But when it comes to the annual launch of the iPhone, there’s not much that can be done about a burst of pent up demand causing a massive spike in sales. Anything that can be done to minimize that spike and spread it out is helpful. Which is exactly what Apple did this year.
For weeks now I’ve been hearing pundits say that you may not be able to get an iPhone X until early 2018. But that doesn’t seem to be how things turned out. Anecdotally, everyone I’ve spoken to who wanted an iPhone X and got up at 3 a.m. has one on the way next Friday. No big deal. Further, Apple is shortening the wait time for those who missed the first wave.
As of this writing the day after orders opened, the wait time is 5-6 weeks and not three months like many predicted. A 5-6 week wait is pretty much par for the course on any typical iPhone launch. Even at 6 weeks out, that puts the delivery and sale solidly in Apple’s all-important first quarter. It looks to me like everything is working out pretty well.
So what did everyone miss? Why all the gloom and doom about 3-month wait times for a new iPhone X? I think it’s the fact that you can pretty much divide the annual swell of iPhone upgraders into two camps. Those who needed a new iPhone and simply waited to ensure that they didn’t get a soon-to-be obsolete model. They intend to keep their phone for another three years and didn’t want the old one. Then there’s the group of upgraders who want the best of the best, regardless of cost.
The iPhone 8 upgraders had a fairly pleasant upgrade experience this year. No lines and plenty of stock. There isn’t the big push on day one, but that’s because these people are in no hurry. However, much to Apple’s delight, they’ll be buying iPhone 8s just as quickly in 2 or 3 months as they are now. No spike in demand, but demand is smooth.
The iPhone X upgraders had the standard experience this year. Get up at 3 a.m. to make sure you get your order in, or wait until the next day and wait 5-6 weeks. There’s not much Apple can do for this group due to limited supply. But what Apple did do is greatly reduce the number of people who end up waiting.
Smoothing out the demand by breaking it up into two waves helps both the customer and Apple. All those iPhone users still using busted up iPhone 5s don’t have to wait so long to get a new iPhone. For Apple, cutting the volume spike down and smoothing out some of the demand takes a lot of pressure off of the manufacturing and logistics groups. That means lower costs and higher margins. So by splitting their iPhone launch into two and aiming it at two very different groups, Apple ends up with overall higher gross margins, lower manufacturing costs, and higher customer satisfaction. Everyone’s happy and I’m not seeing any downsides here.
The part that I’m fuzzy about though is whether this was by design or a lucky happenstance? This all works to Apple’s advantage, but was it blind luck caused by manufacturing problems that they stumbled on a dual-stage launch? Will they want to do something like this every year now?
If I had to guess, I’d say that this wasn’t Apple’s plan. Launching two models is easier for manufacturing and logistics but places more strain in other areas like engineering and design. Although, with the way things seem to be going so far, I’m sure Apple has a lot to discuss regarding how they want to approach the annual upgrade cycle now.
Now available in iBooks —> The Tesla Bubble