Nope, those iPhone 14 Pro sales aren’t lost forever [Comment]

Apple analyst Ming-Chi Kuo suggested earlier this week that tight supply constraints could cost the company as many as 15-20M iPhone 14 Pro sales. Not just temporarily, he argued, but permanently: Most of those sales would just “disappear.“

He’s not the only person to suggest this, and there are four arguments that can be made in support of the view – but I don’t buy any of them …

The facts

Let’s start with the facts, as best we can …

We know for certain that there’s a substantial gap between supply and demand for the iPhone 14 Pro. We know this because Apple said so, because Foxconn agreed, and because we can see it for ourselves, in the form of very visible disruption to production and very long wait times for orders. As early as mid-November, iPhone 14 Pro orders were showing delivery dates too late for Christmas.

The exact scale of the shortfall isn’t known – probably not even by Apple or Foxconn, as the situation is simply too fluid. We’ve seen estimates of output falling behind by 6M units at the low end, and by 15-20M units at the high end.

But whatever the exact number, there’s no doubt that anyone wanting to get their hands on an iPhone 14 Pro within the next few weeks is going to struggle to do so. There’s also no sign of any near-term improvement, and suggestions that the problems will continue into the new year also seem plausible.

The argument that iPhone 14 Pro sales will “disappear”

But Kuo – who provided the most pessimistic estimate of lost production – went further than this. He suggested that it wasn’t just a case of sales being deferred until supply improves, but that most of the demand for the iPhone 14 Pro will “disappear.” Others have made similar arguments.

It’s not a crazy view, and there are four ways in which this could happen:

Substitution

If I want X, and X is in short supply, I might decide instead to buy Y. This is the prospect feared by companies when they’re unable to meet current demand: that they might lose out on those sales permanently, not just for now.

Worsening economy

This is Kuo’s argument. Both the US and UK are officially in a recession (two consecutive quarters of negative GDP), and high inflation rates combined with wages lagging behind is limiting spending power around the world. If people can’t buy now, they may struggle to buy later.

The Christmas gift factor

This is an argument I’ve also heard made. December 25 is a hard deadline for those who celebrate with gift-giving. If someone can’t take delivery of an X by then, they may be forced to substitute a Y.

Empty wallets, post-xmas

Finally, there’s a marked tendency for people to overspend during the holidays, leaving money tight in January.

But I don’t buy that people won’t buy it

The iPhone 14 Pro is an X for which there is no obvious Y. If someone wants an iPhone, they want an iPhone, not an Android flagship. And if someone wants a Pro model specifically (as reviewers agree they should), then a non-Pro iPhone 14 model isn’t a substitute, either.

So I don’t buy that people will substitute something else for an iPhone 14 Pro, even if it is a gift and it won’t be available on Christmas day. I know that if someone were buying me the iPhone I really want, I’d happily wait another week or two rather than be given something else on the day.

I also can’t see the recession or inflation having that kind of impact – the loss of “most” of 15-20M sales – in such a short timescale.

When people can’t get the iPhone they want, when they want it, they might respond in a variety of ways. They might just place their order and wait. They might explore other suppliers, beyond Apple. For gifts, they might even be desperate enough to hit up the scalpers on eBay. But what they are very unlikely to do, in my view, is either buy something else, or nothing at all.

That’s my view; what’s yours? And if you are in this situation yourself, what’s your solution? Please let us know in the comments.