Mike Wuerthele
Ming-Chi Kuo has cut expectations for sales of the iPhone XR for the next year by 30 percent to 70 million, based on a possibility of a trade war with China, and other factors possibly weighing on sales, very similar to his erroneous predictions of iPhone X volumes.
In a note to investors seen by AppleInsider Ming-Chi Kuo of TF Securities has advised investors that there are three factors that are holding down iPhone XR demand world-wide. The first, blanket, reason is the negative impact on consumer confidence that a possible trade war could have, particularly in the Chinese market.
Also cited by Kuo is the possibility that customers are waiting for the iPhone XR feature set to become more affordable in another year with added feature boosts, like even smaller bezels and a dual-camera system in that pricing level. Competition from Huawei's Mate 20 series is also cited, but in passing as a third factor.
TF Securities has reduced iPhone XR shipment estimations for the fourth calendar quarter of 2018 by about 35 percent, and the first quarter of 2019 plus the second quarter of 2019 by about 30 percent each.
Kuo believes that "legacy" iPhone shipments will increase significantly thanks to "more affordable prices." Kuo isn't cutting estimates of unit sales for the holiday quarter, though, and is expecting between 75 million and 80 million units sold.
The net effect of the iPhone XR demand, however, will result in a year-over-year decline in the first calendar quarter of 2019, if Kuo is correct.
Kuo has said this before about the iPhone X in early 2018, and wasn't accurate. His voice joined a chorus of analysts predicting poor sales of the device, and lower earnings than Apple actually delivered as a result.
In October, Kuo predicted that demand for Apple's iPhone XR will be better than expected, with Apple cranking out about 38 million of them in time for holiday sales. He said then that the iPhone XR should defeat a "low seasonality" after the holiday quarter. Instead of a near-50 percent drop that the iPhone 8 saw after the holiday, the iPhone XR is expected to only drop 30 percent, a favorable comparison to the overall industry's about 40 percent drop.
Kuo joins other analysts who are pessimistic about Apple's future because of decreasing iPhone demand. However, Jun Zhang from Rosenblatt, and Bank Of America Merrill Lynch seem more concerned that Apple isn't going to report sales figures for the iPhone going forward, more than any other realistic concern.
A cheaper alternative to the iPhone XS and XS Max, the iPhone XR has a 6.1-inch LCD Liquid Retina display instead of an OLED panel used by its stablemates, has a single 12-megapixel wide-angle camera on the rear, and a wide array of bright color options. Preorders begin on October 19, with the first units arriving on October 26.
Malcolm Owen
Andrew O'Hara
William Gallagher
27 Comments
When I think about it. Apple has good reason to not report unit sales. We have a President that is unpredictable and is hell bent on escalating a trade war with China. Apple is much better served by focusing on increasing their profit margins and the expanding their services business, because their supply or demand can be artificially impacted by national policies out of their control without warning, mid quarter. If they proceed with caution but things stabilize, they will just be that more successful.
I’ve had mine for a week. I have very long fingers and can deal with the size, but I think many more would sell if this phone were smaller and lighter. However, the LCD display’s bezels probably dictated this size in order to keep the bezel/body ratio in an acceptable range.
It looks the macro economy is finally catching up with Apple this time. There are so many headwinds that AAPL could easily fall into bear market for quite some time. It is sad that Apple lost Save Jobs. The last time before world fell into recession due to macro economy in 2008, Steve Jobs unveiled iPhone in 2007. iPhone sales took off in 2009 mainly due to the world economy is recovering. This time the President began to destroy world economy in March 2018. And Apple does not have a Steve Jobs to waddle through the looming world economic collapse.
AAPL is being trashed to day along with all of the other FAANG stocks so don't try to justify your bias with its dropping. Wall Street is a strange universe where fear and greed rule, not logic and reasoning.
My take on this year's phones from Apple is that they are crackerjack, but the release day and date availability of them from my local Apple Store (all versions were available) suggests to me at least probably slower sales. If Apple can knock it out of the ballpark with their VR goggles - which appears to be the only major new device they're likely to ship in the near future, they should be OK. Raising prices to offset slower sales seems to me a shortsighted policy.