iPhone 5 Appears To Be In Production, iPhone 4S Orders Reduced
Posted by Michael Nace on Thursday May 24, 2012 Under Apple Rumors, iPhone 4S News, iPhone 4S Opinion, iPhone 5 RumorA flood of new iPhone component orders, as well as a new analyst’s report detailing a 25% drop in iPhone 4S production, indicates that the iPhone 5 production process is well underway. But how do these production rumors wash with the “two prototypes” rumor?
We’ve been noting recently that there has been a great deal of contradiction between iPhone 5 rumors that have been hard to reconcile. A couple of new reports today have further complicated the prognostication process, with new whisperings out of Asia that Apple — and its assembly partner Foxconn — are beginning to buy up the parts they need to assemble what is ostensibly the iPhone 5.
According to SlashGear, the iPhone 5 “. . . is set to have components that are not necessarily working with the same companies Apple has been working with before. . .”If this is the case, then, in my opinion, it remains to be seen when iPhone 5 component production really began, since new component supplies may mean that analysts have not been looking in the right places for clues. Regardless, specific information on components appears to be bubbling to the surface, “. . . with the most recent supply shock being Apple’s leaked purchase of flash memory products with Elpida, a competitor with the then $10 million USD poorer Samsung, for over half of their total parts in-house.”
SlashGear has also put their finger on this rumor: “Apple has also continued to push for parts across China and with the group known as TXC. Reports today show that TXC has secured component supply orders for use with the next iPhone release. TXC is a quartz crystal device maker in China.”
But the most interesting production rumor that SlashGear and others are reporting has to do with what Foxconn is up to.
Apparently, Foxconn is in the process of buying up components: “. . .they have had an order put in with the Osaka, Japan plant for Sharp displays. This order has Foxconn in a deal to purchase up to and including 50 percent of the large-sized LCD panels and LCD modules made by Sharp at this particular plant, this leading analysts to believe that word of Sharp being one of three possible iPhone 5 panel suppliers could very well be true.”
Given the fact that Foxconn makes iPhones, not the parts that go into the iPhone, the fact that they are in the process of mass-purchasing Sharp displays — together with a new plant that they are building in partnership with Apple — points to the fact that production for the iPhone 5 is to begin in earnest (and on a big scale). I recall the report from April that indicated Foxconn was adding 20,000 new workers — it looks like they are set to get to work on “something big.”
iPhone 4S On The Wane
The SlashGear article about rumored iPhone 5 production pairs nicely with an article today on Apple Insider that outlines a sharp decline in iPhone 4S production and orders. Citing a new analyst report, they had this to say:
“Analyst Shaw Wu with Sterne Agee said in a note to investors on Tuesday that he has found in his checks with suppliers that Apple has reduced iPhone orders by between 20 and 25 percent from the 35.1 million units the company shipped in the March quarter. If those numbers hold for the current June quarter, that would result in shipments of between 26 million and 28 million iPhones. That result would be below Wall Street consensus of between 30 million and 31 million.”
According to Wu, the reason for this reduction in production “. . . is not demand related but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe. It appears AAPL is opting to be conservative with its suppliers to factor in a potential 2-quarter pause ahead of the refresh and also to manage inventory.” The oddness in this analysis is that, last year, Apple didn’t begin to draw down its iPhone 4 inventories until the September quarter, just ahead of the iPhone 4S announcement in October. If the prevailing thought that the iPhone 5 is going to be released in October of this year, then Apple is drawing down inventories awfully early — some 4 months early.
Apple Insider reports: “Wu noted that Wall Street consensus last year ‘grossly underestimated the impact of a pause and inventory drawdown ahead of the iPhone 4S.’ He believes investor expectations should be drawn in for the June quarter as well as the following September quarter.” That’s true, but it would not explain why Apple would be adjusting production and inventories some four months ahead of the iPhone 5′s alleged release.
In my opinion, the current production evidence, as well as this production decline for the 4S, still might suggest a summer iPhone 5 release, since Apple was not engaging in any of this activity last year at this time, and I still do not think that Apple would need four months’ lead time on production in order to launch the new iPhone.
By Michael Nace
Michael Nace is the Publisher of the iPhone 5 News Blog and iPhone 6 News Blog. He has published articles about the iPhone since 2010.
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May 24th, 2012 at 10:45 am
I agree, I think all of us came to believe on a June release and along with this speculation you put out Mike I think we can safely sit back and wait till June for the next iPhone. I’m stoked, money saved up, and waiting. Not very long now until June 15th hits us. Being in highschool it’s much, much more effiecent for it to come out durning the summer – more time to wait in line. Now, should we pull out the shampane and glasses to celebrate or should we do that later?
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May 24th, 2012 at 10:47 am
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May 24th, 2012 at 10:58 am
I think very similar to this. Last year the first parts leak in August….this year it was in April. Also the rumors are more and more specific and not only some “maybe-concepts” or “Apple could do..” rumors. I imagine a summer release but actually i can’t really imagine a WWDC Preview with launch in early July. But i hope so…
A hot comment -- What do you think?
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May 24th, 2012 at 11:01 am
On the two prototypes rumor. How do we know that Apple Wasserstein till testing two prototypes at the time 9to5mac reported it. Who knows, it could have been a month ago that Apple finished testing and decided which to use and 9to5 just heard about it or is just reporting it recently for their own benefit and to bring more traffic to their site.
That’s what makes this site different. You don’t report something and write about it just to bring people in, you write articles about rumors that have ground and that are relevant and/or verified to inform the masses to the best of your ability. And I’m the words of AC/DC, for those about to report, we salute you!
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May 24th, 2012 at 11:03 am
Damn autocorrect, somehow my iPod touch put Wesserstein insread of wasn’t..,
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May 24th, 2012 at 11:05 am
Sorry for the triple post, last sentence was supposed to be ‘And in the words of AC/DC not I’m’
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May 24th, 2012 at 11:10 am
I love autocorrect’s use of ” Wesserstein” in that last post, Pat. I refuse to edit it. I love when technology fails us in communication. I used my Kyrocera Echo the other night and used the voice function to send a text to my wife, asking about whether or not she would need parmesan [cheese] for dinner. It turned out to say something like, “Do you want me to bring home some possum?” I mean, I’m sure that possum is tasty and all — but you can’t get it at the local supermarket.
Regarding the format of this blog: it did change, and I wonder if it turned people off. I used to just re-post the news. But last year, when all of the wacky rumors started flowing, I began to inject opinion into the posts. Now, that is much more of what me and Charles do: we present the “news” and rumors in the first half, and then levy an opinion in the second half. I would argue its kind of what political commenters like Rush Limbaugh and Keith Olbermann do/did: they don’t/didn’t break much news; they just interpolate(d) it according to their ideologies. That’s kind of the format here, only technology-based.
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May 24th, 2012 at 11:25 am
Love this article, I truly believe not just because I want the IP5 to come this summer because regardless I’m getting it I don’t have a contract with anyone I’m on no contract plan metro pcs until the IP5 comes out. So with that said I believe it will omg oh his summer because a) the people who got the ip4 contracts will be up next month b) schools out so there’s more money to be spent c) like someone else said in another comment above me that Apple could be causing the comfussions themselves by having people report things after the fact or her plain make up stuff to get people off there trial because what’s to omg is going to be HUGE and also a surprise. D) last years 4S was only ip4 with software upgrade and any people were disappointed so APPLE will definitely try to make up for that in a huge way . E) the country is in recession so money is tight for a lot of people specially during holiday season. even though the ip4S did bring in a lot of money during 2011 holidays things change in a year and this economy is unpredictable .so SUMMER is definitely a good time to release the most anticipated phone of the year
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May 24th, 2012 at 11:55 am
Interesting article. The biggest problem is that Apple hasn’t given iOS 6 to developers for testing. There’s no way we’ll get the first preview of iOS 6 and a new iPhone at the same time. June would be cool, but I’m still thinking a late summer/fall release.
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May 24th, 2012 at 11:59 am
Thanks for your comment, wicket. But why not? If the iPhone 5 is going to be mainly a hardware update, iOS 6 is going to be a refresh from a user interface standpoint, and we’ve already seen Apple’s willingness to release new iPad’s without new iOS iterations, couldn’t they release the iPhone 5 with iOS 5.2?
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May 24th, 2012 at 12:02 pm
@wicket
This is definitely the biggest problem. Today there are some things which prove that they test iOS 6 and that iOS 6 is coming.
But may they only make a new maps-app, improve siri and some other features. Then they may the give up GoldenMaster at the WWDC and launch it with the new iPhone in early July.
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May 24th, 2012 at 12:05 pm
Another mock-up for the iPhone 5, looks very sweet and realistic:
http://www.idownloadblog.com/2012/05/23/designer-uses-rumors/
Apple broke tradition last year, releasing the iPhone 4S in October, prooving to us that Apple is willing to break tradition when need be and I feel that they could easily do it again this year, releasing a new iPhone before a new iOS.
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May 24th, 2012 at 12:40 pm
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May 24th, 2012 at 12:41 pm
Another interesting part of all this that may be worth noting is the increase in all the iphone 4s commercials. As far as I know, this time last year apple wasn’t pushing the 4 too much and started doing so around August. Apple tens to push commercials right at launch and also at the end of the life cycle. It may be worth noting then that Apple quite possibly is pushing the 4s hard right now as sorta a last hurrah before the 5 is announced. Just some other food for thought for all of us looking for any evidence that we can find that will point to a “one more thing” announcement.
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May 24th, 2012 at 12:42 pm
Nice job Mikey. So, have you talked with your source in Asia recently? Does he still say June?
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May 24th, 2012 at 12:51 pm
Apple has proven that they don’t do what everybody expects. Why say that they can’t release a new iphone without a new version of iOS?
I think this whole article pivots on the idea that the reduction in production is supposedly not due to demand. I think that’s a big oversight to believe that. Q1 demand dropped after the holidays were over, and naturally in the anticipation of a new iphone the demand is going to continue dropping. To say that they are cutting back as a “pause ahead of the refresh and also to manage inventory” isn’t a choice that Apple has. There isn’t a shortage of iPhones on the market. If someone wants one, they can get it from any retailer. In order to manage inventory they have to cut back production….otherwise they will have millions of extra iphones sitting around that nobody will buy because they are waiting for the I5, or waiting for it to be discounted like the 4 was when the 4S was released.
I think most of this article is not reliable as evidence toward a summer release, but rather continuing to build on the hopes of it through support of limited rumors that lean towards a summer release. I’m not saying that there is absolutely no chance of a summer release, but it seems extremely unlikely. Apple will do whatever they will do, regardless of the rumors and false information that is spread around.
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May 24th, 2012 at 12:53 pm
@Cocoapro13
It could also be that they are really pushing the 4S because demand is dropping off so much. I mean, seriously, they are trying to advertise a phone that is two years old and trying to compete with brand new phones and the Galaxy S3. They don’t have much of a choice but to increase their ads.
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May 24th, 2012 at 1:22 pm
I haven’t @Daveydog. I’ll see if I can get some insight from him.
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May 24th, 2012 at 1:41 pm
Mike D: It is the analyst who claims that the production cut is not demand-related: “. . . is not demand related but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe.” But I will say that, if he is right, then his claim contradicts itself; the current production cut makes less sense if the iPhone 5 is being released in October. It would only make sense if it was being released in the near-term. However, if the production cut is indeed about demand, that would actually be more sensical.
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May 24th, 2012 at 1:45 pm
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May 24th, 2012 at 1:52 pm
@wicket: “I don’t think there’s any chance of Apple selling a new iPhone with anything other than iOS 6 on it. I could be wrong, but it’d be a mistake IMO if they did.”
I respect your opinion, but can you further explain your statement? I just don’t understand why 1) there is no chance, and 2) it would be a mistake.
Last year, it was a no-brainer that iOS 5 had to be a major component of the 4S launch, since the 4S was basically just a refresh of the iPhone 4. Thus you needed the software of iOS 5 to help sell the 4S — the hardware didn’t change. But this year, with hardware being the big selling point — and with rumors that iOS 6 won’t feature big changes — why is Apple beholden to iOS 6′s Golden Master in order to announce the iPhone 5?
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May 24th, 2012 at 2:00 pm
Putting aside the iPhone for a minute……
It’s a developers conference for their software, iOS and OSX Mountain Lion and it’s ‘the week we’ve all been waiting for’ so apart from the assumption that we will see new iMacs and Macbooks from the hardware side what could be the thing we HAVE all been waiting for?
Could it be some new software or app that we will ALL need but just don’t know it yet? Will it be an incredible advancement in the iCloud portal? Will it be unleashing of a fully blown non beta of Siri with even more incredible technological advancements?
We are around three weeks away from finding out and I’m sure I don’t have a clue at this point what is coming (or when) so well done Apple!
I started thinking about the hardware side and what they could have possibly kept quiet other than the iPhone but really can’t think of anything that would match the tag line. I may be wrong but Apple usually closes down its stores on the release day of a new iPhone as the demand can be huge with people queuing up but do they close down for release of new iMac/Macbook releases?
I went to the Apple website and looked if I could book a genius session for June, maybe around the 15th or so but that system only gives dates until the end of May. My thoughts were if one particular day was fully booked and looked a bit odd and out of sequence maybe the store would be closed that day. Might be worth keep checking back for clues!
There are so many rumours and essentially we are all still in the dark. Could it be a June announcement – maybe, could it be October – Maybe or could Apple break with their own convention and release something between the two dates?
If the iPhone doesn’t come in June and there really is a new mini iPad and iTV coming later in the year will they release both of these brand new products alongside a new iPhone or will its release get diluted somewhat?
All questions at the moment and no firm answers. From my point of view the Apple silly season has reached new levels this time around.
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May 24th, 2012 at 2:00 pm
Steve Jobs worked on the iPhone 5 before he died, so a lot of the work on the iPhone 5 had already been done. All Apple needed to do was make final adjustments and put it into production.
I think the reason Foxcon had to hire so man new people is for the new mini iPad and Apple HDTV.
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May 24th, 2012 at 2:13 pm
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May 24th, 2012 at 2:14 pm
@Mike D. I will agree that apple probably has to try and use the commercials as they are trying to compete with an old product. Just think it is a piece of information worth noting as it may or may not provide clues.
@Vernicularis
“apple silly season has reached new levels”… I love it.
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May 24th, 2012 at 2:28 pm
“The iPhone 4S hardware was pretty different from the 4. The design didn’t change, but the radios, processors, RAM, etc. were upgraded.”
That’s true, wicket. But to the average Joe, those upgrades made little different. You and the other readers on this site are generally very well-educated on consumer electronics and their features. But most people who buy iPhones don’t know or care about the difference between the A4 and A5 processor. iOS 5 was a necessity for the iPhone 4S’s launch because it offered the only real, tangible upgrade to average users. This time around, average users are going to be drawn to the bigger screen and completely new form factor. As a result, when you say, “The backlash for releasing a new device with old software would be crazy. People are expecting a big change this year, not only from hardware, but also from a software standpoint,” I respectfully disagree. Most average users — seriously — do not even know (or care) what iOS is.
“The new mapping software being a big expectation. I also think Siri will finally come out of beta in iOS 6. I don’t have any proof on that, but that’s a theory of mine.”
I like that theory. But I’d also argue that Apple can debut Maps and bring Siri out of beta with an iOS 5.2, release the iPhone 5 with it, and upload iOS 6 via OTA once it is ready. It can be done.
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May 24th, 2012 at 2:47 pm
@Michael, you’re absolutely right that it can be done. I’m only stating what I believe considering what Apple has done in the past. The new factory Foxconn is building won’t be ready until October. That with the fact that we’re just hearing about the buying of components still points to a fall release. Remember, just because they’re buying the components doesn’t mean they’re ready for assembly. In the past Apple has bought mass quantities of memory and displays well ahead of a new product launch for fear of delays in production. Even if production started earlier this month, I don’t think Apple would have a significant number of iPhones ready to ship in June or July to keep up with demand. I’m enjoying your blog, and I love having a new (to me) source of researching and discussing Apple products. Keep up the good work!!!
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May 24th, 2012 at 2:56 pm
Many thanks, wicket. It’s great to have you here. To be sure, it’ll be interesting to see what all of this adds up to. At least we won’t have to wait too long to see what the WWDC bears out, if anything. If not the iPhone 5, then maybe one of the other rumored devices for this year. We shall see.
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May 24th, 2012 at 3:05 pm
@Michael
If Apple introduce iOS 6 with improvements like a Siri full version and their own maps app. Need they then really time for a beta ?
I mean last year they introduce it without any test by developers. So why should they make this time a beta? Same with new maps. I think it is what Siri was last year—the exclusive feature. Which may first will show at the iPhone 5 Keynote, if they won’t announce ist in June.
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May 24th, 2012 at 3:06 pm
This is totally unrelated – but I like how everyone is having a civil discussion and being respectful of other peoples opinions too many times people are just rude jerks, so bravo for keeping it civil and nice!!
On topic – I just want a new Iphone I don’t care when at this point all I want to do is blow my upgrade on a new Iphone, I like speculating because it keeps me interested and keeps me from throwing my piece of garbage Samsung Fascinate (awesome screen OLED rules, but lousy with freezing and crashes) through a window. So if I have hope that an Iphone is coming I am more patient
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May 24th, 2012 at 3:07 pm
Whilst my thought train is over analysing ‘What we are all waiting for’ what about this theory……
Apple doesn’t release the new iPhone in June but instead announces the date it will get released ala Samsung?
They could create a new website with teasers like Samsung did to build excitement, we would all know when it is coming and it wouldn’t get in the way of other future hardware releases.
Maybe the URL for this teaser site could be iphone5.com?
Should I switch to decaf?
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May 24th, 2012 at 3:11 pm
@Vernicularis
This would stop the iPhone 4S sales drastic. But i think they will say when iOS will released (Fall or late Summer)
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May 24th, 2012 at 3:11 pm
@Nace, I agree with your last statement.
@Wicket, “The iPhone is Apple’s flagship iOS device”….Out of all the Apple products, how many are running on iOS? I’m not so sure that iOS is the driving factor of what sells iPhones. Apple can release a new version of iOS to any iPhone at any time. I disagree that they have to have iOS 6 ready in order to release a new phone. Most people are sick of the current form factor and the biggest selling point is going to be a new form and sweet new hardware. The iOS upgrade can come at any time afterward and i’m sure nobody will care about that delay.
Another way of looking at it is that people aren’t reading blogs and rumors everyday about when the next iOS version is coming out….it’s all about the new phone and new hardware. That’s what people want. The software plays an integral part, but people are impatiently waiting to see what new software upgrade Apple is going to release.
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May 24th, 2012 at 3:17 pm
this is my personal opinion so take it for that – if they announced “hey check out this site we will be releasing info on the new phone you have been dying to have little by little as a teaser” people would RIOT in the streets. I can hear the collective cry “we waited for this…. a WEBSITE that’s what we waited for.
Here is a new rumor to start….. they are replacing Siri……. with the voice of Steve Jobs……
Sorry if this post is rude maybe I need to switch to decaf as well just merely trying to put some humor out there
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May 24th, 2012 at 3:54 pm
@Andrew
I sometimes wonder where some of the comments I write come from and I don’t take anything seriously so kudos to you!
@Kev
Isn’t it time for Apple to put the IP4 form factor to bed? If they do release a new phone, give us a release date or we have to wait some more months the IP4s is dead in the water now.
I think that the sales for the IP4s have even taken Apple by surprise and as a result have possibly had to have a hard think of their release schedule. I read recently that Apple have managed to block the imports of the HTC One X and Evo 4G and although they may have a valid case (I don’t know if they do or not), why do this now?
I am lucky enough to have held a Samsung Galaxy S3 phone and personally I think Samsung have done an Apple and not given its users enough, just like the IP4s. A good friend of mine has a Galaxy S2 and says he won’t upgrade at this time because the new phone just hasn’t got enough extra features for him to justify it. It is a nice phone, maybe it feels a little ‘cheap’ but I wouldn’t go as far to compare it with a frying pan or table tennis bat as some commenters have due to its size.
Michael Nace made a good point earlier in this post in that consumers are mainly not like us, the needy geeks, and just buy a phone because it looks new and it doesn’t really matter what is ‘under the hood’.
I agree with you @Kev that Apple will give us a rough time frame for the release of iOS6 at WWDC but with a potential lineup of so many new iOS devices such as iTV, iPhone, iPod, Mini iPad and full size iPad the upgrade could be applied at any time to these units.
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May 24th, 2012 at 3:55 pm
@Andrew
It’s one of the qualities of the site, and when there are rude posts, they are pretty quickly called out.
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May 24th, 2012 at 3:57 pm
I agree, Andrew. The discourse on this blog is amazing. Just look around the comment board of similar tech websites — the level of anti-social banter is really disturbing. The only time we have some comment weirdness is when we have a DRUDGESTRIKE (when Drudge carries our articles). Of course, if Drudge carried this blog’s articles 1-2 time a week, I could quit my day job and do tech blogging full time.
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May 24th, 2012 at 4:19 pm
One of the things I tell my kids is “what you say says more about you than anyone else.”
As for the enigma that is Apple and release schedules, I know that Apple will do what Apple does, and we’ll all be congratulating/condemning ourselves for calling it/missing it. When it comes to the new phone, I’m getting it, whenever it comes out. One of the benefits of being an iMac owner. In short, we’re trying to predict an unpredictable company.
As for the “general users” Mrs. in Everett is the one I turn to for those kinds of evaluations. She wants a phone that works, lets her listen to her music/books on tape, etc. When driving, I ask, “where do we need to turn” and she pulls up Google Maps and lets me know that we should have turned a block back. I agree with Mike D. on his assessment. Most people don’t read release notes for new software, so they’re going to say to their tech savvy friend that does, “what else does it do?”
Andrew, I do wish they had different voices for Siri, like John Cleese, Jack Nicholson, JarJar Binks (I can only imagine the dislikes I’ll get for that one…), or whomever wants to license their voice to use. I personally think it would be fun to use Siri in a Starbucks up here in Everett, and have Rush Limbaugh asking me what he can do for me, just to see the look on the patrons’ faces.
Oh well, the next 3 weeks will be interesting, as will the one after it.
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May 24th, 2012 at 4:32 pm
“John Cleese, Jack Nicholson, JarJar Binks” I did give you a thumbs down for the JarJar Binks reference, Mr. in Everett — but if I could give both an up and down vote for your comment, I’d do so, since the rest of the comment was extremely good.
Yeah — I can’t be offended by the “joke” of Steve Jobs’ voice being utilized by Siri. I think that’s a cracking good idea! Of course, I’m also rooting for the day when they roll Walt Disney’s frozen arse out of the freezer, thaw him, and let him reassume his position on Disney’s board of Directors. Can you imagine him walking in on all of those freaks, and being like, “So what have you all been up to around here?”
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May 24th, 2012 at 5:11 pm
All I can say is I just can’t wait till WWDC. 2.5 weeks seems so far way.
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May 24th, 2012 at 5:33 pm
I think there are several big factors that some of the commenters are overlooking:
1. The business aspect of either reducing orders or releasing a new product would be mutually exclusive. If a product such as the 4S were sputtering in sales to the degree where a 25% reduction in orders occurs, business 101 would tell us the iPhone 5 (new iPhone) has to be right around the corner. It just makes good business sense.
2. DBTH – Don’t believe the Hype. The prototype story is a perfect example. A consumer electronics company such as Apple is, would have had prototypes designed shortly before the release of the 4S only to minimally tweak things over the following months before approving for mass production. As an example the iPad was in protype phase before the iPhone was developed. http://thenextweb.com/apple/2010/06/02/steve-jobs-the-ipad-concept-came-before-the-iphone/
3. The things Apple can’t hide are the mechanisms that drive their cash-machine. The reduction in orders of new 4S, the decrease in cost of current models available (3GS being reduced to $250 without contract in pre-paid markets (Forbes 5/20)), advertising to push out current inventory stocks, etc. These are the trends in Apple’s business model. Those that state that they can’t refresh so quickly after the 4S, neglect to realize that those that purchased the 4S are not the end users that will impact the bottom line in Cupertino…it will be the iPhone 4 users whose contracts are up in June/July and now have more choices than ever.
4. With HTC launching the EVO 4G and One X, Samsung releasing the GS3 during this timeframe and the push Apple has made on two fronts:
a) The EVO 4G and One X being held up by customs due to an FTC order in Apples favor
b) The nano SIM push at the ETSI
…should be indicative of a mobile device looming on the horizon.
While I’ve stated in the past, that I could be dead wrong…the business model of Apple and how they execute said model should be the clues we are attempting to decipher. If they do launch a new iPhone at the WWDC, we will now know the clues to key in on during an upcoming release year.
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May 24th, 2012 at 6:59 pm
Remember all the rumors about Qualcomm having low supplies of chips for the “new” iPhone?
Maybe it was Apple buying them up all along. I do wonder if they had purchases through Foxconn and others to hide their trail of what they were up to.
Sometimes I think they have enough little fires going on around that no one can actually pick up the scent.
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May 24th, 2012 at 9:03 pm
@Michael DeCook
I’m not sure if you meant to only support the idea of a summer release because that’s the way it sure comes across. This is how I would reply to your comments:
1) I disagree that business 101 would tell us that the iphone 5 is right around the corner. A company cannot foresee when sales are going to drop off. They may have an idea but Apple could have been banking on the idea of negotiating bigger contracts with other carriers (i.e. China) and realized that it didn’t happen according to plan…in the meanwhile if they had planned all along for the iphone to be released in the fall, and then all of a sudden sales drop off, that doesn’t mean that they can all of a sudden push such a huge project up by several months just to meet decreasing demand in the current product. Your analysis on this is very one sided. Again it appears to only want to support the idea of a summer release and limiting probably hundreds of other variables.
2)I don’t believe the hype. What makes sense leans towards a fall release. Then there are blogs or people such as yourself that seem to really push the idea of a summer release. There is already a lot of built up anticipation and hope for a summer release but it doesn’t seem all that possible. The hype pushes towards summer, and I don’t believe it.
3)Your comment of the iphone 4 users whose contracts are up in june/july that will drive the bottom line negates the fact that Apple has already pulled this stunt in the past. The 3GS users last year whose contracts were up in june/july would have supposedly driven the bottom line, but Apple held off until October to release the 4S. Also, you should remember that the amount of iphone 4′s that were sold in june/july of 2010 were a very small amount to the total of iphones that have been sold since that time and will not be expiring in june/july of this year. Most of those iphone 4 users whose contracts are expiring will probably wait until the I5 is released, so Apple will still retain that revenue, it would just occur a few months later. In the meanwhile, they are able to continue squeezing a bigger margin from the current model while reducing inventory.
3)I would agree that we should be attempting to decipher the business model of Apple. However, it’s a different model with Tim Cook. Steve Jobs’ business model never would have paid a dividend, and in less than a year Tim Cook’s business model does.
The bottom line is that Apple’s business model is to drive as much of a bottom line as possible. Business 101 tells us that. If Apple can squeeze out a higher profit margin, build up anticipation for the new phone (even moreso than it already is), and release the latest and greatest technology…they will continue to be wildly successful.
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May 24th, 2012 at 9:51 pm
I would like to throw few more things out for thought under business 101.
1.I remember seeing a few weeks back that the Iphone 4 was out of stock in some regions so Apple was replacing them with the 4S. < Any thought on how this plays in to the inventory?
2.Both Verizon and AT&T are working out detail for a new shared data plan to come out later this summer which could directly or indirectly tip off the release of the Iphone and the cost to which we will have to pay
3.Most contract out there make you commit you to the length of time you stay at the carrier.
4.I think the 2 major carriers will have a head up on when the IPhone are coming out and we should see hint from them on it when they start to make service changes to the Data they offer.
Don’t get me wrong I would like to see a June release, I think it very possable with the changes in progress with the 2 major carriers but if I see this happen I think we could see the Iphone comming out with in 2 to 3 week of this kind of New Data Plan being released.
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May 24th, 2012 at 10:02 pm
The debates that have taken place under the posts for the past few days have been amazing. Great stuff, folks!
Well-loved. Like or Dislike:
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May 24th, 2012 at 10:58 pm
@ MikeD (feels like I’m debating myself)
First, I’d like to state that of course an argument would be one-sided, you either feel the evidence is pointing to a summer release or a fall release. Quite honestly those are the only facts any of us (outside of Cupertino) know about the next iteration of the iPhone.
Now my rebuttle to your points:
1. You have $90 billion in your back pocket and your company is valued at more than a half trillion dollars. Your second leading revenue provider (iTunes/AppStore) is slipping in sales…do you honestly believe that you couldn’t move up a release projected for 2013 Q1 into 2012 Q4, if that ever truly was the case? A company with the cash flow of Apple has contingency plans in place just for scenarios such as this. And while there may be ‘hundreds of other variables’, considering the company has doubled it’s valuation in the past 12 months and had 60% revenue growth in FY2010 with an estimated 60% revenue growth in FY2011 (under Tim Cook, but more on that later), I’m sure they are good at developing ‘break glass in case of fire’ contingency plans.
2. Your statement on my comment is contradictory to all of the analyst and tech pundit rumors being thrown about. If there was hype it would surround the Fall release theory as every rumor starts with, ‘in anticipation of the new iPhone release this fall’. I might have you ‘lawyered’ on this one.
3. Your theory here is also easy to debunk as there is one key fact you are missing. The first iPhone that came with a subsidy was the iPhone 3G (2nd Gen). Seeing the original iPhone was without subsidy, someone who paid $600 for the iPhone (like myself), gladly accepted the subsidy and plunked down the $200 for the iPhone and signed on the dotted line. This would mean the first two generations of iPhone users were on the same contract cycle. Seeing as well that the iPhone 4 was also an even numbered gen phone, you now have 3 generations of iPhone users on the same contract cycle (insert joke here). That being said, when it comes to subscribers (at least here in the US and most countries this side of China) you would see a greater demand for the next iPhone this summer.
4. While you do have history on your side with the dividend comment (no dividend was paid while Jobs was CEO) to say that it is a different direction with Tim Cook as CEO might be a little misguided. Referencing the numbers I listed above and seeing Tim Cook has been function as CEO concurrently since January 2011 (as well as interim CEO in 2004 and 2009), I’m sure that he has had a more significant impact on their business model than you are giving him credit for. There is a historical trend you can follow for the company’s growth with Cook as CEO and it has done phenomenally.
I do have to agree with your wrap up as they have done a tremendous job with squeezing so much out of their products. However, I don’t believe that they can spread the margin further. Regardless of whether you believe that the next iPhone will be released this summer or this fall, when all is said and done the possibility exists that they will have 4 models on the market thus decreasing the cost effectiveness of each model. But in the end we will see, it’s not about being wrong or right…this is just my interpretation of the tea leaves.
@JB
Verizon has just recently announced the discontinuation of all of their grandfathered plans effective immediately after a subscriber moves to a 4G phone…yet another piece of the puzzle, in my estimation.
Lastly, I’d like to say that I believe the Foxconn plant being built in my estimation is to appease the Chinese government especially with the projected build out of the China Mobile and China Telecom LTE networks over the next two years.
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May 25th, 2012 at 1:43 am
Hey Michael! I found interesting that they are ordering from that quartz crystal company. What would they do with that? Would they replace Gorilla Glass screen with scratch resistant quartz screen? Hmmmmn…
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May 25th, 2012 at 4:35 am
Seeing Apple is testing iCloud with unknown OS, I think iOS6 will be more for improving iCloud rather than adding new features on the iPhone. There is already OTA which helps updating to the new iOS when it comes. So iPhone5 could be released without iOS6.
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May 25th, 2012 at 8:00 am
Perhaps they are saving IOS6 for the iTV later this year. With so many products using iOS, there really is no reason the iPhone HAS to be the one to showcase the new version.
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May 25th, 2012 at 1:56 pm
@Michael DeCook
1)It doesn’t matter if Apple has $100 billion in cash sitting around. If they had certain technologies being developed on a certain timeline and have many different suppliers and components that all need to be arranged at certain times, you can’t jump up a major product by several months without cutting corners or compromising the quality of your product. There is no way that Apple would do that. I think it’s naive to think that you can just magically make everything happen just because the money is there. If that were the case then why didn’t Apple come out with a better iphone last fall? Which apparently (based on rumors) got pushed back to the fall in the first place because not everything was ready.
2)I don’t believe that the “hype” points to a fall release. I think very qualified, legitimate sources have reason to believe that it will be released in the fall. The hype is contradicting that and saying that it will happen sooner than later and gets everyone’s hopes up without much substance to support it. Maybe its just semantics, but I define hype as promoting and intensifying the desire of something. I would say that it intensifies a persons desire a lot more for the iphone by telling them it will be released in a few weeks, rather than saying it will be in a few months.
3) My “theory” has nothing to debunk. The fact is that only a small percentage of iphone 4 owners actually bought the iphone 4 in the first 2-3 months it was released. That means that the majority of iphone users don’t care if the new iphone is released this summer because their contract won’t expire at least until the fall (or later). From Apple’s perspective, it won’t hurt them from a revenue standpoint if they release the iphone a few months later. Besides all of that, I’m sure Apple’s biggest concern right now is getting a deal with the largest carrier in China which would turn out to be way more profitable than any of the US sales alone. Nobody has even mentioned the idea that maybe Apple is holding off on releasing the new iphone until they have a contract with them and can give them the iphone 5 instead of the 4S for just a month and releasing a new phone.
4) Tim Cook is running Apple differently than Steve Jobs. That is not misguided. Look at the dividend payout. Also Apple has started matching employee donations to charities under Tim Cook. Steve Jobs thought the idea of a 7 inch iPad was ridiculous and guess what’s rumored to be coming out in the iPad world? I’m sure Tim Cook has played a significant role all along but it would be foolish to say that Tim Cook has not changed Apple’s business model.
I will openly admit that there is obviously a possibility that the new iPhone is announced in a few weeks. Apple ultimately has all the secrets under wraps and we only have small pieces to the whole puzzle. We all interpret the information differently and have different perspectives. I guess I’m just tired of soooo much pushing for the idea of a summer release when it appears that the argument for it is still very weak. Maybe that’s what Apple wants in order to surprise many of us. If that’s the case then kudos to them and I will be thrilled. But it seems like, based on all the information, that the new phone is much much more likely to arrive in the fall.
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May 25th, 2012 at 3:10 pm
“I’m sure Tim Cook has played a significant role all along but it would be foolish to say that Tim Cook has not changed Apple’s business model.”
As long as he changes the business model for the better then I’m all for it. If he turns out to be another John Scully then Apple’s in trouble.
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May 25th, 2012 at 8:27 pm
I knew it! Looks like I’ll be wrestling Vodafone to get out of this 4S contract 15 months early :/
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