Analysis of Supply and Demand for Apple’s Iphone X

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Analysis Of Supply And Demand For Apple’s Iphone X

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The phone was launched in September 2017 by Apple, popularly known as the iPhone 10. The phone main selling features include; No home button, OLED display, Glass body, Facial recognition, Wireless inductive charging, bionic faster processor and edge to edge display. Major part of Apple’s revenue are gained through the sale of iPhone, thus the sales of the product is a key issue for the company. The iPhone X marks the first phone with a higher sales price of over $999.

iPhone X Supply Shortage

The demand for the new iPhone X surpassed the initial supply for the long-awaited new gadget. Apple Inc. began taking orders for cell phone prior to dispatch to retail stores and customers. Only ten minutes after the device was available, consumers seeking to place orders were advised to hold up as much as four more weeks to receive their orders, which is an indication that underlying stock had been quickly depleted. The stock depletion reflects both extreme demand thanks to early adopters and considerably lower supplies than average for the new device. Edge-to-edge OLED screen and three-dimensional camera are the two features of the model and both are made from scarce materials. In the study of market equilibrium, particularly for volume and price determinations, an in-depth comprehension of the free market is fundamental to economics. Shortages and surpluses on the supply end can greatly affect both the pricing aspect of a merchandise as well as the quantity sold over time (Davis & Charemza, 2013). Such shifts in the supply accessibility bring about disequilibrium, or principally disharmony between current demand and supply levels. Shortages and surpluses regularly result in inefficiencies in the market because of equilibrium shift.

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Contrarily, the term shortage is used to show that the supply of goods produced is below the quantity demanded by shoppers. The disparity suggests that the present equilibrium at a given cost is not fit the existing demand and supply relationship, taking note that the cost is set lower than expected. It could likewise indicate that the coveted product has a relatively lower degree of affordability by the general population, which is a societal risk for other basic commodities. Undoubtedly, an undersupply could likewise be seen as a ‘longage’ of product demand, for the two are conversely related. From this point of view, a growth in population, as well as resource scarcity.

In a flawlessly competitive market, supply deficit will resultantly cause equilibrium shift, changing towards a higher price due to the constrained supply (Hirschey, 2009). The phenomenon will prioritize consumers based on their readiness and capacity to pay a premium for the phone, leveraging consumers along the demand curve, situated at higher levels with willingness and ability to pay a premium.

Supply shifts, same as shifts in demand, can eventually be an aftereffect of a wide range of external factors. It has been indicated, shortage assumes a part of pricing. Subsequently, controlling supply is regularly is believed to be a strategic play by organizations in particular industrial sectors (most prominently enterprises such as valuable minerals, uncommon earth metals, and so forth.). Supply movements can likewise be an aftereffect of innovative advances, over-use or over-consumption, supply-chain efficiency, globalization, and economics (Hirschey, 2009). For instance, the potential launch of a new phone by a competitor may act as a shock of Apple, causing a shift of the supply to the right of the supply-demand curve.

The scarcity of the materials used in the assembly of the new device and the technology involved come with increased risk level. Consequently, the company is more cautious with it with the quantity of product supplied in the market due to the possible shocks that may follow. It engages in market survey and research to ensure it releases just enough products to meet market needs. Apple understands the ramifications of the over-supply on pricing and takes every measure to ensure stable prices.

Some of the indicators of falling demand and supply include:

  • Chip producer TSMC warning of loss of demand, whose chips are usually used in Apple Manufacture.
  • Statistics by analysts had indicated earnings up to $8.8 million for the chip producers, however TSMC data indicates $7.8-$7.9 million.
  • AMS producer of components used in facial recognition features, also warned nearly 50% revenue in the second quarter than the first.
  • OLED producer Samsung cutting production on Apples orders, with output target reducing from 40-50 million to almost 20 million.

IPhone X production fell by almost 50% as the statistics by analyst suggest, however the company still maintained higher revenue due to the high price tag. The new features in the new features did not spark higher sales as expected. The price tag could not justify the price increase than other iPhone models due to the new features. Plans of launching the iPhone X variants, justify low sales than expected. Hence, production of low cost variants with lower manufacturing costs.

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