The Business Times Singapore
October 26, 2017
As of early autumn, it was clearer than ever that production problems meant that Apple Inc would not have enough iPhone Xs in time for the holidays. The challenge was how to make the sophisticated phone—with advanced features such as facial recognition—in large enough numbers.
As Wall Street analysts and fan blogs watched for signs that the company would stumble, Apple came up with a solution: It quietly told suppliers that they could reduce the accuracy of the face-recognition technology to make it easier to manufacture, according to people familiar with the situation.
With the iPhone X set to debut on Nov. 3, we are about to find out whether the move has paid off. Some analysts said that there may still be too few iPhone Xs to meet initial demand. Ming-Chi Kuo of KGI Securities predicted that Apple will have two to three million handsets available on launch day and 25 million to 30 million units for the holiday quarter, down from his previous forecast of 40 million. For comparison, Apple sold 78 million phones during the same period last year, although that included all models.
Apple is famously demanding, leaning on suppliers and contract manufacturers to help it make technological leaps and retain a competitive edge. The company’s decision to downgrade the accuracy of its Face ID system—if only a little—shows how hard it is becoming to create cutting-edge features that consumers are hungry to try.
And while Apple has endured delays and supply constraints in the past, those typically have been restricted to certain iPhone colors or less important offerings such as the Apple Watch. This time, the production hurdles affected a 10th anniversary phone expected to generate much of the company’s revenue.
About a month ago, Foxconn Technology Group pulled as many as 200 workers off an iPhone X production line. Apple was struggling to get sufficient components for the phone and needed fewer people to put it together. The main culprit, sources said, was the 3-D sensor that recognizes faces and unlocks the handset.
The sensor was always going to be a major technical challenge. Until the iPhone X, the most significant deployment of the technology was in Microsoft Corp’s Kinect controller, which the Xbox console used to detect a gamer’s movements. But the Kinect was the size of a large book, and Microsoft sold just 24 million units of the controller over two years, a far easier production challenge than the one confronted by Apple, which sells more than 200 million iPhones a year.
“That technology is something we have been looking at for five years,” chief design officer Jony Ive said in an onstage discussion hosted by The New Yorker magazine earlier this month. “We had prototypes that were this big,” he added, holding his hands about a foot apart. By the time that Apple had greenlighted the iPhone X, the company was looking for technology that could be squeezed into a space a few centimeters across and millimeters deep.
Despite demanding the near impossible, Apple did not add extra time to get it right—giving suppliers the typical two-year lead time. The tight schedule underestimated the complexity of making and assembling exceedingly fragile components, said one of the people familiar with the production process. That left suppliers short on time to prepare their factories and explains why the iPhone X is being released a full six weeks later than the iPhone 8, said this source, who asked to remain anonymous to discuss an internal matter. “It’s an aggressive design,” the source said, “and it’s a very aggressive schedule.”
The 3-D sensor has three key elements: a dot projector, flood illuminator and infrared camera. The flood illuminator beams infrared light, which the camera uses to establish the presence of a face. The projector then flashes 30,000 dots onto the face which the phone uses to decide whether to unlock the home screen. The system uses a two-stage process because the dot projector makes big computational demands and would rapidly drain the battery if activated as frequently as the flood illuminator.
The dot projector is at the heart of Apple’s production problems. In September, The Wall Street Journal reported that Apple was having trouble producing the modules that combine to make the dot projector, causing shortages.
Apple’s decision to downgrade its Face ID system shows how hard it is becoming to create cutting-edge features.
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