Will the iPhone 6 Plus Shortage Hurt Apple This Christmas?
Placing an order for a new iPhone 6 Plus through Apple's own site results in a shipping delay of three to five days for two of the three storage configurations. The priciest of the iPhone 6 Plus models -- the one that packs 128 gigabytes of storage -- won't ship until at least a week after the order is placed. Since the iPhone doesn't have slots for external storage, many buyers pay up for maximum internal storage capacity.
Things used to be worse. Shipping delays ran three to four weeks for several weeks after its mid-September launch. Even late last month, with Black Friday approaching, potential buyers were being told that new iPhone 6 Plus orders wouldn't go out for a couple of weeks. So, yes, the trend is definitely improving in December. In-store availability used to be scarce, and now there's a pretty good chance that the iPhone 6 Plus is in stock at your nearest Apple Store location.
However, demand continues to outpace supply, particularly at some Apple retail partners that could really use a boost. A recent Seeking Alpha article singles out RadioShack (RSH) as a victim of barren iPhone 6 Plus inventories.
Giving the People What They Want
Folks have been clamoring for larger iPhones for some time, and Apple couldn't ignore the trend that finds it yielding market share to Android, with its wider array of smartphone sizes. September's rollout bulked up from the iPhone 5's 4-inch screen to the larger iPhone 6 with its 4.7-inch display and the largest iPhone 6 Plus with its 5.5-inch display.
A survey at the time of 6,000 people by RBC Capital Markets found that 49 percent of prospective iPhone buyers were planning to get the iPhone 6 Plus. Despite the device costing $100 more, the "bigger is better" mantra seemed to be alive and well with Apple fans.
Reports have blamed the shortage on everything from production hiccups to Apple simply not expecting so many of its customers to want a device that may be too big to operate with a single hand. KGI Securities analyst Ming-Chi Kuo estimates that shipments this quarter will favor the iPhone 6 over the iPhone 6 Plus by a 2-to-1 ratio.
That could be a problem, especially over the holidays with buyers potentially opting for or settling for Android smartphones to avoid getting shut out.
A Lot Is Riding on the Biggest iPhone
Shares of Apple recently hit all-time highs, and Wall Street's betting on the iPhone 6 Plus being a big driver. Susquehanna analyst Chris Caso boosted his price target on Apple from $120 to $135 last month, fueled largely by the product economics of the iPhone 6 Plus. It may set buyers back $100 more than the iPhone 6 and $200 more than the iPhone 5S, but it certainly doesn't cost that much more for Apple to make. In other words, Apple will be scoring a larger profit on the iPhone 6 Plus than on the other devices.
Availability trends are gradually improving, and Apple's production will eventually catch up to demand. Will it happen in time to make the most of this month's holiday shopping season? Having a hot product isn't necessarily a bad thing this time of year, but if the shortage finds customers settling for rival gifts or trading down to smaller iPhones, it will cost Apple on the bottom line.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.