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The Real Reason for Soft Apple iPhone Demand Is Painfully Obvious




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Apple iPhone XS Apple

You have to give credit to Apple where it's due No other consumer electronics brand in the world currently has the kind of almost cult-like loyalty that Apple has cultivated over the years. However, recent reports of soft Apple iPhone XR, XS and XS Max demand, requiring Cupertino to cut production volume and forecasts, paint a very clear picture of the larger problem Apple faces Plain and simple, its customer base has finally reached its breaking point with respect to the higher than ASPs the company has used for its current generation of products.

As Brandon Hill at HotHardware noted Tim Cook has undergone that "People want the most innovative product available, and it's not cheap to do that." And I'd have to agree with Mr. Cook on the point. -inovating its competition in the An Droid ecosystem, nor is it equally remotely price-competitive any longer, even with the entry level iPhone XR starting at $ 749. When you consider there are many higher-end flagship devices like the Google Pixel 3 XL and the OnePlus 6T, which sells for less (in some cases a lot less), with higher resolution OLED displays, in some cases more storage and cameras that can easily compete with the iPhone XR / XS / XS Max, it's a bitter pill to tech-savvy users. In the case of the OnePlus 6T, for example, you can get this 6.28-inch Android flagship with its great OLED display, 8GB of RAM and 128GB of storage for just $ 579. Admittedly, the OnePlus 6T camera won't compete with the iPhone XS or XR but I'd argue it's close enough for the average mainstream consumer. And Google's Pixel 3 camera will give any iPhone a run for its money.

And that's where the rubber really meets the road with the mainstream consumer, who also over the years has become significantly more tech-savvy than the earlier golden days of the iPhone. The iPhone XR starts at $ 750, but has a much lower resolution 1792×828 IPS display (not OLED, which offers much better brightness and color fidelity), and to get 128GB of storage the price jumps to $ 800. So then you consider the iPhone XS or XS Max, which starts at $ 1000 and $ 1,100 respectively, both with just 64GB of storage. The bottom line decision making process probably sounds something like " for that kind of money, you really need the latest iPhone? " Unless you're an insatiable early adopter on the Apple platform, the answer to that question is likely no, especially if you're on a higher-end iPhone 8.

 

It's no wonder Apple is now resorting to trade-up / trade-in incentives, offering discounts on the iPhone XR for customers on an iPhone 7 Plus or newer device. iPhone production forecasts for the higher-end iPhone XS Max. But, with these early warning signs for Apple, I think the company has already seen the writing on the wall with respect to maintaining its future profit margins.

Apple's Tim Cook at CTS, Apple Test Equipment Supplier Apple

Tim Cook is in operations guy after all. Where Jobs Was A Visionary And Innovator, Knowing How To Keep The Machine Running Efficiently And Profitably. It may take a few soft quarters to shake out and ramp-up but Apple's vigorous efforts to design more of its key semiconductor technologies in house is what the company knows it needs to bring better profit margins and evermore competitive landscape. When you consider big handset OEMs like Samsung and LG also have their own displays, which are a huge cost component of a smartphone, it's sheer necessity for Apple to outsource as little of the iPhone's bill of materials as possible. Moving forward, a more internally-sourced and thus more profitable iPhone is in Apple's future, but until then Cupertino has its work cut out for it. & Nbsp;

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You have to give credit to Apple where it's due. No other consumer electronics brand in the world currently has the child of almost cult-like loyalty that Apple has cultivated over the years. However, recent reports of soft Apple iPhone XR, XS and XS Max demand, requiring Cupertino to cut production volume and forecasts, paint a very clear picture of the larger problem Apple faces. Plain and simple, its customer base has finally reached its breaking point with respect to the higher than ASPs the company has used for its current generation of products.

As Brandon Hill at HotHardware noted, Tim Cook has underscored that “People want the most innovative product available, and it's not cheap to do that.” And I'd have to agree with Mr. Cook on the point. The problem is Apple is neither out-innovating its competition in the Android ecosystem, nor is it equally remotely price-competitive any longer, even with the entry level iPhone XR starting at $ 749. When you consider there are many higher-end flagship devices like the Google Pixel 3 XL and the OnePlus 6T, which sell for less (in some cases less than), with higher resolution OLED displays, in some cases more storage and cameras that easily compete with the iPhone XR / XS / XS Max, it's a bitter pill to swallow for tech-savvy users. In the case of the OnePlus 6T, for example, you can get this 6.28-inch Android flagship with its great OLED display, 8GB of RAM and 128GB of storage for just $ 579. Admittedly, the OnePlus 6T camera won't compete with the iPhone XS or XR but I'd argue it's close enough for the average mainstream consumer. And Google's Pixel 3 camera will give any iPhone a run for its money.

And that's where the rubber really meets the road with the mainstream consumer, who has over the years become more tech-savvy than the earlier golden days of the iPhone. The iPhone XR starts at $ 750, but has a much lower resolution 1792×828 IPS display (not OLED, which offers much better brightness and color fidelity), and to get 128GB of storage the price jumps to $ 800. So then you consider the iPhone XS or XS Max, which starts at $ 1000 and $ 1,100 respectively, both with just 64GB of storage. The bottom line decision making process probably sounds something like "for that kind of money, do I really need the latest iPhone?" Unless you're an early early adopter on the Apple platform, the answer to that question is likely, especially if you're on a higher-end iPhone 8.

It's no wonder Apple is now resorting to trade-up / trade-in incentives, offering discounts on the iPhone XR for customers on an iPhone 7 Plus or newer device. IPhone production forecasts for the higher-end iPhone XS Max. However, even with these early warning signs for Apple, I think the company has already seen the writing on the wall with respect to maintaining its future profit margins.

Apple's Tim Cook At CTS, An Apple Test Equipment Supplier Apple

Tim Cook is in operations guy after all. Where Jobs Was A Visionary And Innovator, Knowing How To Keep The Machine Running Efficiently And Profitably. It can take a few soft quarters to shake out and ramp up but Apple's vigorous efforts to design more of its key semiconductor technologies in house are what the company knows it needs to bring better profit margin into evermore competitive landscape. When you consider big handset OEMs like Samsung and LG also have their own displays, which are a huge cost component of a smartphone, it's sheer necessity for Apple to outsource as little of the iPhone's bill of materials as possible. Moving forward, a more internally-sourced and thus more profitable iPhone is in Apple's future, but until then Cupertino has its work cut out for it. Apple just can't rely on the bill as they used to.


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