There are plenty of good reasons to think the iPhone X will at least be Apple Inc.'s (AAPL) - Get Report biggest hit since the iPhone 6. In terms of looks, it's hands-down Apple's most stunning iPhone to date. And for anyone looking to upgrade from an iPhone 6S or older phone -- that's most of the addressable market, given the pace of smartphone upgrade rates -- it delivers big improvements in display and camera quality, traditionally the two biggest drivers of smartphone upgrades. There's also a major processing power boost, improved battery life and a few neat augmented reality features.
But there are also a few big remaining question marks for Apple's latest flagship phone. Some have gotten a decent amount of attention, others much less so. They go as follows:
1. How quickly supply constraints will lift.
Widespread reports of iPhone X production challenges have dinged Apple shares the past two weeks. The Wall Street Journal reports of major challenges related to assembling the infrared dot projector modules (codenamed Romeo) that make up part of 3D face-mapping system used to enable the X's Face ID face-unlocking system. Japan's Nikkei also reports of limited production for 3D-sensing parts, and cites one source as saying the X is "being produced in small quantities, around tens of thousands daily." That fits with what KGI Securities' Ming-Chi Kuo previously suggested.
Raymond James, Rosenblatt Securities, Digitimes and others have also reported of production issues. RJ indicates iPhone X mass-production is due to start in mid-October, or about 2 months later than was expected at the end of June; Digitimes reports orders to component suppliers have been slashed.
Major supply constraints on Oct. 27 -- the day iPhone X pre-orders start -- won't necessarily do massive damage, particularly given how much pent-up interest there is in the X. But if major constraints persist into December and consumers start wondering whether iPhone X orders will ship in time for their purchases to be unwrapped on Christmas morning, some of those consumers just might start exploring their options.
2. How reliably Face ID will perform.
Face ID, which relies on the front camera, a dot projector, an infrared camera and (at night) an infrared flood illuminator, is easily much more advanced than the face-unlocking features built to date into Android phones. Apple insists one can't trick Face ID with a user's photo, nor can it work when a user's eyes are closed. The company also promises Face ID can work if a user is wearing a hat or glasses, or if he or she attempts to unlock a phone at an angle.
But it isn't enough for Face ID to be better than face-unlocking alternatives. It also needs to be as quick and reliable as the Touch ID fingerprint sensors built into iPhones and iPads in recent years, given that the iPhone X lacks a Touch ID sensor (the company reportedly encountered issues in its attempts to put one underneath the X's OLED display). That's plausible given all of the technology Face ID relies on, but it's also a high bar.
Apple has had plenty of controversies over the years about unexpected problems (sometimes exaggerated in scope) with new iPhones. The 2012 Apple Maps debacle is probably the biggest of the bunch, but we've also seen things like bendgate and and antennagate. Hopefully "facegate" or something to the effect won't be added to the lexicon of Apple customers and investors.
3. How much steep overseas prices will act as a deterrent.
With its 64GB model going for $999 and its 256GB model for $1,149, the iPhone X's pricing already pushes the envelope in the U.S.. But things are often much worse overseas, due to steep sales taxes and/or tariffs.
The 64GB model sells for the U.S. equivalent of $1,280 in China, $1,325 in the U.K., $1,390 in India and over $1,300 in many eurozone markets. More modest price deltas can be found for Canada and Japan.
To be fair, U.S. sales taxes will tack on about $60 or $80 to iPhone X prices for many stateside consumers. But on the whole, the phone is still meaningfully cheaper in the U.S. than in most overseas markets.
Thanks partly to installment plan adoption, high-end phone buyers have been getting more comfortable paying over $800 to get their hands on flagship devices -- a fact reflected not only by the iPhone X's pricing, but that of phones such as Samsung's Galaxy Note 8, LG's V30 and (reportedly) Alphabet Inc./Google's (GOOGL) - Get Report Pixel 2 and Pixel 2 XL. But the laws of price elasticity still apply to this market, and Tim Cook's company seems to be testing them in certain foreign locales.
4. Whether the iPhone X's design and user interface changes will cause headaches.
This is unlikely to be a major problem, but it could annoy some early iPhone X buyers and produce some negative press. Since it didn't provide the iPhone X with a home button (or the fingerprint sensor normally built into one) in order to pack an edge-to-edge display, and since the phone also doesn't support the touch-based buttons (softkeys) found at the bottom of Android phone displays, Apple requires X owners to swipe up from the bottom of the display to access the home screen, and to swipe up halfway to switch between open apps. And users have to swipe down from the top right-hand corner to access iOS 11's Control Center.
That's going to take some getting used to for many iPhone owners. And in the short-term, the swipe-up gestures will likely lead to accidental presses of controls placed at the bottom of iOS apps. Apple has issued new app design guidelines meant to address this issue, but some developers are bound to adopt them sooner than others.
Likewise, the notch protruding into the top of the X's display -- it houses the front camera and 3D-sensing modules -- could obscure part of a video or game's imagery, as well as portions of other content viewed in landscape mode. Once more, developers should eventually fix this issue, but some complaints are likely to pop up in the interim.
Watch: Could Your iPhone X be Delayed?
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Jim Cramer and the AAP team hold positions in Apple and Alphabet for their