Here’s a roundup of the four biggest Apple rumors making headlines this week.
1. Apple Watch production hampered by low yield issues
A new rumor out of Asia this week suggests that suppliers are having a difficult time meeting the original production goals for the Apple Watch due to problems with manufacturing the device’s display. According to supply chain sources that spoke with Taiwan’s Economic Daily News, only 30% to 40% of the active organic light-emitting diode (AMOLED) panels being manufactured by LG Display have been deemed usable. This has led Apple to revise its monthly shipment targets for the Apple Watch from approximately 3 million units to 1.5 million units.
The sources noted that the manufacturing problem seems to be related to the use of a thin plastic substrate — instead of a glass substrate — in the Apple Watch’s design. According to Economic Daily News’s sources, LG Display is currently the exclusive supplier of the Apple Watch AMOLED panel and it is unclear what steps the California-based company will take to help it boost production.
Unfortunately, low yield issues with the display aren’t the only problems slowing down production of the Apple Watch. Economic Daily News’s sources also claimed that Quanta has been taking longer than expected to assemble the Apple Watch, with an estimated monthly output of just 300,000 units. As a result, Foxconn might be enlisted by Apple to help Quanta make up the shortfall.
While sketchy rumors of supply constraints inevitably emerge before the launch of any new Apple product, it should be pointed out that the Apple Watch differs significantly from many of the company’s other products. For this reason, it is quite possible that unforeseen manufacturing issues may have slowed down the production of the Apple Watch.
On the other hand, Apple is a company that is renowned for its dynamic operational capabilities, so it is also quite likely that the company has already adjusted its supply chain to compensate for any manufacturing delays. It should also be noted that almost all new Apple products have tended to be in short supply during the first few weeks of availability. It is difficult to say whether those shortages were the result of manufacturing problems, or simply due to overwhelming consumer demand. The Apple Watch will hit store shelves on April 24.
2. Trent Reznor leading the Beats Music app redesign project
Former Nine Inch Nails front man Trent Reznor is leading the effort to overhaul the Beats Music app, according to insider sources that spoke with The New York Times. Reznor, who previously worked as the chief creative officer for Beats Music before it was acquired by Apple, joined the iPhone maker along with Beats co-founders Jimmy Iovine and Dr. Dre. Now Reznor is leveraging his music industry experience to help Apple create a new version of its subscription music streaming service. The New York Times’s sources also confirmed a recent Billboard report that suggested that the record labels have been unreceptive to Apple’s efforts to secure a discount licensing rate. This means it is likely that Apple’s new subscription streaming service will cost the standard $9.99 monthly fee that most other rival services charge. Apple is also expected to ditch the Beats Music name.
Reznor previously hinted that he was working on some type “music delivery” project in an interview with Billboard last year. “It’s related to that,” Reznor told Billboard. “Beats was bought by Apple, and they expressed direct interest in me designing some products with them. I can’t go into details, but I feel like I’m in a unique position where I could be of benefit to them. That does mean some compromises in terms of how much brain power goes toward music and creating. This is very creative work that’s not directly making music, but it’s around music.”
Although the latest rumors didn’t offer any new details about how the revamped streaming service will differ from the current Beats Music app, sources cited by 9to5Mac previously predicted that the new version of the service would be more deeply integrated into iOS, while maintaining many of the Beats Music app technologies. Per The New York Times, Apple’s new subscription music streaming service may debut as part of a new iOS iteration codenamed “Copper,” alongside a revamped iTunes Radio service. According to 9to5Mac’s sources, “Copper” is the codename for iOS 8.4.
3. Apple preparing to roll out iPhone trade-in program in China
Apple may soon be offering an iPhone trade-in program in China, according to insider sources cited by Bloomberg. Like the iPhone Reuse and Recycle program that was initiated in the U.S. in 2013, the program will allow Chinese customers to trade-in their old iPhones in exchange for gift cards that can be used for the purchase of a new iPhone. Major Apple supplier Foxconn is rumored to be a partner in the program and will be responsible for repairing and reselling the used iPhones.
While Apple’s Reuse and Recycling Program ostensibly helps to keep consumer electronics waste out of landfills, it also plays an important role in boosting the Apple Store’s iPhone sales. Since many iPhone users like to upgrade to the latest model each year, the in-store trade-in program offers a convenient way for customers to simultaneously dispose of their old devices while getting money for a new one. That being said, Apple Stores usually offer less money for iPhones than many third-party resellers.
If true, the introduction of the iPhone Reuse and Recycle program in China comes at an opportune time for Apple. According to data from market research firm Canalys, the popularity of the 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus allowed Apple to take the No. 1 spot in the Chinese smartphone market for the first time ever in the fourth quarter of 2014. Additionally, according to a transcript of the company’s last earnings call provided by Seeking Alpha, CEO Tim Cook said he plans to double the number of Apple Stores in Greater China from 20 to 40 by mid-2016. With so many potential iPhone upgrade customers now in China, the new store openings and the debut of an iPhone trade-in program will likely boost Apple’s iPhone sales even more this year.
4. Apple to release 4-inch iPhone 6C this year
Although for many years Apple only released one iPhone model each year, it broke that tradition when it introduced the lower-cost iPhone 5C alongside the premium iPhone 5S in 2013. Similarly, Apple released the 4.7-inch iPhone 6 alongside the 5.5-inch iPhone 6 Plus in 2014. This year, Apple may be planning to launch even more iPhone models. Per insider industry sources cited by Taiwan’s DigiTimes, Apple will release the iPhone 6S, the iPhone 6S Plus, and the iPhone 6C in the second half of 2015. The iPhone 6C will feature a 4-inch screen, while the iPhone 6S and the iPhone 6S Plus will presumably maintain the larger screen sizes that were introduced last year. All three models will feature Touch ID and NFC chips for Apple Pay.
As its name suggests, the iPhone 6C is considered a successor to the iPhone 5C and will be positioned as a mid-tier device. The iPhone 6C will likely feature a plastic casing like the iPhone 5C did, although DigiTimes’ sources noted that the use of plastic likely “contributed to lower-than-expected sales of the model.” The iPhone 6C will also use the last-generation A8 chip, while the iPhone 6S and the iPhone 6S Plus models will be outfitted with the latest A9 chip. According to the sources, the use of these less expensive components will allow Apple to offer the iPhone 6C for a price between $400 and $500.
Besides giving customers an entry-level iPhone option, the iPhone 6C will also provide an option for Apple users that prefer a smaller screen size. Rumors of a new 4-inch iPhone model have circulated since last year, when sources that spoke with Taiwan’s Electronic Times claimed that Apple had plans to debut a 4-inch iPhone model for “female users” who may find it difficult to operate either of the latest models with one hand. In any case, it will likely be several months before any hard evidence of a smaller iPhone emerges from Apple’s supply chain.