Analyst: Apple cutting iPhone production
Apple could be cutting iPhone production as demand eases due to the economy.
(Credit: CNET)Fresh off a blowout quarter for the iPhone, Apple may be cutting back on production of the device heading into what could be a slow holiday season.
Craig Berger of FBR Capital Markets said in a research note Monday that his research indicates Apple has cut back on orders for the iPhone 3G by as much as 40 percent during the fourth calendar quarter of the year, compared with Apple's order for the third quarter. Apple sold 6.9 million iPhone 3Gs during the third quarter, but it's not exactly clear how many it ordered, so there are a couple of possibilities raised by this report.
One is that Apple is naturally decreasing production after stocking the channel ahead of the iPhone 3G launch, which saw Apple expanding its distribution into far more countries with far more carrier partners than accompanied the original iPhone launch. If Apple felt initial demand would be hard to forecast, it might have decided to overbuild rather than face extended shortages, and is now paring back production to what it thinks will be normal, ongoing volumes.
Apple COO Tim Cook said on the company's last earnings conference call that as of the end of September, the worldwide iPhone channel contained about 2 million iPhones spread out across the 51 countries selling the iPhone at that time, or less than six weeks worth of inventory.
The other possibility is that iPhone demand is suffering in the face of a worldwide economic slump, or the release of pent-up demand for the iPhone 3G coming off a six-week stockout in June and early July. The recent stock market plunge that shattered many a consumer's confidence didn't take place until the very end of the third calendar quarter, which means the ripple effects could be felt more strongly during the current quarter.
So Apple may be trying to work through some of its existing iPhone inventory, especially as the state of the economy makes everyone running a business nervous heading into the holiday quarter. That's usually the best quarter for consumer electronic sales by far, but this year the boost may not be as large as in past years.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
Isn't that what most companies are doing now? What I mean is that this limitation of product output is not unique to Apple in times like these; just about everyone is turning down productions due to the economic slump. But it will be interesting to see if high demand of the iPhones will create yet another shortage this holiday season.
The economic downturn might be a factor, but I've seen that in times like this that people tend to spend more on personal ego items like this.
So I doubt it's market saturation. In fact, I doubt it's actually cutting numbers of units. Unless they have something new coming with more storage space and they want to clear out inventory?
Berger specializes in chips, not computers or smartphones.
"Nor does he does appear on the list of analysts dialing into Apple's quarterly earnings calls."
http://apple20.blogs.fortune.cnn.com/2008/11/03/the-apple-analyst-who-couldnt-shoot-straight/
In highly competitive cell phone markets around the world, 3 to 6 months product update interval is the norm, now that several rivals is churning out "iPhone killers", it makes sense for Apple to rolling out new models to keep the competitive edge. It's highly possible that we might see new iPhone models coming out at 1Q 2009.
My 2 cents worth...
a Wonderful "do-it-yourself Plug & Play sim card " for unlocking iPhone 3G to work for any network,
any carrier, any SIM card seems still have its marketing demand.
such as this? http://www.magicsim.com/en/iphone_3g_unlock.asp?new_id=47
In April, Apple reported its fiscal Q2 earnings. iPhone sales were indeed off after the Christmas quarter, but only by 26%. And MacBook sales, rather than falling 50%, actually rose ? up nearly 7%, from 1.3 million in fiscal Q1 to more than 1.4 million in Q2. (link)
Here's this guy - Berger's Record:
Not Once has he been right on Apple.....
In May 2008, Berger checked again with his contacts in Apple?s supply chain and reported another round of bad news: his sources were telling him that orders for iPhones for fiscal Q3 had been cut 25%. (link)
A month later, Berger went back to those sources and came back with a very different story: 2008 iPhone build volumes, he said, had been ?revised significantly higher? ? with more than 15 million 3G iPhones plus two million old 2G iPhones forecast for 2008. Apple?s notebook and desktop build volumes were also revised up ? by 10% and 20%, respectively. ?The firm,? he wrote, ?continues to knock the cover off the ball in terms of product innovation, sleek designs, attractive price points, and effective global deployment plans.? (link)
On Monday Berger was back to singing the blues. Despite predictions from other analysts that iPhone sales might grow 40% or more this quarter, Berger writes that Apple had been expecting to cut iPhone production 10% and was now looking to cut it four times more. This 40% cut, he says, ?could end up painting an ugly picture.? (link)
Not Once has he been right on Apple.....
In February 2008, Berger wrote that ?recent checks? showed that Apple had cut its build plans for iPods and iPhones, from an anticipated 50% decline between fiscal Q1 and Q2 to a 60% decline. He also reported that Apple had cut its build forecast for MacBooks for the same period, from down 35% to down 50%. (link)
In April, Apple reported its fiscal Q2 earnings. iPhone sales were indeed off after the Christmas quarter, but only by 26%. And MacBook sales, rather than falling 50%, actually rose ? up nearly 7%, from 1.3 million in fiscal Q1 to more than 1.4 million in Q2. (link)
In May 2008, Berger checked again with his contacts in Apple?s supply chain and reported another round of bad news: his sources were telling him that orders for iPhones for fiscal Q3 had been cut 25%. (link)
A month later, Berger went back to those sources and came back with a very different story: 2008 iPhone build volumes, he said, had been ?revised significantly higher? ? with more than 15 million 3G iPhones plus two million old 2G iPhones forecast for 2008. Apple?s notebook and desktop build volumes were also revised up ? by 10% and 20%, respectively. ?The firm,? he wrote, ?continues to knock the cover off the ball in terms of product innovation, sleek designs, attractive price points, and effective global deployment plans.? (link)
On Monday Berger was back to singing the blues. Despite predictions from other analysts that iPhone sales might grow 40% or more this quarter, Berger writes that Apple had been expecting to cut iPhone production 10% and was now looking to cut it four times more. This 40% cut, he says, ?could end up painting an ugly picture.? (link)
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