Yesterday, there were reports originating from Asia regarding the reduced iPhone 5 orders that the Cupertino company is placing with its Asian hardware component partners. When the iPhone 5 was introduced at the end of last year with a larger screen than previous iterations, there was great demand. In fact Apple sold a record 2 million handsets during the opening weekend. It seems now that the demand has not grown according to Apple’s projection and is instead sliding down. This puts Apple’s component partners at financial risk since the record sales must have bolstered their confidence in strong future sales.
The reduced numbers are due to weak demand for the iPhone 5. Does that mean that the latest version of the iPhone has not gone down well with customers? The iPhone 5 came with a bigger screen which it probably did to fend off competitors like Samsung who have been tempting erstwhile happy Apple users with big screens as seen in Samsung’s Galaxy S3 phone. We have written about how the idea of a bigger screen size is going mainstream in the smartphone market. There is no data yet on the sales of the iPhone 5 after its launch and Apple will soon be releasing the financials for the last quarter of 2012. We might get some insights into that situation then.
However, the markets took this ‘weak demand’ for the iPhone 5 seriously and this has resulted in Apple’s shares falling 3.5% yesterday, which happens to be the lowest it has been in 11 months. Share prices of its component makers have also fallen because of this. Sharp which makes display panels for the iPhone saw a 7% fall in shares while ACC Technologies which makes the speaker component saw a 4.2% drop in shares. According to reports, Apple has cut iPhone 5 LCD display orders by 50% in Japan! Did Apple get overeager and project an unrealistic sales figure depending on the the sales during the launch weekend? This might be possible. Sharp is already struggling financially and has already kind of failed at its own mobile phone business. This recent cut may aggravate its financial problems further.
Do you think that Apple’s power over the smartphone market will slip further due to increased competition from others like Samsung? Share your thoughts with us.