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Apple is finding out that not everyone likes giant, expensive phones

Ethan Wolff-Mann
Senior Writer

For weeks now, reports have trickled out that Apple is having trouble with iPhone XR demand. The XR, which came out this year as the most affordable option in the X-series, has not been as popular with consumers as it has been with reviewers.

Analysts and other Apple watchers frequently parse through the tea leaves left by Apple suppliers and assemblers throughout the supply chain, and the Wall Street Journal wrote on Monday that Apple slashed production plans by a third from the 70 million or so units it had been expecting to produce between September and February with its suppliers.

Several suppliers, the Journal noted, had been asked to make cuts in production.

At the same time, however, the iPhone 8 — and 8 Plus — have been experiencing strong demand, according to a report from the Nikkei Asian Review. The report noted that when the iPhone 8 came out, Apple had to rush more production for 7 models.

A demonstration of the newly released Apple iPhone XR is seen following the product launch event at the Steve Jobs Theater in Cupertino, California, U.S. September 12, 2018. REUTERS/Stephen Lam

So what does this say about consumers’ phone preferences?

Apple customers are notoriously loyal, glued to the brand’s trademark hardware and software design. But they are not always loyal to the latest and greatest things that the Cupertino-based company puts out — especially if the features don’t signify a step forward.

The higher-than-expected iPhone 8 demand, which Apple has not confirmed, would suggest that consumers are hungry for affordable, smaller iPhones. The XR is the cheapest in the X-series, but costs $749 — far from a budget product — and has a larger form factor (5.94 inches x 2.98 inches) than the smaller size (5.45 inches by 2.65 inches) people who had iPhone 6, 6S, 7, and 8 phone experienced.

To many people, that half-inch of height makes a real difference, and had already put up with unsolicited size hikes. To get a phone that keeps the sub-5.5-inch size, one must buy an iPhone Xs for $999, or stay with the older iPhone 8 model, which costs $599.

With a $400 price difference for people who want to stay with a smaller device, it’s no surprise the iPhone 8 has demand, especially considering the X-series’ features are not a large departure. Besides design language and a few small camera changes, the biggest difference is FaceID unlocking. For plenty of people, that’s just not enough.

In a recent note from Goldman Sachs, analysts noted that pricing may have become a real issue. “The laboratory of the market now points to Apple being at the limit of their price premium for the iPhone,” they wrote. “In our experience with mobile phones, when pricing power is lost, consumer technology companies tend to either lose margins or market share or both.”

Apple did not respond to a request for comment.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, retail, personal finance, and more. Follow him on Twitter @ewolffmann.

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