Apple made the iPhone Duo available for pre-order on Friday, and it appears that the company’s first foldable is a big hit. If you didn’t place your pre-order immediately, you’ll probably be waiting until next year to get your hands on one. At least, that’s what the delivery dates say on Apple’s website.
On the one hand, it’s kind of impressive. The iPhone Duo starts at US$1,999 (RM9,499), making it the most expensive starting price for an iPhone that Apple has ever sold. And within minutes of preorders opening Friday morning, it appeared that Apple was selling far more than it expected.
By 8:30am ET, every configuration was showing a delivery date more than three months away. It was remarkable, when you consider that Apple has spent decades perfecting its ability to design, manufacture, and distribute hundreds of millions of iPhones every year.
Apple, for its part, seems delighted. In a statement to CNBC, the company described demand for its first foldable iPhone as “nothing short of extraordinary.” Apple added that it’s working to get the new device into customers’ hands as quickly as possible.
Selling out its new premium iPhone sounds like great news, at least for Apple. Every smartphone company is looking for ways to convince customers to upgrade their device, and a foldable iPhone is about as good a reason as it gets. Even considering that it costs twice as much as most of its other models, apparently customers can’t get enough of it.
There’s just one problem: Extraordinary compared with what?
If you think about it, the fact that iPhone Duo deliveries slipped into January almost immediately really tells us only one thing: that Apple sold more devices than it could ship with its current projected inventory. We don’t know how many devices people ordered, or whether it’s more than what Apple thought it would sell initially.
Those aren’t minor details. They’re literally the numbers you need to determine whether demand is extraordinary. Obviously Apple knows that answer, but I think it’s fair to reserve judgment as to whether the iPhone Duo is a hit until we have a little more information.
For example, did Apple expect to sell 5 million iPhone Duos but only make 500,000 in time for the launch? Or did Apple make 5 million but customers ordered 10 million?
In either case, Apple’s going to run out of iPhone Duos pretty quickly, and customers would end up having to wait months for their new foldable iPhone. But they would tell us very different things about Apple.
There are also reports that Apple has had trouble manufacturing supply for the Duo. Some of those suggest assembly yields were only around 60 percent, meaning a pretty substantial number of iPhone Duos weren’t meeting production standards. If that’s true, Apple knew well before Friday morning that it would struggle to produce enough phones.
That doesn’t mean demand isn’t strong. It might even be extraordinarily strong. I think it’s entirely possible that Apple made as many as they could, but that there is considerable pent-up demand for an iPhone that offers more than what you’ve been able to get for years. People are attracted to something new and different.
But I don’t think we know for sure whether Apple’s newest iPhone is significantly more popular than the foldable devices from Samsung or Google. I assume that it is, but I don’t have any information to back that up. All I know is that demand exceeded supply.
That actually turns out to be an important distinction, especially because scarcity is one of the most powerful marketing tools. When something is difficult to get, people want it more. People assume that a restaurant with a three-month waiting list must be better than one with empty tables. After all, if that many people are eating there, it must be good.
Sometimes that’s true. Other times, there just aren’t enough tables or products available. And, sometimes, companies can intentionally decide to manufacture fewer devices in order to manufacture more hype.
To be clear, I don’t think that’s what Apple did. It seems pretty unlikely considering the company could be leaving billions of dollars in potential sales waiting until next year. For Apple, selling more iPhones is considerably more valuable than convincing people it could sell more iPhones.
But I also don’t think they’re all that sad about it.
They couldn’t have asked for better headlines for a brand new product. All of them have some version of the US$2,000 (RM9,499) foldable iPhone being sold out. And all of them run the quote from Apple that “demand is extraordinary.” That’s incredibly valuable marketing, even if the underlying reason is that Apple just couldn’t make enough devices.
And that brings us to another possibility: Apple may have been right about demand, but simply underestimated how difficult it would be to make its first foldable phone at scale. That would be a real problem, especially considering that operational expertise has long been one of Apple’s biggest advantages.
Ultimately, I think Apple’s response is the correct one, regardless of the reason. But until we know how many customers actually ordered the Duo – and how many Apple expected to sell – we shouldn’t confuse an inability to make enough iPhones with a true hit. After all, extraordinary demand sounds impressive. But without something to compare it with, it’s just marketing. – Inc./Tribune News Service
