. Instead they took the other approach.

Apple, here are the prices you should have gone with to maximize units sold and revenue. It could have been a banner year for you.

iPhone Xr: $599
iPhone Xs: $799
iPhone XS Max: $899

128 GB: +$50
256 GB: +$100

Yeah. I have to agree. The prices are out of control at the moment especially in Europe when you add conversion to USD and VAT on top. Its becoming to be a joke. And before you say that VAT is not an Apple problem..Yes maybe not directly but somehow competitors take it under consideration when announcing new hardware. Sure its more expensive than in US but by modest 10-15% not 30-40%