Bloomberg makes a Serious Charge that Apple is Compromising Face ID to Keep iPhone X production on Schedule
Apple has reset their homepage today to reflect all-things iPhone X and pump-up the volume for pre-orders that begin this Friday. Good news surfaced yesterday from one of Apple's key TrueDepth camera suppliers AMS who forecasted a strong Q4. The stock soared on that news. If this camera component maker sees very strong growth for the next quarter when the iPhone X comes to market, then perhaps the negative rumors about the problems with Apple's iPhone X camera are completely overblown. The day before that report a supply chain report stated that Foxconn would deliver 25-30 million iPhone X models for Q4. That would be fantastic news and put the iPhone X on course for the next two quarters. Yet the negative rumors are coming in never ending waves with one feeding off the other. Case in point, Bloomberg's latest report is as close to being a hit piece as I've ever seen.They make a serious charge that Apple shouldn't allow to be left unanswered.
The Bloomberg report via their secret sources is all but saying that Apple will weaken one the key features of iPhone X, Face ID, in order to get production back on cue. That's a claim that Apple will either ignore being made public or go on the offensive to make it known that no such compromise was ever made. This is a very serious charge and with sources being anonymous as usual, it's difficult to know if Bloomberg's sources are engineers, brokerage analysts that are pro Android or people directly involved at Foxconn or in Apple's suppl chain. This isn't just a bad rumor, this is a hit job that says that Apple will compromise iPhone X and deliver a diluted or outright fake feature.
The madness of trying to say that the iPhone X and Apple's whole strategy with the iPhone including iPhone 8 is a failure is coming out of the woodwork. We covered a report this week titled "A new Consumer Intelligence Research Partners Report analyzes the First 7 Days of iPhone Sales in Vain." The whole report is off the mark. Last year's iPhone 7 was release 9 days earlier than the iPhone 8 and so just on that basis alone you can't compare the two sets of stats fairly. In just a few days on the market, the iPhone 8 soared to being the number one smartphone in Taiwan crushing Samsung's Galaxy S8. Does that sound like a failure to you?
The whole iPhone business model was thrown on its head by adding the iPhone X and it will take two full quarters at minimum to see if Apple's iPhone strategy was a success or failure. Making direct comparisons with the stats from iPhone 7 isn't valid, especially based on a single quarter when Apple is releasing a super advanced 3D camera module for Face ID. Little snags in production should be considered standard and not a disaster.
The Bloomberg report comparing Microsoft's Kinect with Apple's new TrueDepth camera is off the wall stupid. Intel's RealSense camera has been on the market for some time now and so Apple refining it a little further isn't as dramatic as Bloomberg makes it out to be.
The Bloomberg report further speculates that "Despite demanding the near impossible, Apple didn't add extra time to get it right—giving suppliers the typical two-year lead time. The tight schedule underestimated the complexity of making and assembling exceedingly fragile components, said one of the people familiar with the production process."
To keep the report on it's negative track they concluded that "The 3-D sensor shortage is expected to end in early 2018. Even so, signs of weakness in iPhone 8 sales means Apple could sell fewer handsets than last year—despite all the fanfare surrounding the iPhone X." For more on this, read the full Bloomberg report.
At the end of the day, we'll have to wait until at least the end of calendar Q1 2018 (Apple's fiscal Q2) to see how the iPhone strategy actually fared. The iPhone 8 is selling well, the iPhone X over two quarters will be on track or ahead of sales and the iPhone 6S and iPhone 7 sales will show an increase for those unwilling to spend US$1200 for the high end or the iPhone 8 that may not offer enough advancement for some.
When Android vendors like Samsung, Huawei and others sell the majority of their smartphones in the mid to low end range, Wall Street and the press applaud these companies for 'volume shipments' even though they're close to being profitless.
This year Apple fans have many more choices than in the past and the wireless carriers have great deals on the iPhone 6S and 7. So the mix will be completely different than in the past and in total Apple will sell more phones. It's not like Apple fans will stop upgrading their iPhones or switch to Android, because that's not going to happen. The negative reports would have you think that iPhone sales will fall off a cliff over the next two quarters and I don't buy into that hysteria in the least
In June Patently Apple posted a report titled "Apple raked in 83.4% of Smartphone Profits in Q1 2017 while Samsung sat in Apple's Shadow at 12.9%." This is really what matters at the end of the day and with Apple selling the iPhone X at US$1200 or higher means that higher profits will make up for any short fall in iPhones, if that even occurs over the next two full quarters.
While the Bloomberg report sounds in-depth and has a nice fancy graphic, it's still a report full of speculating negativity. My only hope is that one of Apple's executives go public with a clear statement stating that Apple's Face ID has not been compromised to meet a production schedule. That's a serious charge that Apple has to refute and the sooner the better, because why would anyone want to buy the iPhone X if they know that the technology has been compromised?
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