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 12, 2012 5:33PM
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Apple is the next Snapple... a total has-been.
Nov 12, 2012 5:31PM
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the i4s is much better. The new system battery adaptor is different which is not compatible with other i products. Apple just shot themselves in the foot thinking consumer would be willing to fork over 600 bills without the data plan...What a rip-off...! Notice all the pre lines and media hoopla getting shorter and shorter. Our attention has shifted back to JOBS......JOBS....JOBS....which this economy is not producing enough of...So Apple will do like everyone else "Take a number in the unemployment line" and wait until until it creates it's next job.
Nov 12, 2012 5:28PM
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Question of the day!  Where are I-phones manufactured.  CHINA.

Since that is the phone of choice as well as all the other over priced stuff from Apple.

And the youth of America seem to want always the latest not thing from Apple,  I guess those Obama voters are really shipping jobs over to China.

The article above is why.  Can't make it cheaper here, otherwise those products would be much more expensive and overpriced than they already are.

Happy Hoiiday.

Nov 12, 2012 5:10PM
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It's amazing how out of touch we are with our First World problems: There are people around the world who lack food and basic necessities, living in absolute poverty. In fact, many of those folks work at Foxconn. But oh my God, I might have to wait three weeks for my iPhone, and THAT is "unacceptable". Sad...

Nov 12, 2012 5:09PM
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Really? What's the great end all thing you can do on an iPhone that you can't on an android? Pay bills? call people? have maps? oh but the iPhone maps totally suck so there goes that. What else ya got that you can do that i can not with my S3?
Nov 12, 2012 5:08PM
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Someone,

When you say "fumbling to do absolutely nothing on their phone" are you referring to me being able to actually view and use the entire internet as opposed to getting that lovely message "You cannot access or view this site with this product"  Or are you referring to my phone being able to give me correct navigation?  Do you want me to go on?  You can keep your Apple product and you can continue to give them your $$$.  Their great marketing department is looking for consumers just like you.

Nov 12, 2012 4:55PM
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I bought the iPhone 5 about a month ago. I traded in my iPhone 4 for $136.00 and paid $64.00 for the 5 because I had my two year upgrade. I got it because it's bigger, runs faster, and is lighter. It's not vastly different, but definitely better. Why do companies have to dramatically change their product? Apple improved on a phone that's easy to use and something people love. There is no reason to bash it, unless you're not proud of the phone you have. I haven't seen anyone boast about the phone to no end. I see Apple working like every other company--advertising their product, trusting that it will boost sales. 

I got it, I like it. 

Don't hate the player, hate the game.
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Read production problems as labor disputes in China and lack of qualified people to run the high tech machines to make the components

 

add in the mix that Apple is going to move to Vietnam for cheaper manufacturing and you can see the hand writting on the wall for Apple a failed company by the middle of 2013.

 

QUOTE

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.

END QUOTE

Nov 12, 2012 4:47PM
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Maybe this time, it'll have - "THE BIG SCREEN!!"
Nov 12, 2012 4:47PM
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As people get squeezed on economics and the law of diminishing utility sets in for smart devices (and alot of other marginal products) say goodbye to most of the consumer tech business.

Say hello to reliable lower tech stuff.
Nov 12, 2012 4:43PM
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Why wouldn't they make a 6? or a 7 or 8 or 9?

 

Why did Ford decide to make a car after the model T? Could it be because competitors constantly make better products so you in turn need to make yours better to keep up?

 

Im not sure why people with Apple products are snobs. I have an Ipod so am I a snob?

 

Why do people resort to name calling? It's a simple news article about a new product. Calm down people, I'm sure your phone is much better, that's why Apple has sold MILLIONS and MILLIONS of phones, Ipads, and Ipods, because they suck i guess??

Nov 12, 2012 4:39PM
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The Galaxy IIIs is a far superior product.....hands down!
Nov 12, 2012 4:19PM
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Someone, 
Apple Products are just status symbols for snobs like yourself.

I'll put my Motorola 4 up against your over priced iPhone 5 any day.  With full slide out keyboard I can get more "productivity" done while you peck and "fumble" on your toy.


Nov 12, 2012 4:06PM
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This is why Apple earns so much money. The apple loyalists keep shelling out dollar after dollar every time a new device is released. Like heards of sheep, the apple loyalists continue to "need" the newest Iphone, newest Ipad, and now, for some strange reason, need the Ipad-min. I give apple kudos, they have the public fleeced into thinking they always need the newest version of something even if it means shelling out hundreds each and every time. Their marketing department is the best. Imagine if they went into the auto business.....lol.
Nov 12, 2012 3:31PM
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lmao...."Its not worth the wait...."

The author does not understand how to use a real phone an the author does not realize the value of a REAL app eco system.

 

For those with education levels higher then others, for those who want the ONLY product that works 100% intuitively. For those who want a product that does not freeze,requiring battery removal daily. 

They will and DO WAIT for the Iphone 5.

 

Anyone that calls it a bust has and agenda or is about as dumb as they come when it comes to knowing the consumer product market.

 

The facts are simple....no other phone makes the $$$, sells more then the Iphone 5 NONE!!!! No other company has a complete eco system with 100s of productivity apps that simply make the life of Apple users superior over all others...YES, Day to day I do things you can not period!!!

 

I see it every day. I compare daily....I laugh at the inferior products and the people fumbling to do absolutely nothing on their phone.

Nov 12, 2012 3:24PM
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Is iphone 6 already in the works?  Is iphone 6s already in the works?  Genius company.  They have shot themselves in the foot.  You can not have the latest greatest product coming out every few weeks.  Everyone will just keep waiting.  
Nov 12, 2012 3:07PM
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Yeah, it's a huge bust....what a stroke!
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