Slower-than-expected iPhone 7 sales prompt Apple to cut production by 10%, report claims

AppleInsider

Apple's new iPhone 7 lineup has "sold more sluggishly than expected," according to a new report, which claims that the company has cut orders for early 2017 by some 10 percent.

Citing data from Apple suppliers, Japanese newspaper Nikkei reported on Friday that "sluggish sales" of the iPhone 7 lineup have come in softer than Apple expected.

Somewhat confusingly, the report said that Apple plans to cut production of both the iPhone 7 and iPhone 7 Plus. But it also notes that Apple has not been able to meet demand for the 5.5-inch iPhone 7 Plus due to a shortage of camera sensors, noting that the jumbo-sized handset "remains popular."

The report also noted that sales of the iPhone 7 are strong in Japan, particularly due to the Apple Pay in the country in October. However, Japan accounts for roughly 10 percent of Apple's global sales.

The claims come on the heels of a new study on activations showing that rival Samsung gained some ground on Apple this holiday season.

The latest slew of reports stand in contrast to Wall Street expectations, where analysts generally expect the iPhone 7 lineup will propel Apple to its best quarter ever. Apple will report the results of its holiday frame in late January.

macxpress

Any story to make the stock price tank! Why do we keep relying on supply chain data for sales? Its absolutely no indication on what's going on. Apple has said this many many times already yet we still talk about it. We don't have a clue as to whats actually going on inside. 

How the hell does this newspaper know there were "sluggish sales"? One thing doesn't necessarily relate to the other. 

cali

Could be true. It's after Christmas anyways.

That doesn't mean it didn't sell record numbers either. Stupid.

macxpress

cali said:

Could be true. It's after Christmas anyways.

That doesn't mean it didn't sell record numbers either. Stupid.

I can see Apple cutting production after the holidays. If they put in for extra orders for the holiday season why would they keep the higher orders? It seems like they'd do this every season regardless of how well they did during the holiday quarter. This seems like a non-story to me...just something to get investors all worried over nothing. 

lkrupp

“...report claims” Nuff said. Funny how the iPhone 7 goes back and forth between success and failure every other day.

adonissmu

They don't know. They need to stop pretending. I need to see the actual numbers. 

gatorguy

lkrupp said:

“...report claims” Nuff said. Funny how the iPhone 7 goes back and forth between success and failure every other day.

I think the iPhone sales are fine. . . 

Now regarding AppleTV maybe not so much. Even my ISP is now giving them away if I'll upgrade to a faster internet plan, joining ATT and their DirectTVNow promo for a free one (which I just rec'd today).  Sling will only sell you one for $89, but still well under Apple's list price. 

But the iPhone worries are way overblown. What difference would it make to Apple bottom line if they only sold the same number of them this year as last? Services would easily drive the profits higher despite slowing sales (if they are) 

george li

If you have been in Apple the stock, you would have known this: Nikkei always comes out with negative reports based on made up bullshit to knock down Apple stock price exclusively on Fridays---especially on stock option expiration days during the quiet period ( weeks before earning report date). That's how the big boys on the Wall Street play --- creating predictable/controlled volatility and profit from it.

malcolmtucker

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

felipus

Also. The dollar is too expensive all over the world. Here in Mexico, it went up 61% from 13 to 21 pesos per dollar. Everything that I used to buy from tue US is now more than twice the price. Movies, games, gadgets etc. To get a new iphone 7 128 GB with a 2 year contract I would've had to pay about $800 dollars. Last time I paid $450. So for now... I'm keeping my iphone 6.

k2kw

The iPhone 7/7+ will do about the same as the iPhone 6/6+ but will have a higher average selling price because of the popularity of the dual Camera.
2016 is the year of the S chip, T chip, and W chip. Hopefully Apple will really get the T chip and W chip out in the MacBook and MacMini (via Wired or BlueTooth Keyboards with TouchBar) in 2017.

HermeyTheElf

This is very bullish news. Production for the 7/7+ is more than the 6s was last year, and they are only cutting the 7/7+ production by 10%? Last year Nikkei said they were cutting the production of the 6s/6s+ by 30%.

Happy New Year!!!

cropr

malcolmtucker said:

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

You must have at least 2 master degrees to invent such bull shit
  
Every shortage in supply in the month of December is leading to less sales and less profits, the last thing is Apple is trying to achieve. 

tshapi

This is about growth not about sales. They are being doomsayers because of lack of growth with iPhone 

Metriacanthosaurus

Wouldn't they be expected to cut back production somewhat after Christmas?

These Japanese mouth pieces are the absolute worst.

andrewj5790

malcolmtucker said:

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

Would you mind providing evidence of your conspiracy theory? Also, would you mind explaining why a company would not take customers' money? Your explanation doesn't hold water for many reasons. First, the most influential people in the media get review units and don't have to be denied their initial purchase. Second, the phone launches late in the quarter so they MUST sell as many phones as they can make in order to help their ER. Third, it's insanely stupid to intentionally deny your customers the ability to buy your produce since most normal people will not wait forever to get the new X, they'll just go buy the new Y.

tshapi

andrewj5790 said:

malcolmtucker said:

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

Would you mind providing evidence if you conspiracy theory? Also, would you mind explaining why a company would not take customers' money? Your explanation doesn't hold water for many reasons. First, the most influential people in the media get review units and don't have to be denied their initial purchase. Second, the phone launches late in the quarter so they MUST sell as many phones as they can make in order to help their ER. Third, it's insanely stupid to intentionally deny your customers the ability to buy your produce since most normal people will not wait forever to get the new X, they'll just go buy the new Y.

Do you really need to ask for evidence? Apple has been selling iPhones for 10 years. Don't you think by no they would have figured out how many they need onblaunch. Instead they seem to be sold out every single year.  Taking weeks to catch up. That seems like evidence enough 

gatorguy

andrewj5790 said:

malcolmtucker said:

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

 Third, it's insanely stupid to intentionally deny your customers the ability to buy your produce since most normal people will not wait forever to get the new X, they'll just go buy the new Y.

No actual fan of Apple (or Android for that matter) would leap to the other side simply because they needed to wait an extra two weeks for the latest model. So while I don't agree with the OP that Apple artificially restricts supply, even if they did they wouldn't lose sales because of it IMHO. 

flaneur

tshapi said:

andrewj5790 said:

malcolmtucker said:

One of the things Apple has always excelled at has been the creation of demand; sometimes false demand by constricting its own supply chain.  

When a product becomes out-of-stock, it creates a situation where the product is "perceived" as more valuable by the consumer.  

When people in the press can't purchase it either, then the press will write about it in a more favorable light once the product is obtained as well.  This is something carefully balanced by Apple and a part of its branding, marketing, and supply chain strategy.  

Look at it this way-
People know when they go to a McDonald's they can get a McDonald's signature BigMac Burger but only Apple would deny its customers the ability to tender a sale.   No one in the press writes about how tasty their last BigMac burger was because they are ready for purchase.

It takes a stroke of genius to deny Dieter Bohn his ability to be the first in the office to buy an Apple. 

Would you mind providing evidence if you conspiracy theory? Also, would you mind explaining why a company would not take customers' money? Your explanation doesn't hold water for many reasons. First, the most influential people in the media get review units and don't have to be denied their initial purchase. Second, the phone launches late in the quarter so they MUST sell as many phones as they can make in order to help their ER. Third, it's insanely stupid to intentionally deny your customers the ability to buy your produce since most normal people will not wait forever to get the new X, they'll just go buy the new Y.

Do you really need to ask for evidence? Apple has been selling iPhones for 10 years. Don't you think by no they would have figured out how many they need onblaunch. Instead they seem to be sold out every single year.  Taking weeks to catch up. That seems like evidence enough 

Plenty of room in the barnyard there with malcolmtucker, and a shovel with your name on it.

anantksundaram

george li said:

If you have been in Apple the stock, you would have known this: Nikkei always comes out with negative reports based on made up bullshit to knock down Apple stock price exclusively on Fridays---especially on stock option expiration days during the quiet period ( weeks before earning report date). That's how the big boys on the Wall Street play --- creating predictable/controlled volatility and profit from it.

All the major tech stocks are down a fair amount today: AMZN, GOOG, FB, MSFT, etc. are all down by more than 1%. There's nothing Apple-specific in the price move, at least not today.

HermeyTheElf

Metriacanthosaurus said:

Wouldn't they be expected to cut back production somewhat after Christmas?

These Japanese mouth pieces are the absolute worst.

Sales of the iPhone are seasonal. This means more iPhones are sold in the December quarter compared with other quarters. Every year Apple adjusts production lower to meet a lowered demand in the quarter or two following the December quarter. Then the production ramp for the next iPhone model occurs. 

Last year Nikkei said Apple was going to cut iPhone production by 30% going into the March quarter. This year they say 10%. If the correlation is 1:1 then Apple will sell more phones in the March 2017 quarter than they did in the March 2016 quarter.

Another note: an iPhone supplier recently stated the cut in production was 15% going into the next quarter. Again, this was from an elevated number of components compared to last year. A 10% cut is better than the 15% cut anticipated by this supplier a few weeks ago.