iPhone, Supply, and Demand

Apple, in a statement to CNBC:

Customer response to iPhone 6S and iPhone 6S Plus has been extremely positive and preorders this weekend were very strong around the world. We are on pace to beat last year’s 10 million unit first-weekend record when the new iPhones go on sale Sept. 25.

As many customers noticed, the online demand for iPhone 6S Plus has been exceptionally strong and exceeded our own forecasts for the preorder period. We are working to catch up as quickly as we can, and we will have iPhone 6S Plus as well as iPhone 6S units available at Apple retail stores when they open next Friday.

Although demand for the new iPhones was stronger than in previous years, most models were still available for first-day delivery several hours after preorders started. I guess I should feel a bit foolish for staying up so late to preorder mine when I could have done it at a more rational hour on Saturday. But honestly, I might have been up that late anyway.

Kirk McElhearn was the first person I noticed to point out the more readily available supply in his piece asking whether there was low demand or high production:

I was surprised to find that, at around 4 PM Saturday afternoon, or eight hours after the iPhone went on sale, it was still possible to order one for first-day delivery. In fact, it is now Monday morning, over 48 hours since the iPhone went on sale, and it is still possible to order certain models and have them delivered on September 25, the first day.

Of the lot, the rose gold models and every flavor of iPhone 6s Plus were the first to see slipping ship dates — which makes sense to me given that the rose gold option is a new addition to the lineup and the 5.5-inch form factor is only a year old. Overall Apple did a much better job keeping pace with preorder demands, but they still missed the mark with these models.

Aside from the demand for the new and shiny, KGI Securities claims that the supply constraints on the iPhone 6s Plus is due to production issues related to the 5.5-inch display’s backlight hardware.

KGI Securities, as reported by 9 to 5 Mac:

We believe Radiant is receiving rush orders, because Minebea is having production issues. This tells us that Radiant is more skilled at producing backlight module for 6S Plus given its accumulated abundant experience supplying the backlight module for iPad mini (a similar size to 6S Plus). To accelerate availability, we believe Apple has been transferring substantial 6S Plus backlight module orders to Radiant.

I’m very impressed with Apple’s ability to keep up with demand this year, especially considering they’re on pace to beat last year’s record of 10 million units in the first weekend. The iPhone I decided to preorder, 64GB iPhone 6s in Space Gray, is still available for first-day delivery as of Monday night. That’s incredible. And I’d expect that model to be one of the more popular of the bunch.

An Aside on Preordering

My preorder experience went as smoothly as I could expect considering I placed my order on AT&T’s website. I would have purchased straight from Apple, but unfortunately the only way to get 2-year contract pricing is if I order from AT&T. I had two windows open on my MacBook Air one pointed at att.com and the other at att.com/iphone. AT&T had setup simple webpages at both of these locations which reloaded every 30-seconds or so and would supposedly show you the storefront once you were at the head of the line.

I, like a dumbo, waited about 10-15 minutes with Safari refreshing before deciding to give it a go on my iPad. AT&T’s full website loaded on the first try (of course) and I was able to meander my way to the iPhone 6s product page. It took a few more page reloads and a couple of instances of backtracking, but I was eventually able to place my order at about 3:20am. I closed the lid on my MacBook, set my iPad on the coffee table, conked out on the couch, and slept until noon.

To the Doomsayers

I think it’s obvious that we haven’t reached peak iPhone, Apple has simply matured their supply chain to the point where they are able to keep up with initial demand — to the tune of 10+ million units, I might add. There’s still some occasional hiccups in the system, this year it’s backlight hardware, next year it may be something else, but it’s abundantly clear that Apple has built the most sophisticated hardware pipeline in the world. No one has this kind of expertise when it comes to manufacturing consumer electronics.

There’s no telling when demand for the iPhone will falter, but eventually it will happen. I don’t think it will anytime soon — as in, the next 3-5 years — but in the meantime Apple may actually reach the point where anyone with the means to do so can stroll into a retail store on iPhone launch day and walk out with a brand new device. And that’s without having to preorder or reserve one beforehand. With the way ship dates have remained steady, it could be this year for some models and potentially the entire lineup next year. That’s an outstanding achievement that everyone should recognize.