Apple is reportedly cutting production orders for its newest iPhones, according to a report from The Wall Street Journal that cites sources that claim that demand for the new devices — especially the iPhone XR — has been weaker than expected.
But while the news may be somewhat concerning at first glance, it might not be as bad as it sounds. This could be the result of Apple’s changing iPhone strategy, which has focused more recently on raising the amount of money it makes off of each device, instead of driving prices lower to goose sales numbers. Last quarter, the company saw a 29 percent revenue increase in its smartphone division with a 0 percent change in iPhone unit sales year over year, so it’s a strategy that seems to be paying off.
The result of Apple’s changing iPhone strategy
We saw similar predictions of falling-off Apple sales with the iPhone X last year, which ultimately turned out to be nothing but speculation. Despite fewer sales, Apple’s first 2018 earnings report earlier this year showed that the iPhone X had driven the company to an 11 percent increase in revenue. Apple CEO Tim Cook noted that the “iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November.”
There’s a good chance that we’ll see a similar pattern with the iPhone XS and iPhone XR models this year, which are Apple’s priciest iPhones. Apple is no longer planning to disclose unit sales for its devices during its quarterly earnings reports going forward, so it will likely be harder to tell whether the reports of diminished demand are true. But if Apple can keep its streak going from last year by posting increased revenue numbers, it likely won’t matter to investors how many iPhones it actually sold.