updated 09:48 am EDT, Tue October 2, 2012
Phone's complex assembly now main obstacle to sales
Productions yields of in-cell touchscreens for the iPhone 5 are improving, and imposing less of a burden on manufacturing the phone, according to Sterne Agee analyst Shaw Wu, citing supply chain checks. The screens have regularly been blamed for Apple's inability to keep up with demand. Now, however, the main issue is said to be just the complexity of building the 5, since the product is extremely minimalist and cased in aluminum and glass. Apple, moreover, "has very high standards where it aims to produce each model to be an exact replica where variance is measured in microns," Wu claims.
The supply chain is said to be holding steady in terms of build plans, indicating no drop-off in demand. Wu speculates that demand could have fallen off because of problems with iOS 6 Maps, but this doesn't appear to be the case. "...we believe AAPL made the right decision in addressing its Maps-gate issue head-on, referring those who have problems to use third-party maps," the analyst writes. "At the end of the day, AAPL's goal is to produce the best user experience possible and as a leading platform, third-party support is essential.
"Because AAPL Maps is software based, we have high confidence that it will become more powerful and refined as more mapping and user data is acquired. People forget that GOOG Maps started out inferior to YHOO Maps and Mapquest. From our understanding, AAPL had no choice but to produce its own Maps as GOOG wanted to keep turn-by-turn navigation unique to Android. We see this as short-term pain for longer-term gain."
For the September quarter, Wu is estimating that Apple will have shipped 27 million iPhones. For the upcoming quarter, though, shipments are expected to jump to at least 46.5 million. This is likely to be fueled by a combination of the iPhone 5's recent introduction and the standard holiday bump.