Recently reports have surfaced that Apple has reduced the orders for parts to make the iPhone 5. There are three theories as to why Apple has taken this action. 1. The iPhone 5 is not selling as well as they had hoped. 2. They have designed a way to produce the iPhone 5 more efficiently. 3. Apple is preparing to roll out another product in the Spring. All three theories have a basis in corporate strategy, each with very different implications.
Is the iPhone 5 not selling as well as Apple had hoped it would sell? The iPhone 5 broke records for opening weekend sales, selling over five million units. However analysts were disappointed because some had predicted that over ten million units would be sold in the first weekend. Were the analysts a little over zealous in their estimates? Forecasting accurate sales numbers can make or break a company. It is also one of the hardest numbers to figure out. How can we expected to predict the future? We’d like to believe the consumers will act in a predictable way, but obviously human behavior is unpredictable. What this all boils down to is that if Apple had over estimated their original sales forecast numbers then it would make sense that they would be tapering off orders for parts to produce the iPhone 5.
Has Apple designed a way to produce the iPhone 5 more efficiently? Jay Yarrow from Business Insider described a theory as “Apple may have put in a bigger manufacturing order under the assumption that the iPhone 5 was going to be hard to make. Turns out it’s not that hard to make, so Apple can cut its order.” Again an important part of creating and maintaining a business strategy would be to accurately predict the resources you will need to produce your product so that you don’t over buy or under buy.
Is Apple planning a new product rollout in the Spring? Apple has recently moved from rolling out products once a year to doing new product rollouts twice a year. This is a significant change in strategy for Apple, and we have to question whether or not it is a good idea for Apple to roll out products at double the pace. Should we follow the old adage “If it ain’t broke, don’t fix it?” Or is it important to try to keep pace with new strategies and try new things?
http://tech.fortune.cnn.com/2012/12/17/apple-iphone-5-sales/
http://tech.fortune.cnn.com/2012/09/24/apples-5-million-iphone-5-sales-what-analysts-are-saying/
It’s amazing that there are enough followers of Apple that reports are actually released on the ordering patters of iPhone 5 parts. How many other large companies would draw this much attention to their ordering trends as Apple does? Tracking Apple’s corporate strategy is an analyst’s dream seeing as there area always many ways to think about why Apple makes the decisions it does. This article is a perfect example. For any other industry, a reduced parts order would most likely just signify a lack of sales of that product. Inventory and production would be adjusted to offset lower sales. However, in the case of Apple, speculation goes as far as to say that Apple could be just preparing for a launch of a new product already. Are analysts overthinking Apple’s strategy? Are they giving Apple too much credit on the strategy side? It will be interesting to find out how this plays out. Apple has obviously made it’s mark in the industry to cause people to think this is all part of a larger strategy.
Well it is Spring now, and no new release from Apple. I am in the midst of currently upgrading my phone now. I couldn’t decide whether to get the iPhone 5, or the new HTC one, that will be released on Friday. After talking to many iPhone 5 owners, and Sprint representatives, and many YouTube videos comparing the two phones, I was surprised that I was told a number of times “not to waste my money on the iPhone 5.”
Could this reduction in ordering of parts possibly be a combination of all three theories? It is true that the iPhone 5 was not as popular as Apple would have hoped. Maybe they have become more efficient in their production, which in turn has led to the creation of a new product that will hopefully be more popular than the 5. Similar to the iPhone 4 and 4S, maybe an updated, more efficient version of the 5 is going to be released. As someone who is due for a phone update, I’m going to wait it out and see if they release something better in the near future.
I agree with the fact that it is okay to try new things. This is how we overcome obstacles and make things more efficient in the business world. Apple has done this for quite some time. I also agree with the statement “[h]ow can we expected to predict the future?” This is hard to do in the business world, especially for a company like Apple. As we see, Apple, a powerful company who has always successfully been the best at promoting the newest gadgets, wanted to have ten million phones sold, but instead only sold five million, and because of this, Apple wanted to decrease the units of its iPhone 5. I believe that Apple is not thinking clearly. They sold quite a lot of their product, a product that everyone wants, and Apple wants to decrease production because it didn’t meet a quota that was quite out of their reach. In my opinion, it is a bad move for their business and they may regret going through with this decision.
Honestly, I think that Apple needs to take a chill pill. That number was overly optimistic and whatever this drawback in production indicates they need to seriously think about the whats next. My number one issue with this company is how fast they release products. This may sounds weird but think about how you feel when you buy a new Apple product only for your device to be considered “outdated” a few months later. For the customers who have to have that new device releasing the iPhone 5S may be wonderful news but how about those who just got the 5? I think Apple needs to allow customers to become adjusted to the 5 and its differences from the 4S before releasing yet another phone. I am not surprised that the 5S didn’t sell as much as predicted, it simply does not live up to the hype-there isn’t enough differentiation from the 4S aside from the size and the changes they did make-the charge adapter port is annoying.
Apple’s way of doing business is genius but they are just stealing money from consumers that are susceptible to marketing tactics and following trends. They convince consumers to buy a $500 phone once a year, buy new chargers, buy new features, new screens, and much more. In my opinion, it is Apple trying to produce their products more efficiently and uses less materials to increase margins. Companies like this care about margins more than happy customers. At the end of the day, as long as consumers are impressed by the aesthetics and cool features they can continue to steal money. But hey, at least they are an American company!
I believe that apple did get their hopes up too high. The IPhone 5 was not even that different from the 4S. I believe that the only function that really makes it different is a better camera and a better looking black color. Because the product was not too differentiating from their existing product, there was not enough motivation for all the customers to want one. This is especially true when a lot of consumers who buy apple products look at reviews. If the initial people are not impressed, then sales would go down and not meet anticipated expectations.
Apple was expecting a lot for the Iphone 5. I currently own an Iphone 4s and I was considering buying the new Iphone 5. I realized that it wasn’t that much different than the Iphone 4s. It doesn’t make sense for people to buy the new Iphone 5 if they already have the Iphone 4s. They aren’t that much different and it would be a waste of money. I know that apple is coming out with a new Iphone soon, but it doesn’t make sense to come out with so many Iphones in such a small time frame. Some customers will be willing to pay for the new phone, but other customers won’t as they just got the most recent Iphone. Apple should slow down with releasing new Iphones so soon. Either way, Apple will continue to make enormous amounts of money as more and more people want to go with the Iphone.
I think Apple did over produce with the Iphone 5. The Iphone 5 isn’t that much of a jump for consumers to drop what they have and buy it. It will be interesting to see how innovative they will be without Steve Jobs.
Overall in business, they have a good strategy. It’s not their fault that consumers can become susceptible to Apple indulgence, they can only forecast from what they’ve gotten from consumers. It’s funny because I’m in the spring class and there already are rumors about the iPhone 5s. I think it’s good for consumers because if we want the new iphone 5 so badly right now, then all we have to do is wait a year and the phone will be half the price because another one has already taken it’s place. I do think that they should start making the phones in variety colors, but it’s just a suggestion.
Well I recently just got the Iphone 5 (which I never put down) so I thought this article was very interesting. I think that the third possible theory would be a bad idea because if technology is moving too fast, the customers will not have the time to appreciate the actual product. Also a lot of the customers are in two year contracts with their service providers so I think that introducing too many products would be a bad idea.
One of the main reasons Apple became a top company is because they were a “cool” product, and people bought them as a status figure as much as for the hardware specifications. Recently, however, Apple has been surpassed in the hardware specs, by companies such as Samsung and HTC, who are making phones with the same specs as Apple, only a year sooner. All in All, i believe that Apple expected to sell more phones, but realized that they over projected how many they would need.
All three theories regarding Apple’s current situation and their future corporate strategy seem plausible given my relative knowledge as an Apple consumer and the research provided. The iPhone 5 may have initially broke records for opening weekend sales, however, other cell phone companies such as Samsung have caught up to Apple, perhaps even exceeding their technology and public perception of product quality. Also, due to my experience with friends and family, Apple has turned off a lot of their customers with their plan to “rip-off” consumers by changing the port to charge your iPhone. Whereas one of Apple’s greatest appeal was their universal charging system for all of their products. As for producing their phones more efficiently, all companies improve production over the years, thus producing and selling more at a lower price to gain more of the consumer market and increase sales. Lastly, if I had a say in company strategy for Apple, I would advise them not to roll out a product twice a year. Rather create a better product then their previous one that customers will actually be able to tell a difference between and entice them to come out in droves to purchase the new iPhone. However, Apple seems to be doing just fine tweaking their phone each time just enough to break sales records. So what do I know really?