Demand for iPhone 5 Weaker than Expected?

iPhone 5There are mixed messages on the outlook for the iPhone 5. Several sources (e.g., Kantar Worldpanel Comtech) reported high demand and initial sales for the device heading into the holiday season. However the Wall Street Journal is now reporting that demand for the iPhone may be weaker than expected and Apple is cutting its order for parts.

According to the WSJ article:

Apple Inc. has cut its orders for components for the iPhone 5 due to weaker-than-expected demand, people familiar with the situation said Monday.

Apple’s orders for iPhone 5 screens for the January-March quarter, for example, have dropped to roughly half of what the company had previously planned to order, two of the people said.

The Cupertino, Calif., company has also cut orders for components other than screens, according to one of the people.

Apple reports quarterly earnings on January 23. We’ll see then how well the iPhone did. However Apple is lower on concerns about competition the outlook for the iPhone.

There are now a range of Android devices, in particular the Nexus 4 (which is rumored to be no longer in production), which have caught up and according to some improved upon the iPhone. In particular the iPhone has failed to keep pace with the public’s appetite for larger smartphone screens.

To date Apple has largely resisted the screen-size race. The iPhone 5 grudgingly increased the size of the screen by making the device “taller,” but maintaining its width. However the public wants screens that are larger still. This demand is being fueled by Samsung and others, which are producing phones with 5-inch and even 6-inch screens.

There were recent rumors of a less expensive iPhone to enable Apple to compete with Android at the lower end. But Apple SVP Phil Schiller seemed to quash those rumors in a newspaper interview last week.

If indeed iPhone  5 sales have stalled the company will have a dilemma on its hands. The anticipated next iPhone would likely be a “5S,” which would offer incremental improvements over the current handset but not a design overhaul. Apple may need to bypass a “5S” and go to 6 directly.

Because consumers now have so much choice among Android phones, many of which are very good, the “need” for the iPhone is diminished. The “apps gap” has also largely been closed. To many Apple also doesn’t appear the innovator that it once did.

Accordingly the company is going to need to step up design and innovation in order to differentiate from Android once again. While it can be convincingly argued that Samsung and others largely copied the iPhone initially, Apple now appears to be the follower in the smartphone race.

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One Response to “Demand for iPhone 5 Weaker than Expected?”

  1. Report: iOS Continues To Dominante Web Traffic says at

    […] report appearing in the Wall Street Journal asserting that Apple cut production orders on components for […]

  2. Arabella Autenberry says at

    I am an iPhone user before but I have switched to Android when they released the Galaxy S4 last year. I can really feel the big difference in terms of design and durability. Galaxy S4 is absolutely a phone that belongs in 2013. It’s much more powerful, its camera has a full five extra megapixels at its disposal and it doesn’t even cost any more.

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