long tail effect difficult to reproduce without production adjustment
Despite the radically different sales performance of the iPhone 14 Pro series and the iPhone 14, Apple does not seem to be adjusting its production volume. Whether or not the iPhone 14 can recreate the long tail effect of previous generations remains something to watch.
Recently, there have been negative iPhone 14 rumors circulating in the market, such as Apple canceling a previous “production ramp-up plan”. However, at present, supply and demand have yet to feel the effect of these rumors.
Most supply chain sources have pointed out that Apple’s only order is to adjust the shipping percentage of the Pro and regular series. There was never a so-called “production increase plan”. Shipping momentum is now mostly still within the estimated range. The increased percentage of the Pro Series has even led to improved product mixes for certain components.
There were situations where Apple canceled orders drastically in the second half of the fourth quarter. However, judging from the current sales performance and market share of the iPhone, even if there is a reduction in orders, the degree would not be too great, according to supply chain sources.
As with sales, both Pro Series models are indeed selling very well. Sources familiar with end-user sales channels said that since the pre-order launch, the Pro series has undoubtedly been the dominant force. Many channels run out of stock early. They had to keep calling Apple products to keep up with customer demand.
As with sales of the non-Pro series, there’s a distinct drop. Since the 2022 iPhone 14 upgrades over the previous generation are just too minor, value-conscious consumers preferred the iPhone 13 and iPhone 13 Pro instead. The iPhone 13 Pro has been pretty much sold out in the retail market after being pulled from the official website.
The relatively affordable price of the iPhone 13 has also made it more popular than the iPhone 14. Apple has tried to replicate its previous product prioritization strategy on the iPhone 14. However, it seems to have gone too far and has caused the iPhone 14 to receive little attention.
Sources in Apple’s supply chain pointed out that the percentage increase in iPhone 14 Pro sales is certainly benefiting Apple’s financial performance. The front half of Apple’s product strategy has indeed achieved its goal. However, with the minor evolutions of the iPhone 14, can it do like its predecessor and continue to maintain a certain level of sales until the first half of 2023?
Market sources believe that the current global recession and reduced purchasing power in China, one of Apple’s main markets, are two major factors that have contributed to the overall decline in iPhone 14 sales. On top of that, middle to lower income people tend to be hit harder by the economy, which means it’s harder to sell the relatively cheaper iPhone 14.
This generation’s Pro series models might perform better than the previous generation. However, the weak performance of inexpensive models and the weakness of the global consumer market that could continue into 2023 mean that the long tail effect is more difficult to obtain. Apple’s demand plans for the second half of 4Q22 could increasingly tilt to the conservative side.