Analyst Shaw Wu issued a note to investors yesterday that says according to his sources, Apple is going to make between 20% and 25% less iPhones in Q2 2011 because the company is preparing their factories for the upcoming sixth generation iPhone. Should we believe Shaw? Absolutely. Apple shipped 35 million iPhones during the first three months of this year. Do you know how hard it is to make 35 million iPhones? It takes time to ramp up production, and it doesn’t take a rocket scientist to figure out that demand for the iPhone 5, which will probably be called “the new iPhone”, is going to be off the chart. Shaw wants to stress:
“From our understanding, the reason for the reduction is not demand related but rather due to the upcoming 6th generation iPhone refresh likely in the September-October timeframe. It appears AAPL is opting to be conservative with its suppliers to factor in a potential 2-quarter pause ahead of the refresh and also to manage inventory.”
You have to remember, normal people now know Apple comes out with a new iPhone every year, so sales during this quarter and next quarter are going to take a hit as people decide to keep their wallets closed. October is after all just five months away.
Speaking about the new iPhone, what do we know about it? Not much. There’s a ton of conflicting information. Some say it’ll have a larger 4 inch screen, others say it’ll be 4.6 inches. Everyone agrees it’ll have 4G LTE connectivity, but other than that … it’s too early to piece together the rumors.
Forgetting about the iPhone for a second, what we’re really excited about are the rumors that there’s going to be a low cost 7.85 inch iPad introduced. Lots of people are curious about this whole tablet computing thing, but $500 is a tough pill to swallow. Pricing something at half that, or less than half that at just $200, would cause pandaemonium.