Apple is significantly increasing the production of iPhones for the back half of 2011, most of which will be the iPhone 5, part suppliers divulged Monday. Volume was going up 12 to 13 percent to over 56 million phones, nearly half of which would be the iPhone 5. While it had trimmed back its iPhone 5 production for the summer down from seven million to no more than 6 million, Digitimes saw that …
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Apple surges iPhone orders, plans 26m iPhone 5s in late 2011
DigiTimes reports that touch panel suppliers for Apple’s iPhone continue to dedicate their capacity to the existing iPhone 4 with no timeline for shifting production to a fifth-generation model, lending credence to claims that Apple will not introduce a new iPhone at its Worldwide Developers Conference in early June but still leaving open the question of when users can expect such a debut.
Apple has not yet released a production roadmap for iPhone 5 as shipment volumes of iPhone 4 have continued to mount and related suppliers are not yet ready to shift their production lines for new products, according to sources at Taiwan-based touch panel makers. … While acknowledging there should be a roadmap for each generation of products, the sources insisted that touch panel shipments for iPhone 4 have remained steady, and that they have not seen a timetable to stop current production in preparation for the next-generation of iPhone.
Increasing numbers of claims are pointing to a new iPhone roughly in the September timeframe, with recent speculation citing Apple’s annual September media event traditionally focused on iPods for a potential iPhone introduction.
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DigiTimes reports that RIM’s PlayBook tablet PC is set to launch on April 19th, but that this date was a month behind the original target date. Besides ongoing software testing, RIM was also unable to procure enough touch panels since “Apple already booked up most of the available capacity”.
Apple is believed to have invested $3.9 billion in order to guarantee long term supply of LCDs for the next few years. Apple had already suffered from shortages during the first iPad’s launch and likely recognized it as a strategic long-term investment, much like their long term flash-memory purchase in 2005.
The move already seems to be affecting supply of competitors including the RIM playbook. While the Playbook uses a smaller 7″ screen than the iPad’s 10″, there are only so many companies that supply touch panel displays and it seems Apple has saturated their production capabilities.
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Samsung Galaxy S (4-inch screen) vs iPhone 4 (3.5-inch screen) via Emoiz
Rumors are flowing fast for the next generation iPhones. Digitimes is now claiming that the next generation iPhone will use a 4-inch screen to better compete with Google Android.
The component suppliers noted that the production lines for Apple’s next generation iPhone have begun testing, and Apple is interesting in expanding the screen size to 4-inches to support the tablet PC market as the vendor only has a 9.7-inch iPad in the market.
The news is interesting given the recent rumors of a smaller iPhone as well. The iPhone has always used a 3.5-inch screen since its launch, while several Android phones have launched at larger screen sizes.
Digitimes has a bit of an on-again off-again reliability with Apple-related rumors. They have certainly made some legitimate predictions, but has also detailed 7-inch iPad and 22-inch touch-screen iMac. It’s believed that Apple prototypes several different designs for testing purposes but may also be the source of the some the false rumors we’ve seen in the past.
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Apple today filed its 2010 annual report with the U.S. Securities and Exchange Commission, and the document reveals a few interesting tidbits of information:
- Apple noted that it had approximately 46,600 full-time equivalent employees as of September 25th, an increase of over 35% since last year’s annual report. The company has an additional 2,800 full-time equivalent temporary employees and contractors on its payroll, up from 2,500 last year.
- As noted by TechCrunch, Apple’s advertising budget for fiscal 2010 was $691 million, up 38% from last year’s $501 million and a much larger increase than in previous years. Even so, the report notes that Apple’s rapidly-growing revenues allowed the company to reduce its percentage of revenues spent on advertising from 1.37% to about 1.06%.
- Apple noted in several locations within the report pertaining to risk factors that could impact the company’s performance going forward that it expects lower gross margins in the future due to increasing sales of new products with higher production costs.
The Company expects its gross margin percentage to decrease in future periods compared to levels achieved during 2010 and anticipates gross margin levels of about 36% in the first quarter of 2011. This expected decline is largely due to a higher mix of new and innovative products that have higher cost structures and deliver greater value to customers, and expected and potential future component cost and other cost increases.
While Apple has routinely offered modest expectations regarding gross margins in its financial discussion, the apparent longer-term pressure on margins disclosed in the report is being cited as the reason for a slight dip in Apple’s stock price in after-hours trading following the release of the report.
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After the initial reporting of the production of a Verizon-capable iPhone, The Wall Street Journal has updated their story with some clarification and new details. The original wording of the piece left open the possibility that Apple might be producing a CDMA iPhone 4 for a carrier other than Verizon. The WSJ has since clarified that Verizon is indeed the intended target for the phone.
Apple Inc. is making a version of its iPhone that Verizon Wireless will sell early next year, according to people familiar with the matter.
According to the updated article, Verizon has been meeting with Apple to add capacity and test its networks to prepare for the heavy wireless traffic from new iPhone users. The preparations are an attempt to avoid the public issues AT&T has had in coping with the iPhone’s popularity. In particular, certain cities such as San Francisco and New York have had major issues sustaining voice and data calls for many AT&T iPhone customers.
While AT&T has been much maligned for their network issues and policies, Verizon may have its own demands for the iPhone. The WSJ reports that in earlier discussions, Verizon was unwilling to give up its ability to sell music and videos through its proprietary service. Verizon seems to have pursued this path on their Android phones by announcing that they are launching their own V CAST App store that would be separate from Android’s official App Store. It’s not clear if either Verizon or Apple caved on these demands to facilitate a Verizon iPhone launch. Finally, Verizon is also expected to introduce tiered data plans, following in AT&T’s footsteps to remove unlimited data plans from their offerings.
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Yerba Buena Center for the Arts prepped for Apple’s media event
The Wall Street Journal reports that Apple will launch its 99-cent TV show rentals through the iTunes Store tomorrow, with Fox and ABC set to serve as launch partners for delivering content. A report earlier today had indicated that Walt Disney (which owns ABC) was on board with that plan and that News Corp. (which owns Fox) was undecided but leaning toward participating.
As part of the Apple event Wednesday, News Corp.’s Fox and Walt Disney’s ABC networks are slated to be announced as offering 99-cent rentals of television shows through the iTunes store, according to people familiar with the matter.
According to the report, Fox’s participation will be limited in duration, at least to start, and will be limited to shows such as Glee, Bones, and Lie to Me for which it owns both the production and broadcasting rights.
Echoing the report from earlier today, the new article claims that a number of News Corp. executives are uneasy about Apple’s plan, fearing a disruption of the traditional television business. The company ultimately agreed to go along with Apple, however, as an experiment in alternative means for delivering content to consumers and in order to win goodwill with Apple to set stage for partnerships in other digital content ventures.
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Just a few days ago, we noted that early advertisers and developers participating in Apple’s iAd program have generally been pleased with the results so far, with advertisers finding high levels of user engagement and increased brand awareness and developers seeing solid financial returns.
The Wall Street Journal reports, however, that not everything is running so smoothly. In particular, Apple’s “tight control” over the entire process, including creation of the actual ads, has slowed the launch of offerings from a number of the program’s publicized launch partners.
Of the 17 launch partners Apple named for iAd, only Unilever PLC and Nissan Co. had iAd campaigns for much of July. Of the remaining 17, Citigroup Inc., Walt Disney Co. and J.C. Penney Co. – which tied its campaign to the back-to-school-season – have since launched iAd campaigns and other companies are planning iAd efforts.
Part of the reason some marketers are experiencing delays in getting their iAds to market is that Apple has kept tight control on the creative aspects of ad-making, something advertisers aren’t used to, according to several ad executives involved with creating iAds.
According to the report, the ad creation process is taking up to 8-10 weeks, with Apple spending up to two weeks longer than originally expected to build the actual ads, leading to the delays.
People familiar with the matter said Apple underestimated how tough the new business would be and is still learning the best tactics for dealing with ad agencies. At the same time, ad agencies are struggling to keep pace with new ad technologies.
With Apple handling the production of the ad unit, agencies don’t necessarily know what it is capable of or how to use the technology, one ad executive said. The iAd is designed in HTML5 technology, and Apple has yet to distribute a “developer kit” to agencies so they can understand how it works.
In order to fill the void in the iAd program created by the delayed launches of the big-name advertisers, Apple has rolled out an “iAd for Developers” program that allows App Store developers to advertise their applications within other apps and provides users with the ability to download the advertised apps directly from the iAd without leaving the application that is running. Today’s report claims that Apple is charging developers 25 cents every time a user taps on a banner ad for their application, a significant discount from the $2-per-tap rate charged to deep-pocketed advertisers for their more interactive ads.
While the iAd roll-out seems to have had mixed results so far with limited participation but strong results from those who have managed to make their ads available, Apple is no doubt still in the early stages of learning how to become a mobile advertising company. But with Citibank, Disney, and J.C. Penney beginning to roll out their initial ads for the program, we may soon begin to see more variety in ads and additional companies making entries into the program.
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Yes, it’s the subject that’s been beaten to death: a Verizon iPhone. The ongoing rumors have been stoked in recent weeks by a claim from Bloomberg that the device will launch in January, with this week’s announcement that Verizon CEO Ivan Seidenberg will offer the keynote address at CES 2011 sparking speculation that an iPhone introduction could occur there.
TechCrunch weighs in today with new claims that Apple has placed a large order for Qualcomm CDMA chips to be deployed in an iPhone production run scheduled for December. The claims come from a source reportedly familiar with the supply chain logistics for the CDMA-based chips that would be required for a Verizon iPhone.
Sources with knowledge of this entire situation have assured me that Apple has submitted orders for millions of units of Qualcomm CDMA chipsets for a Verizon iPhone run due in December. This production run would likely be for a January launch, and I’d bet the phone is nearly 100% consistent with the current iPhone 4 (with a fixed internal insulator on the antenna).
As the report notes, the evidence does not guarantee a Verizon iPhone launch in January, “but all of the signals point that way”, adding another claim to the growing chorus of reports suggesting that a launch is coming early next year.
AT&T has already moved to downplay the risk to its bottom line posed by the loss of its exclusivity for the iPhone in the U.S., noting in its latest quarterly filing with the U.S. Securities and Exchange Commission that it expects no “material negative impact” from the expiration of its exclusive handset distribution agreements.
“We do not expect any such terminations to have a material negative impact on our wireless segment income, consolidated operating margin or our cash from operations,” AT&T said in the filing with regulators on Friday.
AT&T also reiterated its position that AT&T customers will not defect to rival carriers in large numbers once the iPhone goes non-exclusive, claiming that 80% of customers are on family or business plans that make it difficult for them to switch.
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Engadget summarizes reports in the Chinese-language media claiming that the delays experienced by the white iPhone 4 are due to issues with the paint application process for the device’s glass front and back panels. In particular, the company behind the production process, Lens Technology, is working out kinks in its screen printing process to achieve proper paint thickness and color consistency.
Now, a worker from Lens’ quality control department has allegedly admitted that the company’s screen-printing workshop may currently be dealing with some issues with the white iPhone 4 covers. Specifically, the factory’s still working out the perfect combination of paint thickness and opacity — the former to ensure the next sub-contractor has enough clearance for the digitizer overlay, and the latter for the absolute whiteness that Jony Ive and co. strive for. As we pointed out before, the prototype white covers we acquired appeared a touch darker than the iPhone 4 dock, so here’s hoping that we’ll see a better result when the official white phone comes out later this month.
The report seems to corroborate a claim made by a Gizmodo reader back in June when Apple announced that the white iPhone 4 models would be delayed until the second half of July.
I cannot say who I am as Apple does have a non-disclosure in effect for this, but: The color specifications for the white on the new iPhones are just crazy. The tolerances they are trying to achieve with the white really is the cause of the delay. As screen printing goes, it is somewhat controllable, doesn’t have the tolerance that Apple is wanting to hold the color specification of the white too. Talk about anal…
Apple CEO Steve Jobs confirmed at last Friday’s press conference that white iPhone 4 models will begin shipping in limited quantities at the end of this month.
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