So it looks like Bloomberg has a pretty big scoop on the iPhone X production troubles here. Normally I would take a story like this with a big grain of salt. However, Bloomberg is a pretty solid source for Apple news, even though the company has waged a war of secrecy against them recently. They still have their sources, and don’t tend to just run with wild rumors like many other media outlet, so there is a high likelihood that this report is as least partially accurate. Also, I have to give Alex Webb and Sarah Kim of Bloomberg credit- this is a well-written and balanced article that provides a lot of insight into the entire situation. There are a lot of good details, and I highly recommend reading the whole thing. This is definitely not just a click-bait Apple hit piece. Kudos to the authors for that.
So what does this potential spec downgrade to Face ID mean, exactly? We won’t know until device’s start hitting customers’ hands and scanning their faces on November 3rd. However, we will definitely know very quickly if there are problems because of the high levels of scrutiny that Apple products face. That comes with the territory of being the most profitable company in the world, and the executives at Apple know this. Here are a few things to consider:
This is Business as Usual in the Manufacturing World
Production delays are a way of life in manufacturing. I deal with this on a daily basis, as I have often had to shift orders and products that I use because of such delays with the companies I do business with. I’ve seen a shortage of a single component sideline controllers that install often for a month or more, and it really sucks. My customers don’t want to hear it, but it doesn’t make the situation go away. This is reality in the modern supply chain. One problem can bring the whole production line to a screeching halt and keep it there.
Lowering product specs to get better yields at higher volume is also something that happens every day in component manufacturing in response to situations like this one. It may seem unfamiliar and almost like a bait and switch on the part of Apple, but this is how these problems get solved on the fly. Either you scale back production, which isn’t an option for Apple with the iPhone X, or you scale back your specs to compensate. It sounds like Apple has been forced to do the latter, to some degree.
There is a fairly reliable ratio of performance vs scalability in this world, and its a thing that we mere mortals rarely, if ever notice or hear about. That said, none of the companies I deal with have to produce at anywhere close to the kinds of scale and volume that Apple does. Companies like the one who’s products I sell also tend to be dealing with enterprise and industrial customers who have a little better idea of what to expect. Apple doesn’t have that luxury, which I’m sure makes days like today a nightmare for them. Most people aren’t going to put this potential spec rollback in any kind of context. They are immediately going to jump to conclusions about it. But when you are as big as Apple is, the bigger bullseye is part of the deal. They shouldn’t get a free pass from anyone, even Apple fans.
An Aggressive Apple is a Good Thing
One quote from the Bloomberg article jumps out at me. An anonymous source who is familiar with the production process said:
“It’s an aggressive design,” the person said, “and it’s a very aggressive schedule.”
This is interesting considering the reputation that currently Apple has in the tech community. They are no longer seen as an innovator by most of the tech community. They have never really been known for doing things first, but for refining existing ideas and making them work more easily and reliably. They do occasionally strike out ahead of the field, with the original Retina display, TouchID and Apple Pay being prime examples. All of the above leapt ahead of all competing phones by a wide margin in year one. It would certainly appear that Apple has the same intent with Face ID. At least this points to a continued willingness to push the limits in some areas. The AirPods are another. However, tt would also appear that they may be having an Icarus moment this time around. Time will tell.
It’s All About Results
November 3rd is going to be a major popcorn time moment for the tech media. EVERYONE, myself included, is going to be waiting and watching to see what happens with review units. Every user who gets an iPhone X, fanboys included, are going to hammer the hell out of Face ID to try and find the cracks and bugs. If there are any issues, it won’t be long at all before we all know.
Apple has put itself into a uncharacteristically risky situation with the iPhone X. Rather than shoehorn TouchID into the product as a safety blanket of sorts, they abandoned it all together in favor of the new. Now we have this report that Face ID will have reduced specs, whatever that means. And that is the 1 Billion Dollar Question, isn’t it? What DOES that mean, exactly? If Face ID doesn’t work as well as advertised or at least close to as well as TouchID did after this change, then Apple is going to face a huge backlash for it. To be honest, if that were to happen, they would deserve it. As I said before, none of what’s happening here is new in the world of manufacturing, and Time Cook’s biggest strength is in THIS area.
Apple’s executives and engineers knew full well the risks going in, but that’s actually what gives me some hope that this turns out to be a non-story in the end. I don’t think they would have going down this TouchID-less road with the iPhone X unless they knew they had some slack to play with. If Face ID still works as well or better than TouchID and production is able to meet demand and generate huge Holiday sales of the iPhone X, then the engineers at Apple deserve a raise. However, if this concession doesn’t pay off, it is going to be open season on Apple in not just the tech press, but the mainstream press, as well. I am really hoping for the former, but Apple fans shouldn’t fool themselves into thinking that the latter can’t happen.
I would be willing to bet anyone cash money right now that this exact scenario has occurred before in iPhone production over the past ten years. Maybe multiple times. I absolutely guarantee that it has. We just never knew about it. The rumor mill around Apple has grown by leaps and bounds and become progressively more insane, and the iPhone X has just taken it to new levels. I thought that things would have calmed down at this point, but here we are, still talking about rumors and reports just days from preorders and release.
This report didn’t originate from Apple. Bloomberg may have gotten feedback and background on it from some inside sources, but this story started with the supply chain overseas. That is Apple’s big weakness when it comes to rumors. It always has been, and it’s just getting worse. I think today is just one of many reasons why we will see Apple continue to produce more and more of its own components, and keep more of that work to itself. Even if the manufacturing of the components and assembly of devices happens overseas, I wouldn’t be surprised at all to see Apple absorb more control over their supply chain, so that they can more actively plug the leaks that contractors won’t.
This story has the potential to cost Apple a LOT of money. I’m not betting that it will, but it is a possibility. That kind of risk is worth spending real money to avoid, so I look for Apple to get even more aggressive about control of their products end-to-end. I expect to see more acquisitions and more money spent by the company in pursuit of this goal. That is the only thing that will keep the kinds of manufacturing details contained in this report from becoming public knowledge again.
What do you think about this story of Apple potentially tweaking the specs of the iPhone X at the last minute? Will this potentially affect your decision to buy an X, or do you not care? Maybe a wait and see approach, or will you still be up at 12 AM PST on Friday? Let me know in the Comments section below, on Flipboard, on our Facebook page, or on Twitter @iPadInsightBlog.
[Update: Apple actually responded to this report, which is not surprising considering the implications, but it isn’t something they typically do unless it’s a very big deal. They have categorically called out this report as being false. It will be interesting to see how this plays out, but it is unlikely we will ever know 100%, one way or the other.]