Apple is reportedly looking to extend its partnership with Wistron this year to assemble new iPhones. That should allow Tim Cook to squeeze more value out of the supply chain by pitting Wistron against incumbent Foxconn, but it runs the risk of decreasing customers’ trust in the purity of the iPhone experience.
This gives Apple three key areas where it can play suppliers off against each other in a bit to lower its bill of materials – assuming that the suppliers are happy to undercut their prices in exchange for the ‘guarantee’ of the volumes that an iPhone order will provide (and are happy to risk Apple cutting its order when a super-cycle of iPhone X sales fails to materialise).
Alongside the final manufacturing being split between Wistron and Foxconn, Apple has also set up ‘internal competition’ between Samsung and LG over the OLED displays to be used in 2018’s iPhone X and iPhone X Plus, and between Intel and Qualcomm over the cellular modems used inside the handsets. These won’t be the only areas where Apple is squeezing suppliers to increase its own margins and average revenue per handset.
Given the static sales of the iPhone, Apple’s only choice to maintain growth is to have a more efficient and cheaper supply chain, so these moves make sense on a financial front.
What it does do is it affects the simplicity of the iPhone. With various combinations of internal parts that offer differing levels of quality, power, and battery life, users cannot be sure that the iPhone they buy is the best possible smartphone for their money. It could have a screen with reduced viewing angle, a model that draws more power, or any other combination of parts from a mixed up supply chain.
In the past, Apple’s near-mythical focus on quality control would have been the salve that soothed the geekerati, but with the recent issues around the throttling of older iPhone batteries due to poor performance, through faults that require logic boards and solid state disk drives to be replaced en masse, to faulty keyboards that can require a $700 repair bill from a speck of dust, Tim Cook and his team have used up a lot of goodwill.
Come September consumers will be wondering if they will be lucky enough to pick up a good iPhone, or be saddles with below par hardware when they spend over $1000 on this year’s new iPhones.