“Why Are iPhone 8, 8 Plus Component Suppliers Halting Production Next Month?” (http://www.ibtimes.com/why-are-iphone-8-8-plus-component-suppliers-halting-production-next-month-2642269)
“Poor iPhone X Sales Are Good News for Apple” (https://www.forbes.com/sites/ewanspence/2017/12/18/apple-iphonex-sales-q4-supercycle-fail-good/#65249141386e)
In response to low order numbers in 2017, Apple iPhone component suppliers are halting production for 2018. Other component suppliers have started to prepare for the consequences of decreasing iPhone orders. Apple claims that the low orders are believed to be due to seasonal factors. But, these declining orders for the iPhone 8 and 8 Plus began in the fourth quarter of last year, causing this trend to continue in 2018. In further research, a Forbes article, “Poor iPhone X Sales Are Good News for Apple”, states that this decline resulted in the release of the iPhone 8, 8 Plus, and iPhone X all around the same time. This continued decline insinuates that there is something else, not just seasonal factors, that is responsible for causing the trend.
Apple’s decline in orders relates to our class topic of Making Supply Chain Decisions. It is apparent that Apple is failing to properly evaluate business opportunities through the value in use method. The value in use method for a product, such as the iPhone, is the value or worth of that product in its intended use. There is a disconnect between Apple’s value in use and Apple’s customer value in use of the iPhone.
From Apple’s customer standpoint, they are asking themselves: is this new iPhone worth purchasing? This question takes into account order winners and order qualifiers in making their purchase decision. When an Apple customer is determining their need for a new phone they will look at factors such as camera quality, screen size, or any new benefits the phone will offer. These are considered to be the consumer’s order qualifiers, as they are the minimal level required from a set of criteria for a firm to do business in a particular market segment. These consumers will then weigh these new benefits against what they currently have. When this is done, the consumer will determine just how badly their desire is for purchasing this new phone. As a result, the consumer then creates a perception of what they individually are willing to pay for the new iPhone.
The consumer then assesses their individual perception against the price Apple is currently offering. When Apple offers the newest iPhone at a price in which consumers are not willing to pay, they lose the opportunity to increase iPhone orders and make the sale. This is because the price of the new iPhone exceeds the consumer’s desire for the benefits offered. For Apple consumer’s the order “anti” winner here is price. This is because the high cost of these new iPhones is the determining factor for consumers not wanting to purchase the newest iPhones. For Apple, the high price is the serving as a deterrent of the purchase of their products.
This is happening because Apple is not accurately assessing what price the iPhones should be sold for. The inaccurate price assessment is resulting in supply and demand issues. Based on the article, there has been a discrepancy between the consumer demand and the supply. Because of this discrepancy, suppliers are reaping the consequences of Apple’s actions.