toggle

AAPL Stock: 98.38 ( -0.64 )

Printed from http://www.macnn.com

Apple: shortages on iMacs, iOS lines will continue

updated 07:07 pm EST, Wed January 23, 2013

Company 'cannot meet demand' for iPad minis, iMacs

One surprising announcement coming out of today's conference call with financial analysts was Apple CEO Tim Cook's revelation that while iPhone 5 supply improved significantly from its initial launch and that sales of the unit were robust throughout the quarter -- contrary to some rumors -- the continuing demand for the iPhone 4 at its lower price has caused shortages of the two-year-old phone that occurred "throughout the quarter" and may continue for some time. The iMac and iPad mini will also remain very constrained.

Cook offered no clear explanation of why the iPhone 4 was so constrained, but one possible explanation is that demand for the phone -- which is now offered for free with a two-year contract in many countries -- was higher than Apple anticipated, leading one analyst to ask directly about any possibility of Apple offering an even lower-cost future iPhone model. Cook deflected the question, saying that that price range of the present lineup was clearly acceptable to customers.

Analysts, like Apple, may be underestimating the appeal of a free iPhone 4, even if only available in postpaid contracts: the unit can run the latest iOS version and nearly any app, making it near enough to a top-line iPhone 5 or 4S in functionality that budget consumers can embrace it. Carriers often entice early upgrades to iPhone 4 customers that result in a later model without having to substantially increase their monthly obligation. The option of an all-prepaid iPhone model, however, was not specifically addressed.

The shortage of the iMac is of continuing concern to investors, as Cook made clear that ongoing shortages of the product will continue to hurt Mac sales in the near term. Though there are no serious constraints on the company's more-popular portable Mac products, the iMac is still a substantial seller and CFO Peter Oppenheimer attributed much of the 1.1 million fewer Mac sales compared to the year-ago quarter to the difficulty the company is having in producing sufficient quantity of the latest model to meet demand, as well as the weakening PC segment generally (the industry overall suffered the largest drop-off in over 10 years in 2012).

The latest iMac reduces the overall volume of the unit by 40 percent and creates a substantially thinner and lighter version compared to what has come before, but the techniques used to make the product -- including friction-stir welding for a seamless metal body and full-screen lamination for a higher-quality performance out of the LED-lit IPS LCD display -- have kept yields low, with Apple struggling to ship even a limited quantity out by the November and December deadlines the company set for itself. It was not able to ship out iMacs in sufficient quantity to make a large impression in overall Mac sales figures for the quarter. Cook warned that iMacs will continue to be in short supply through the quarter.

The iPad mini, however, may be giving Apple its biggest headache in terms of operations. Cook mentioned repeatedly in the call that Apple simply can't make the smaller iPad version fast enough to meet demand, though he and Oppenheimer agree that the company may achieve a "supply/demand balance" perhaps by the end of the quarter. In addition to being hinted as being significantly more popular than the full-size iPad, Cook acknowledged that tablets -- primarily Apple's three available iPad models -- are beginning to eat into the sales of notebook and even desktop computers, which may also partially account for the lower Mac sales.

Overall, iPad sales were up 60 percent from the year-ago quarter, with Apple now selling about 1.7 million units per week -- a figure the company said would have been higher if it had been able to make more units. Apple ended the quarter with "a significant backlog" of iPad mini inventory, and offered no clear date when the shortage would be alleviated. On top of all that, the iPad mini has significantly lower profit margins than the full-size iPad, dragging down the average selling price (ASP) of iPads as a line by around $100, which hurts the company's profitability.




by MacNN Staff

POST TOOLS:

TAGS :

toggle

Comments

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

MacNN Sponsor

Recent Reviews

JBL Synchros E40BT headphones

For all the different configurations of headphones on the market, it's always a tough choice for buyers to get something that is just ...

Razer Taipan mouse

The list of gaming devices is growing larger with each passing day. A large number of companies have entered the gaming input arena, a ...

Cambridge Audio DacMagic XS

Every computer with a microphone or headphone port has one -- a digital to analog converter (DAC). There are nearly as many chipsets a ...

toggle

Most Commented