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Apple iPhone 5 faces supply constraints as consumer attitude shifts

Jonny Evans | Sept. 3, 2012
If you're one of the thousands of iPhone owners selling their smartphone to make way for the introduction of Apple's new iPhone then you'd better get ready to make your pre-orders as soon as you can, as it seems possible supply will be constrained.

Apple's set its own bar high. Testifying against Samsung, Apple's VP marketing, Phil Schiller, noted that each generation of the iPhone sells approximately as many units as the combined sales of all previous generations. 

Analyst Horace Dediu estimates this means the iPhone 5 will shift 170 million units across the next year. That's an impressive prediction. It equates to sale (and production) of just over five iPhone 5's each second.

Global Apple iPhone sales Q3 2012
You will find more statistics at Statista

Will component supply undermine Apple?

With production set to such capacity it seems clear that any delay shipping components to Apple will have a significant impact on its ability to meet demand.

Apple's problem as it engages in its platform war with Google's Android OS is that iOS sales appear relatively flat. iOS smartphones now account for c.20 percent of the market, with Google's OS grabbing over 60 percent, according to Statista/Gartner

This environment means Apple will be under great pressure to manufacture its slim, thin, smaller and bigger iPhone 5 in huge quantities. The company really doesn't need its suppliers to fall short in terms of component manufacture at this point in the war. 

There's a lot to play for -- smartphone use in the US is expected to reach 192.4 million by 2016 (eMarketer). All players in the space want to grab as much of these sales as possible. J.P. Morgan analyst Mark Moskowitz believes the new iPhone will be the leading smartphone in 2013.

The proxy smartphone war between Apple and Google is becoming increasingly confusing. It's unlikely consumers see this litigation as an inducement to purchase these devices, potentially creating an opportunity for Microsoft to grab share in the sector. The legal battle is driving people to become partisan regarding their platform choices.

The ugliness of the debate (and I've not been blind to the almost personal attacks levied within comments by some Android fans in reaction to any observation that isn't completely pro- their platform on reports all across the Web) is inevitably tarnishing Apple's reputation.

Shifting business

This is leading to some strange shifts in consumer behavior. For example, a YouGov BrandIndex report released this morning reveals that over the past month the iPad has overtaken the iPhone in overall popularity and in the 'Value' and 'Recommendation' categories. 

"This overtaking of the iPhone by the iPad is a reversal of the usual patterns which have seen the phone traditionally well ahead of its tablet counterpart on all the measures highlighted since before the beginning of 2012."


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