Apple halves some iPhone 5 component orders

When Apple launched the iPhone 5 last September there was definitely a mixed response to the new handset. Yes, it had a larger display, embraced 4G, and was thinner, but it wasn’t revolutionary, just another evolution. And that seems to be causing Apple a few problems as the iPhone 5 isn’t selling anywhere near as well as expected.

The evidence of that comes in the form of revised component orders. Apparently, Apple has cut the order for iPhone 5 displays and some other components for the handset by half for the January-March quarter. The cut was ordered last month, and is only now being leaked to the press.

A cut in component orders is a big contrast to when the phone launched. At that time a display shortage was blamed for only 5 million sales. There was also concerns over how robust the device was, with scratches and chips being widely reported and explained away as “normal” by Phil Schiller.

Apple may be experiencing lower than expected sales of the iPhone 5, but there could be another reason for the order cut. It’s quite possible Apple is considering an early launch for the iPhone 5S as a way of boosting its position with regards to competitors, although it’s unlikely that would sport a different display size. If anything, orders might increase slightly if that were the case.

As a company, Apple holds just under 15 percent of the smartphone market. However, Samsung has increased its share to over 31 percent and offers a much wider variety of handsets. Clearly Appleneeds to react, and maybe releasing a new iPhone more regularly is one way of doing that.

Also, spare a thought for Apple’s component suppliers. Typically the company likes to max out capacity and orders specialized parts. With orders cut in half a number of manufacturers will now have a lot of spare capacity they can’t really use for the next three months.

via WSJ

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