APPLE CUTS SMARTPHONE PRODUCTION TO FOCUS ON iPHONE 5S

iPHONE 5S

We are expecting Apple to roll out a new iPhone before the end of September, and if the rumors are to be believed, there may even be two new iPhones coming to market this year. However, the desire to own an iPhone is apparently dropping among consumers as Apple has cut production back for the second half of this year.
Instead of producing 120 million new iPhones before the end of 2013, Wedge Partners analyst Brian Blair has stated Apple will only now produce between 90-100 million, which is a 20 percent drop. That’s quite a large scale back, but in context it still means Apple is selling a lot more smartphones, as much as 26 percent more.

Of course, Apple cutting production gets investors worried and the company’s share price has fallen because of this. That should be easily reversed when a new iPhone does appear, and you have to wonder how much this production cut back is actually related to making the switch to iPhone 5S and potentially a budget iPhone handset.

The budget iPhone in particular will require different parts in order to hit a much lower price point. Lowering orders for certain parts could easily be misconstrued as a cut back when it is in fact just a switch to other parts production and suppliers.

Inevitably, sales of smartphones will start to flatten out in established markets due to saturation. Apple needs to target new, emerging markets as well as cater to more people in existing markets. A budget iPhone certainly sounds like the best way to do that.