Apple reduces iPod / iPhone build rates, increases iMac production

Although Apple has said that it's still on track to ship 10 million iPhones by the end of 2008, it looks like that rumor about scaled back production may have been true after all: several analysts are now reporting that the company's pulled back iPod touch, iPhone, and MacBook production for Q1. Of course, Apple is known for managing its channel inventory pretty ruthlessly, so it's not known if this is a permanent decrease or just a reaction to what some analysts are calling "overbuilding" in Q4, but there is some good news out there -- strong sales of the iMac have led to a forecasted 35 percent production increase. You know, the last time the economy soured, Steve promised that Apple would "innovate out" of the downturn -- we'd say some new MacBook Pros would be a fine start this time around, eh?

[Via X-bit Labs, thanks Mack]

[fahnboi @ Feb 13th 2008 5:32PM]

Where's my SSD MBPro and/or 12" MBP, Stevester?

[Tim @ Feb 13th 2008 5:58PM]

Isn't that what the MacBook Air... is?

[freakmarket @ Feb 13th 2008 6:18PM]

Steve doesn't think you want a 12" so he will not build you one. Steve says you want an MacBook Air ... if you think you don't want an Air Steve thinks you are confused and don't "get" Apple. (sarcasm)

It's funny ... ever since the release of the Air i have heard a BUNCH of people say they want a compact notebook like the old 12".

[Dave B @ Feb 13th 2008 7:46PM]

Man my old 12" PB was the sh*t. Solid as a rock, perfect size, great for traveling. It was a little heavy though, there was barely space left on the inside. Much better looking than my Macbook, though this machine can handle everything I throw at it from PS, Ill, Flash, Reason, etc. The MBA is way overpriced, too wide, too big a screen, not enough ports...

[Matthew C @ Feb 13th 2008 8:54PM]

Apple's really lost sight of what their consumers want. Looking back, they've always created products that met the demand of their users, but added that extra little Apple touch (hah). Recently, Jobs has failed at this. The release of the iphone marks the begine of this decline. It was innovative, but did not exactly reach out to the average consumer, with its high price tag.

Then came the MB Air, which, as I see it, is 99.99% novelty. Its like a business model, targeting Apple's regular consumer, for whom it neither meets their needs or is affordable.

Wake Up Jobs! we realize that apple has the ability to make unexpected new product, but try to make things that we actually might buy. And if an extra 1/8 inch cuts the cost in half, its worth it, despite your affinity to all things thin.

[ZeroCorpse @ Feb 13th 2008 9:05PM]

There are MacBooks to take that role.

I think what you're really saying is you want a small notebook with a better video card built in, because you want to use your notebook as a hardcore gaming platform.

Because if you're *not* saying that, then I don't see where the MacBook falls short of filling the spot formerly held by the 12" PowerBook.

I had a 12" PowerBook, and I loved it, but as I recall the 12" PowerBook didn't have the card slot, either. It was less powerful than the current MacBook Core 2 Duo Santa Rosa models, and the only real difference in build between the MacBook and the 12" PowerBook (not counting Intel/PPC, and new specs) was the metal casing as compared to the polycarbonate shell.

If you want a 12" notebook, get a MacBook and crank it up with a bigger hard drive and 4GB of RAM. Card reader? You can get a pocket-sized USB card reader for about $10 online.

The MacBook is reliable and powerful enough to be my primary computer. I'm not trying to play Crysis on it, though, and if that's your goal, or if you're a professional that NEEDS a MacBook Pro for really heavy video editing or something similar, then I just wonder why you couldn't get a Mac Pro for doing your major work at a desk, and a MacBook for minor on-the-go stuff.

However, I do some video editing, some music production, and various other things on my MacBook, and I have yet to hit a spot where it's incapable of handling the task at hand with good speed and efficiency.

[Jeremy @ Feb 13th 2008 9:35PM]

@Matthew C

Has Apple ever been known for targeting the average consumer? Their products, for whatever else you want to say about them, have always been more expensive than average. The iPhone isn't expensive for a smart phone and the low monthly fee (as compared to a standard VZW data plan) more than makes up for the cost.

[Reid @ Feb 14th 2008 3:01AM]

MatthewC,

I think you're dead wrong. Last I heard, the iPhone was well ahead of overall sales expectations, though it looks to be behind in Europe. I agree with you about the MacBook Air; I'd never buy one, but then again, I am not the target market -- I don't think anybody would try to argue that a MacBook that is slower and more expensive isn't a niche product. Who knows what kind of sales they were expecting? Not every product needs to outsell every other existing product to be successful (although this seems to be what analysts expect of Apple).

Specifically, I don't think a $400 iPhone is too expensive for the market at all. It is very in-line with similar products. $600 was a bit much, but I think all signs point to you being wrong about the iPhone not being what consumers wanted. By all accounts it has been a smash hit and exceeded expectations. That's not to say it's perfect or that there aren't legitimate complaints, but that is the case of any product.

[Nathan @ Feb 13th 2008 5:33PM]

Why would decreased production be a permanent move unless Apple was going out of business? Chances are when they economy picks up (or inventory goes down) they will increase production again...just like every other hardware company.

[Adam @ Feb 13th 2008 5:33PM]

amen to the last line...

[Ozbone @ Feb 13th 2008 5:34PM]

Interesting .... but another take on reduced iPhone production might be that they're scaling back current production in order to prepare for upcoming 3G models.

[Bassir @ Feb 13th 2008 5:39PM]

What other improvements could be in this magical iPhone? 3G? GPS? I'm sure they're so important that Apple should just ditch the current iPhone and go spend their money on another iPhone.

[Nathan @ Feb 13th 2008 5:43PM]

Actually Bassir, I expect that near the 1 year anniversary of the iPhone's debut, the 2nd Gen iPhone will be revealed w/ 3G and GPS and A2DP bluetooth profile. These are a big deal to many consumer and have been deal breakers for many in my circle of friends and acquaintances.

If I were Apple, that is exactly what I would be doing at the moment, diverting resources to iPhone V2.0.

[roberto @ Feb 13th 2008 6:52PM]

I don't think 3g iphone is going to happen - ever - too much battery consumption, too much risk for Apple to go alone in a market like that, 2 cameras (oh yes you need 2 cameras in a 3G phone for video-calling your friends).

[Blaktornado @ Feb 13th 2008 6:57PM]

Don't get your hopes up :P

[ZeroCorpse @ Feb 13th 2008 9:08PM]

How about partnering with Virgin Mobile or some other company to allow prepaid phone service that fits everybody?

I hate contracts, and AT&T's prepaid is too expensive for my needs. I talk on the phone maybe once a week. I don't need to spend $60 a month on it!

[Jah @ Feb 13th 2008 5:41PM]

Well Apple are known to be conservative in their estimates so 10m iPhones should be surpassed by the end of 2008. Perhaps the 3G iPhone is due earlier and therefore current iPhone volumes are not needed or the iPhone sales curve has finally leveled-off.

[Nathan @ Feb 13th 2008 5:47PM]

I hope Apple's innovation out of the downturn will be a 8" MB to rival the EEE.

While I normally would not buy an Apple product, I DO know that they would make that form factor dead sexy (read: no more huge bezels). If they could keep the premium to a minimum on it, it very well could be my first Apple purchase in several years.

[james c @ Feb 13th 2008 7:04PM]

No chance. What did they say when bringing out the MacBook Air? No compromising on screen or keyboard.

An 8" notebook would fly in the face of what they're touting as the advantages of the Air.

[waiownsyou @ Feb 13th 2008 5:50PM]

OMFG, that's how you know they're fixin' to release the Penryn MacBooks/MBPs and iPhones with 3G! That's the only logical explanation for the decrease! Get rid of current inventory and prepare for new products!

OH SNAPS!

[Geir E @ Feb 14th 2008 4:08AM]

I am awaiting the 15"/17" penryn-powered, big-ass touchpad MBP to be launched. So just wake me up when you do that.

Plus, if they just launched iphone world wide they would see a increase with once. but include UMTS and HSDPA please, and MMS wouldn't be a crime to add too.

[Surur @ Feb 13th 2008 5:54PM]

Yes Apple, stuff that channel! First to 10 million always wins!!!!

[PEZ @ Feb 13th 2008 6:04PM]

They arent slowing down, per say. They are gearing up for the 3G version.

(HAHAHAHAHHA)

[roole @ Feb 13th 2008 11:18PM]

"se."

[Surur @ Feb 13th 2008 5:56PM]

Yes, then the iPhone will have nearly everything the Tilt had 6 months ago.

[Nathan @ Feb 13th 2008 6:03PM]

I like the Tilt, and I really wanted to like it enough to purchase one, but it still has all the problems that WinMo comes with AND HTC f'ed the customer by leaving out the 3D acceleration drivers.

So even though it has all the features of what a iPhone v2.0 could have the iPhone would undoubtedly make better use of those features.

Basically the iPhone has the nice interface but lacks the feature set, while the Tilt has the feature set doesn't use them well and isn't as user friendly.

If the new iPhone has all the features and still has the interface then the Tilt is outplayed twice.

DISCLAIMER: I am not an Apple fan, however I have to give props where props is due.

[Scott @ Feb 13th 2008 9:28PM]

Nathan, don't waste your time responding to Surur. He's a known anti-Apple troll that can't understand why people like nice interfaces when you can have a feature filled "jack of all trades/master of none" device that leaves you frustrated and angry, but at least you can say it technically has the features.

[Wonderkid @ Feb 13th 2008 6:16PM]

With multitouch being a very dubious patent (others did it earlier in the lab and in prototype form), Android (see latest build) could be a major threat to the iPhone. It's fast, it's exciting and most importantly, it's open. And with a different take on multitouch, and a less garden walled experience (we're all geeks now so don't need to be 'protected'), I see Android as the first serious threat to Apple. It never really was Microsoft...

[John P @ Feb 13th 2008 6:20PM]

Obviously the country, and as a result a large part of the world (US being a huge purchaser of items) is headed toward a recession, and Q4 results weren't that hot. So what happens during recessions? People generally save a little more. And if saving goes up, consumption goes down. Lower demand means lower supply, jobs are cut, production is scaled back, nothing a basic economics course doesnt teach. It would be stupid for Apple to boldly claim they'll ship 10 million iphones, do it, and then be left with people who arent buying due to less disposable income. So they are probably just being a shrewd company, not gearing up for more products.

[Josh @ Feb 13th 2008 6:25PM]

so...

*taps fingers impatiently*

... where is my new MBP?

Lets get this one out the door before summer time, shall we steve?

[Olu O @ Feb 13th 2008 6:29PM]

yea yea Apple, your stock is still free-falling

[D.L. @ Feb 13th 2008 6:37PM]

Looks like they took the "computer" out of their name just a bit prematurely.

[Andy M @ Feb 13th 2008 6:40PM]

In this case, I'd have to agree it's not just wishful thinking that the purported production 'scaleback' is in fact a transition to another version of these sku's.

We've already seen this happen before where folks get confused thinking demand is dropping when it's just the opposite. Don't get me wrong, AAPL isn't immune to the soft economy and lack of discretionary spending, but if anyone can innovate out of a recession to minimize impact to the bottom line, it's Cupertino.

As risk of getting tagged as an Apple fanboy, I finally feel it's time to point out how remarkable their product launch has been for both the iPhone and iPod Touch. I typically reserve judgement till after 6 mths from release and now that all the bugs (hardware and software related) have had a chance to show themselves, you just have to give them kudos for such a relatively clean product launch, especially one that's so technically groundbreaking. All eyes were poised to criticize even moderate bugs, and while there were some (initial screen QA problems and lesser software glitches quickly resolved), this was by all accounts an incredibly clean launch. Apple clearly tested the iPhone to death before letting it hit the wild. Just look at the recently released mobile phone satisfaction rates which puts Apple (a new entrant in the space) ahead of any other manufacturer by a wide margin.

It's beyond obvious that they are simply cleaning out 8GB inventory with the intent to discontinue with the next release while simultaneously releasing another sku.

Oh, and one other thing... while much (well deserved) focus has been paid to the 2nd gen 3G iPhone, I think people are going to be surprised (positively) when they see what's in the wings for the iPod Touch... really cool stuff :)

[stephenbratz2 @ Feb 13th 2008 8:33PM]

I would not say it has been a clean launch, and the software has not been what I would call stable. If you look over my posting history, I have not been favorable towards apple, but I saw the Touch as a tool that I could use for browsing the internet, so I got one. Shortly after, they wanted to charge me $20 for a small upgrade. I still cannot get the locator to work in the Google maps application. I was reading at another tech blog just today that people who did not buy the upgrade are having problems syncing their Touch where it nags you to upgrade (and pay $20), and if you click no to the prompt, you cannot sync picture folders correctly. The GF is a Mac fan, and so I bought her one for Christmas. She is running an earlier version of OSX, and she cannot sync hers because it will not allow her to upgrade iTunes. There was the price drop - which they made up for (kind-of, you had to buy apple products with that $100 refund). My Blackjack broke (dropped into a puddle) and at the prompting of the GF, I got an iPhone. It works OK, except every third time or so I press the home button the screen will briefly turn on, then go blank. The backlight is still on, but the screen does not show a picture. Once you go into Safari, it crashes constantly where the screen goes black and then takes me back to the home screen. I cannot tell you how many times I have tried typing a comment here on Engadget, but before I am done it crashes. I am using the latest firmware, so it is not because I am using older software.

There is a lot of great stuff in the phone and Touch, but I would not say it was flawless.

And as for them clearing out inventory, I don't agree with that. I can see them doing it with the iPhone if they were going 3G. But this does not account for decreases in Touch production. You do not cut production of the touch if the phone is going 3G, and you do not cut production if you are increasing memory capacity. You just make fewer of the 8GB models and make more of the 32GB model, balancing out the production numbers.

[xbit @ Feb 13th 2008 6:58PM]

EVERYBODY PANIC!!!

[Rick @ Feb 13th 2008 7:09PM]

12" MBP
iPhone Nano 3G
Please, please, ...

[DT @ Feb 13th 2008 8:11PM]

Growth in the computer dept is where AAPL is going to shine in the next 12-18 months, IMO (I watch the stock and financials closely). Margins are MUCH higher than in the iPhone/iPod area, where growth is slowing due to market saturation. The computer dept is the unsung story, and as soon as analysts and the market picks up on it, it will fuel a tremendous rise in value. They are outpacing the rest of the industry in terms of percentage growth every quarter (by a significant amount), and their marketshare is increasing dramatically among those who will be long-time customers (college students, businesspeople, affluent home users), which bodes very well for future growth in other segments as well. As a stockholder, I'm MUCH happier with them selling more computers than I am with increased iPhone/iPod sales. Remember: 1% of the US marketshare is equivalent to $1Bn in net profit.

[Ben @ Feb 14th 2008 9:58AM]

My previous phones:
HTC s710
HTC Kaiser
HTC Advantage (sent it back)
Samsung Blackjack
HTC/O2 orbit

I am NOT a fanboy - I am writing this on an XP computer, with office etc etc. I think windows is great and have never had cause to buy apple products. Today I bought myself an iPhone, mainly to use as phone cum ipod / MP3 player but must admit to being hugely impressed - slick interface, just works with outlook/email, great build quality and much smaller than my old phones with more USEFULL features. GPS would be handy but I have a tomtom and fundamentally I have yet to see a mobile with good GPS - the Kaiser and the Advantage were nothing like as good as tomtom. 3G may-well be usefull in future but how ofter would I truely use it????

Apple are not selling enough phones because most people in Europe dont pay big money for phones when good spec phones like n95 are free with contract. THAT is why production is scaled back - that and the stupidly expensive price plans on O2, mine has been unlocked with ziphone (after 3 attempts). I will flog mine on ebay if I gett bored of it.

[Amin Jaber @ Feb 13th 2008 8:39PM]

Apple should produce a low price laptop and desktop to be able to compete. their computers are too expensive just like sony. the iphone is not worth it. people just buy apple products because everyone else has one.

[Steffen Jobbs @ Feb 13th 2008 9:37PM]

I wish they had a pay as you go plan for the iPhone, but it would still get fairly expensive if you started surfing the web on EDGE. You'd have to stay tethered to a WiFi spot. I don't think it will ever happen. Forget it. Apple is targeting people with plenty of money. Most likely it's the poverty class that use pay as you go phones.

In my case, I would only be using a cellphone in emergency situations, so it really doesn't make sense for me to get a $30+ a month contract for two years. I'm looking toward Net10.

[cameron @ Feb 13th 2008 9:27PM]

WTF Engadget?! Way to report on a story from FEBRUARY 6. If you have additional sources that say Apple's cutting production, feel free to share. But if you're just pointing to the FBR analyst, I don't really see how this is beneficial at all.

[Andy M @ Feb 13th 2008 9:39PM]

To me, what would be more relevant / insightful, is not whether Apple is cutting back production of these specific sku's but whether they have scaled back their buying of various components from their suppliers. This is a better way of gauging whether this is the result of decreased demand (due to soft economy, market saturation, maturing product life cycle, etc) or an indicator of a pending new product launch.

[Erik @ Feb 13th 2008 9:19PM]

Don't Panic.

[XamaX @ Feb 13th 2008 10:31PM]

Pretty sure it is both plain cautiousness and preparation for the new models.
I'm sure Apple is about to announce new iPod Touch and iPhone models and maybe a new MID [mobile internet device]. Actually, according to Oppenheimer, the iPod Touch is a new computer platform and so is the iPhone. That's how the MacBook Air makes sense, it is one of the company's models between regular iPods and regular laptops/iMac. It is supposed to be a peripheral just like the iPod.

Apple will soon revolutionize (again) the industry by ceasing to produce iPods altogether and turning its focus into these Touch-like MIDs which the so called iPod Touch and iPhone are their front runners.

The launch of 3G iPhone may be imminent: the power consumption issue of 3G has been solved by Broadcom who presented all new SoC [system on a chip] modules that do everything from EDGE to 3.5G (HSDPA) to WiFi to Bluetooth to GPS to AAC/MP3 to MP4 to FM Radio, even dance with your ugly sister . NVidia also announced the APX2500 Applications Processor that does everything you ever dreamed of, not excluding playing Quake, and presented a prototype at the same GSM Mobile World Congress in Barcelona this past weekend .

So you see, the set is ready for Apple to revolutionize this industry again. We are about to become equiped with handheld computers that will do everything. NVidia has an excellent prototype there and BenQ has too . Perfectly good reasons to slow down production of existing models.

[Andy M @ Feb 13th 2008 10:52PM]

Uh... exactly (and well done!)

the iPod Touch is the new MIDI- not a separate sku as I alluded to in the earlier post (wasn't sure that was public??)

whereas most see the Touch and iPhone as essentially consisting of the same base (the iTouch an iPhone without the phone), the next release will make a clear differentiation between the two. Different internal components in the most recent models are indicative of this.

When Sir Steve says this year will be an unprecedented series of product announcements, he ain't kidding friends...

[theflew @ Feb 14th 2008 12:32PM]

You do realize just because a company releases some new silicon (Broadcom and NVidia) it can take well over a year to create a product that can use it and for the manufacture to get up to production volume for said silicon. I don't think either company said they were volume shipping products at this point.

[XamaX @ Feb 15th 2008 8:44AM]

@Andy M: Thanks!

@theflew: Well, yes. I don't think it takes that much time nowadays to create a product with a new chipset when it is not really creating one from scratch but putting a new generation of chips in an existing one, all they need is to integrate it into the existing machine and adopt the software, probably something that's already ready, these devices do obbey to standard rules don't they [UMTS, HSPA, etc.]?

And it would be only natural if Apple would have privileged access to their prospective suppliers' developments and even giving input to them as it is public they do with Intel - aren't they working with Broadcom already?

Also NVidia did show a fully functional prototype, such things are done precisely to shorten the time-to-market of their prospective OEMs.

I accidentaly researched a bit and discovered there has been more companies than just Broadcom announcing such low power do-it-all 3.5G chips. And by do it all, it's really all namely something really crucial for Apple: 3G in every frequency there is.

Of course, if they don't launch a final version of a full line of MIDs soon, they will work their way up there with interim models as they usually do.

I apologize for any mistakes as I didn't do all the research this comment needed and I'm here only speculating, you know... :-P [do go sue me over this]

PS: in view of AAPL's huge & hurtful plunge, the man really needs a change of pace to spur new enthusiasm and since he does not react to market changes by calling press conferences and saying how dumb he thinks analysts are, he may think he'd best show sooner rather than later how good and revolutionary Apple is by announcing / launching new products sooner than everyone antecipated.

So soon is a key word and it is agreeing with slowing iPod production.

[JohnPQ @ Feb 14th 2008 2:55AM]

Apple also needs to upgrade the Mac mini and MacBook. They need some GD computers that real people can afford. Maybe like a $799 MacBook. I hate to say it, but Apple's 15 minutes may be over. You can only sell so many Walkmans (I mean iPods).

[CanCar @ Feb 14th 2008 9:30AM]

As soon as analysts and the market picks up on it, it will fuel a tremendous rise in value. They are outpacing the rest of the industry in terms of percentage growth every quarter and their market is increasing dramatically among those who will be long-time customers. lasvegasgolfing.net

[Kali @ Feb 20th 2008 10:14PM]

Mr. Jobs: This is the second time in six months that my address book has crashed! I'm feelin that Zune