New iPhone headed to production, reports say

Deliveries of the just-released iPhone 5 have been painfully slow, and now a Chinese-language newspaper reports that Apple is pushing ahead with a successor.

By Kim Peterson Nov 12, 2012 2:55PM
Credit: 2012 Apple Inc
Caption: Apple iPhone 5If you buy an iPhone 5 from Apple (AAPL), you won't get it for a good three weeks. And that is unacceptable.

The world's most valuable company is running into problems with its most important product. It can't make enough. Yes, demand is high, but there's more to the story. Apple's manufacturing partner, Foxconn, is having a bunch of production issues.

"The iPhone 5 is the most difficult device that Foxconn has ever assembled," an anonymous official at the company told The Wall Street Journal last month. "To make it light and thin, the design is very complicated."

Critics say the phone is absolutely amazing. "This is without a doubt the best iPhone yet," Engadget raves. "This is a hallmark of design. This is the one you've been waiting for."

And waiting for . . . and waiting for. A phone is not worth that wait. Not when plenty of competing phones built on Google's (GOOG) Android platform are available. Apple has a real problem on its hands -- one that could dent its revenue this holiday quarter. Apple sold more than 5 million iPhone 5 units in the first three days, but analysts were expecting as many as 10 million.

"We believe that sales could have potentially been much higher if not for supply constraints," William Power, an analyst with Baird Equity Research, wrote in a client note, according to Reuters.

So it's not that surprising to read rumors that Apple is basically moving full speed ahead with the next version of the iPhone, unofficially named the iPhone 5S. Digitimes reports that Apple is expected to begin production on a small batch of iPhone 5S phones in December, likely only 50,000 to 100,000 units.

"Facing low yield rates in the production of iPhone 5, Apple has accelerated the certification processes for related parts and components for the iPhone 5S," reports the Chinese-language Commercial Times, according to Digitimes. The Commercial Times also says the iPhone 5S will enter mass production in the first quarter of next year.

That timing would be highly extraordinary, since the iPhone 5 just launched in September. "If this new report from China turns out to be accurate, it could represent a dramatic shift in product release strategy for Apple, perhaps spurred on by increased competition from the likes of Samsung, and a raft of other Android-based smartphone competitors," PC Magazine writes.

What about this theory? The iPhone 5 is so tough to make, forcing the normally reliable Foxconn into hardware scratches and other production issues, that Apple is essentially moving on to the next version, which it will ensure has none of those problems.

Of course, this could all be an empty rumor. Digitimes is not known for its sterling accuracy. But even a rumor could hurt Apple's bottom line. If enough people think a new iPhone 5S is coming out early next year, then current sales of the iPhone 5 will take a hit. Rumors have dinged Apple's revenue plenty in the past.

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Tags: AAPLGOOG
89Comments
Nov 15, 2012 4:22PM
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I have never seen a droid user who is ever truly happy with their phone either.  You may say Apple users are iSheep, or snobs, whatever you want to call us, but while I have had the same iPhone 4 from it's release, I have seen droid users go from phone to phone to phone.  Why?  Because they are no different, always going from upgrade to upgrade.  I love my iPhone, and you may love your droid, so stay with droid, and you wont sell me on your awesome galaxy3, then 4, then 5...whatever.  We'll just have to learn to live together...trust me, we can do this...

Nov 14, 2012 3:02PM
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We cant make it here without production problems !!!  Everybody knows what the problem is PROFIT    How much are you willing to pay for something made here ??    Wages and health insurance would KILL it here   I am not being political here just honest  The iphone if it were made here would cost  about what a new Apple Desktop costs   Which is astronomical   For technology moving forward so fsat you would think costs would come down   But there are people who will buy anything  And the vicious cycle continues 
Nov 14, 2012 2:17PM
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I don't understand why everyone is hating Apple on here. "Apple are over priced pieces of S@#$." Well most people buy their phones with 2 year contract, which keeps the iPhone 5 the same $199.00 price point as the Galaxy S3, HTC 8x, and most other flagship cell phoes. Samsung did a great job with the S3, and i'm not going to get into a spec war on MSN, but pretty much every review site ranks the iPhone 5 as one of the top 3 phones available. Some argue the Galaxy S3 has better x, some mention the iPhones longer lasting battery. It's really just opinion, I'm going to have to get a new phone next year - it could be an iphone, a galaxy, a new HTC - either way the build quality should be pretty good.
Nov 14, 2012 12:48PM
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Does no body understand the concept of panned obsolescent. This was pioneered by Polaroid years ago. They already have the next 5 versions designed and in a safe. They have researched and found they can make more money off of frequent upgrades instead of lesser upgrades with more content.

Nov 14, 2012 8:52AM
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If they had half a brain, they would move Manufacturing back to the US.  This would be a huge public relations win for any company. It would generate a very large number of jobs here.  US workers are several times more productive than the Chinese, so in my opinion with the dollars saved in transportation, Customs waiting times, shipping times (lots of inventory on a ship for many days), foreign Quality Control people, etc., etc. we'd probably never notice a small price increase in these overpriced phones anyway.
Nov 13, 2012 7:47AM
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Who cares about Apple.  There are better products on the market and for less money.  I hope Apple rots!
Nov 12, 2012 9:05PM
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 "This is without a doubt the best iPhone yet," . 

Disingenuous story fails to note that the GS3 has been taking honors over the iP5, particularly in Consumer Reports. 
Nov 12, 2012 8:46PM
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Send Mitt Romney over there with a "cat of 9 tails" and a few cattle prods and he'll beef-up production big-time.

If these companies don't tighten-up, their workers will start becoming bums - jusit like "us" American workers - at least THAT is what Romney and his pals at FOX News would lead you to believe.

Nov 12, 2012 7:56PM
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We can make it here in America without the production problems.
Nov 12, 2012 7:55PM
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Get a Nokia Lumia 920 from AT&T for $99 in cyan, yellow, red, white or black. It won't crack or scratch and has a better camera and display and Windows 8 is far superior to any Linux or Unix shareware.
Nov 12, 2012 7:51PM
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LMAO So the iPhone 5S has a Steel case instead of that used Bud can that's being scratched now. 
Nov 12, 2012 7:43PM
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Who needs Apple anymore... I got rid of my iPhone 4 and just upgraded to the new Lumia 920. Very pleased with my new Windows 8 Phone and didn't get ripped off buying over priced iCrap.

Don't fall for their continual upgrade scam anymore - Wake up iSheep!!!!
Nov 12, 2012 7:27PM
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OH ****  a new apple!!! When does it come out?  I have to have it now!!!  I cant have an i5 if the 5s is available.  So what if my kids dont have food or shelter./  I will have the newest apple!!!   LMAO
Nov 12, 2012 6:52PM
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I buy Apple products every week. I buy Red Apples, Green Apples and my favorite Yellow Apples.
Nov 12, 2012 6:51PM
Nov 12, 2012 6:34PM
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What will I do now with the half-cord of "old" iPhones I have

stacked up in the backyard that still work but are "outdated?"

Nov 12, 2012 6:26PM
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The best feature of the iPhone is the one that makes you buy the next iPhone.
Nov 12, 2012 5:47PM
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Disclaimer: While I think Apple products are sometimes innovative the people that follow Apple and the majority are obsessive compulsive that rather be buried in a dysfunctional instrument than have a polite conversation with a person. They are all intervened self centered individuals concerned more about their self absorbed life than the experience of life itself or are afraid of life all together.
Nov 12, 2012 5:47PM
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Apple 6 has a new feature... if you fall behind on your phone bill, it fires a laser beam at your eyes while you are driving texting to blind you and fires another at your right knee that forces you to floor the gas pedal. They are giving them away to ambulance-chaser lawyers and judges for free as long as they agree to never use the word "apple" in the courtroom even if it interferes with judgments. Its less costly to eliminate delinquency this way but they are concerned about have to "give" anything for free they could otherwise squeeze people to pay for.
Nov 12, 2012 5:34PM
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Really? The brain behind Apple dies way too young and suddenly. Then there is a rush by garbage business types to make sure that stock price stays incredibly high for the funds buried in it. It's a product dumbing America into the Stone Age. People that don't have crap exposure in the real world have an i-Phone. What's an "app" really? It's a thinking replacement. Press a few buttons instead of using your brain. We don't make Apple products in the USA so all they do is help China keep us suppressed and a TRILLION DOLLARS worth of suppression comprises Apple.

Are you GETTING IT YET, Wall Street? YOU are done in America.

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