If you're one of the thousands of iPhone owners selling their smartphone to make way for the introduction of Apple's [AAPL] new iPhone (5) then you'd better get ready to make your pre-orders as soon as you can, as it seems possible supply will be constrained.
At the Sharp end
We know there's huge pent-up demand for the new device. This morning we also learn that as well as a non-win for Apple and non-defeat for Samsung in the Japanese courts, Japan's Sharp is allegedly behind in its production of displays for the new iPhone.
A Reuters report informs us that Sharp's fallen behind schedule in its production of displays for Apple's devices with just weeks to go until the iPhone 5 hits the shops. This could be a problem, though Apple is also understood to be sourcing screens from LG and Japan Display.
The new 4-inch screens are expected to be thinner than before through use of in-cell panel technology, in which the touch sensors are built-in to the display, rather than being hosted on a layer that's placed on top of the screen.
Sharp's been facing problems ramping up production of screens made using the technology since earlier in the year. The Reuters report tells us it continues to struggle, facing high costs which have impacted its margins.
With Sharp in parlous circumstances as uncertainty surrounds its previously-announced deal with Hon Hai/Foxconn, the company is ill-prepared to make major investments in its plants. In order to secure future supply, Apple may be forced to help subsidize set-up of additional Sharp iPhone display production lines.
Expect short supply
That the initial run of iPhones will be constrained is no great surprise. This has been the situation with each release of the device. While the first-generation iPhone took a quarter to sell its first million units, first weekend sales have grow with each iteration:
- iPhone 4S first weekend sales exceeded four million.
- iPhone 4 first weekend sales exceeded 1.7 million.
- iPhone 3GS sales were over one million in the first weekend.
- iPhone 3G sales hit one million in the first weekend.
These impressive sales records combined with the hype and hoopla accompanying the iPhone's release and relatively slow growth in smartphone sales across the most recent quarter suggest the industry will be watching initial iPhone sales closely. A July Changewave survey noted that demand for the device is set to be "strikingly higher than we've seen for any previous iPhone model."
"I expect this to be the biggest iPhone launch ever, possibly the biggest product launch ever," Robert Baird Senior analyst William Power told Bloomberg's Bloomberg Surveillance.
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