Apple to Slash iPhone X Production Due to Weak Demand

With its Face ID system, the iPhone X has made a profound impact on the mobile security and biometrics industries. But on the commercial side, at least, it may not be the success that it first seemed to be.

Reports are emerging that Apple is dramatically reducing production of the iPhone X due to weaker than expected demand from consumers, with production over the next two months scheduled to drop from 40 million units to 20 million. This despite the fact that the iPhone X is widely recognized as the most sophisticated iPhone yet, if not the best smartphone on the market. The problem, it seems, is that it’s also the most expensive one, with a price tag starting at about a thousand dollars.

Evidence can be found in the relative performance on the iPhone 8, which is thought to be selling pretty well regardless: One firm estimates that sales of the device and its larger sibling the iPhone 8 Plus accounted for 40 percent of Apple’s iPhone sales in the first month of the iPhone X’s launch, with the more expensive device accounting for only about 30 percent in that period.

After the iPhone X made such a splash last autumn with its launch, much of the mobile industry appeared to shift course and follow Apple’s lead in embracing facial recognition for user authentication and other features. Given the possibly disappointing market performance of the iPhone X, did they jump the gun? Not necessarily. If there is a problem with the iPhone X beyond its price, it probably isn’t its well-received Face ID system; and if anything Apple appears to be doubling down on the technology, having invested $390 million in a supplier of laser technology critical to the system’s operation in December. Right now it looks like the best way forward for Apple is not to drop Face ID, but to drop the iPhone’s price.

Sources: Slate, CNBC, AV Club