On Wednesday, Apple announced its new iPhones, curiously giving the cheaper and more colorful iPhone XR a ship date of over a month after the more luxe iPhone XS and XS Max models become available next Friday. Why didn’t Apple release all three phones at once?
In fact, Apple’s release pattern is exactly the opposite of what it did last year when it chose to release its more affordable phones, the iPhone 8 and iPhone 8 Plus, just 10 days after the Apple event in September, while the iPhone X wasn’t available until November. This was due to OLED supply issues, and iPhone X sales initially suffered for it.
LCD software issues might be the culprit
Reports that the iPhone XR, which starts at $749 and features a so-called Liquid Retina LCD display, was facing supply issues floated around over this past summer. In July, Japanese blog Macotakara reported that supplier Japan Display had low yields in manufacturing the LCD panels. Ryan Reith, IDC’s vice president of research on mobile devices, told The Verge in a phone interview that more specifically, it likely wasn’t a hardware issue. “Everything we’ve been hearing, it’s been an issue on the software side,” he said, “There’s a lot of software involved with the LCD screen, as it’s the first [LCD display] with a notch and full screen.”
Reith added, “Apple could not get enough of these displays. It’s run into last-minute kinks with the contact manufacturer.” He said that Apple has been in production for a while, but that the “quality wasn’t hitting what they needed.” Apple has had to tweak the LCD screen through software engineering to improve the visuals, as well as get its manufacturer to cut the material into a notched shape.
Canalys senior analyst Ben Stanton said to The Verge, “Apple would not delay the launch of iPhone XR for any reason other than the device is not ready to be shipped at adequate volume.” He elaborated, “The constraint with the device is around the new LCD display, which has bottlenecked production.”
Apple has not responded to multiple requests for comment. US-based IDC and Singapore-based Canalys track the parts that go into Apple devices and come up with estimates, and from those estimates they provide analysis.
Stanton said he doesn’t expect customers will be so eager to switch over to a new iPhone as soon as possible that they’ll end up buying a iPhone XS or XS Max model in the interim. “The price differential between the iPhone XS and XR is so great,” he said. “Consumers will not be upsold on impulse.”
Apple knows people want cheaper smartphones, so it’s counting on the iPhone XR
Despite the one month delay in the iPhone XR, both analysts agreed that Apple is betting hard on its cheaper product. Reith said that Apple knew it was pushing its luck on increasing iPhone prices up to $1,449 this year for the 512GB storage option on the XS Max.
“Apple has heard there’s a threshold for pricing. They realize there are a lot of people that won’t go that high,” he said. “To the average consumer, the products will look the same from the outside... and this LCD device is a really good looking device.” If the average person looks at the three iPhones together, Reith reasoned, they’ll go for the cheapest one, seeing that it’s also bigger than the iPhone XS, so it might have better value.
That’s why the delay might cost Apple some sales on its iPhone XR model, as people might end up buying the XS Max while Apple struggles with its LCD supply issues. “I think it’s a real possibility,” said Reith, “Consumers can’t tell the difference. If they see two phones, and one of them is significantly bigger, people will just go to that.”