Apple orders 80 million large-screen iPhones while fund managers remain unconvinced about innovation

By Peter Gothard
22 Jul 2014 View Comments

Apple has asked its mobile device manufacturers at Foxconn and Pegatron to supply it with between 70 and 80 million large-screen builds of the iPhone, the Wall Street Journal has reported.

This represents the largest initial production run for an Apple product, with even the iPhone 5S and 5C models of 2013 commanding an order of only between 50 million and 60 million.

Further reading

The "large screens" in question are for iPhone 6s with 4.7in and 5.5in displays, the latter almost qualifying as "phablets" in a mobile market increasingly driven by a wide customer choice in sizes of devices.

Apple's current range of phones sport 4in screens.

Foxconn and Pegatron will be producing the 4.7in iPhone will Hon Hai Precision Industry will be responsible for the "designed by Apple in California" devices, which are traditionally assembled in China.

As well as employing cell-touch panel technology, allowing them to built thinner, iPhone 6 screens are also understood to contain a 'sapphire-glass blend' for extra toughness. However, this hasn't stopped an enterprising YouTuber from heavily damaging an apparent sample screen with sandpaper.

However, despite Apple clearly expecting greater sales than ever on its new range of phones, fund managers are becoming increasingly underwhelmed about the company's general prospects ahead of the release of its earnings report later today.

While Apple's stock is up 17 per cent for the year, the price is still considered undernourished, according to Goldman Sachs, and this is largely due to a perceived lack of innovation.

The iPad, which first emerged in 2010 and is often seen as the last piece of technical input Steve Jobs offered the company he founded before he was taken by cancer, seems to many to also be the last time the company truly led the field.

Products introduced since - including the iPad Mini, the budget-priced iPhone 5C and now the larger-screened iPhone 6 - have arguably simply been playing catch-up with products from rival companies in the sector - usually those affiliated with Google's Android platform.

Skip Aylesworth, co-manager of Hennessy Technology fund told Reuters that "the company has been in a new-product slump for a while", and is seen now as "more a value play than a growth play at this point".

Aylesworth sold his shares three years ago on the strength of this belief.

While shifting from "value" to "growth" isn't necessarily a terrible issue for Apple now, the company's USP for aspects such as build quality and UI features are starting to become a tough sell in a market that is shifting, thanks to contributions from the likes of ZTE and Huawei in China, to cheaper, more obviously mass-produced fare that provides most of the benefits of an Apple device at a fraction of the cost.

In the west, Microsoft's post-Nokia acquisition mobile arm has similarly budget ends of the market in sight, now attempting to offer many advantages of the Windows ecosystem on smartphones that cost as little as £80.

With traditionally premium-priced yet innovative products lying at the very heart of the Apple creed, the company seems long overdue an announcement to shake up the industry.

Apple's price-earnings ratio currently stands at just below 14, compared with "ultra-growth" stock in Netflix riding high at 82.

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