Underestimating the Demand for iPhone 7 Plus – Apple Caught Off Guard for Holiday Season

iPhone 7 Plus Demand

According to the CFO of Apple, Luca Maestri, they are not able to fulfill demands for the iPhone 7 for the current holiday season.

Apple has obviously underestimated the demand fort the iPhone 7 Plus this season.

Hitting its Profits

Apple has been caught off guard by the high demand for its new iPhone 7 Plus during this holiday season. The wrong calculations could hit the profits of the company during the holiday season. The tech leader is doubtful whether the company can manufacture the units necessary to fulfill the consumer demand in time for the holiday season this year, according to Tim Cook, the Chief Executive of the company. However, he stated that the number of iPhone 7s devices would be enough.

iPhone 7 Plus Demand

Demand for iPhone 7 Plus

According to Tim Cook, the demand for the iPhone 7 Plus was more than the forecast during the launch of the product. It is the bigger devices that bring in more profit margins. Apple had made a forecast of margins to be smaller than what it had expected. This seemed to concern the investors, especially when the company reported its quarterly profits recently.

Conservative Forecast

According to Mariann Montagne, an investment analyst at Gradient Investments, Apple had issued a modest margin of 38% to 38.5 % for this holiday quarter, whereas the expectations were 39%. It is possible that the shortage of the device could have caused this miss. Analyst, John Jackson at IDC says that the company is not able to get the device in the hands of the consumer who needs it just now, so the dollars don’t come to the hand.

Release of iPhones

The Cupertino giant had introduced the new iPhone 7 and the 7 Plus on September 7 this year The iPhone 7 Plus at 5.5 inches is the first of its phones coming with a dual setup camera on the rear, so that the user can take enhanced portrait images and also zoom in from a greater distance.

Tough to Ascertain Demand

According to Jan Dawson, an analyst from Jackdaw Research, it is quite a difficult task to know how the finish and new features of a device will affect the demand for a new phone. Apple is still trying to understand the varying consumer interest for small phones and large phones, as it had launched the two sizes about two years back in 2014, says Jan Dawson.

Apple Caught Off Guard

Customers from Samsung

Apple might also have underestimated customers who were switching over from Samsung Electronics, after the Note 7 debacle.  Chief Financial Executive, Luca Maestri, has stated in his interview with Reuters that it is not possible to exactly assess the effect of Samsung halting its production of the Note 7 in early October. Hence, it is not possible to completely fulfill the demands of the market currently. It is not possible to speed up the production, as it is difficult to get in new suppliers and hire additional workers, open up a factory immediately and so on, according to the MD, Global Equities Research, Trip Chowdhry.

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