Ming-Chi Kuo, a renowned analyst known for his accurate insights and predictions on Apple products, has shared new details with investors. Kuo shared lowered estimates for iPhone XR lifetime sales, down from 100 Million to 70 Million. He has lowered his estimates for Q1 2019 shipments, expecting a year-over-year decline for iPhone sales, which include iPhone XS and XS Max too.
As per MacRumors, Ming-Chi Kuo has reduced his iPhone XR lifetime shipment estimates by 30%, based on current demand and sales. iPhone XR‘s high price and lack of a few key features like dual-camera are some of the factors that are effecting its sales. People are also opting for competing products that provide more value at lower costs, or even older iPhones like iPhone 7 and iPhone 8, which are available at affordable prices.
We have reduced our iPhone XR shipment estimation from 100mn units to 70mn during the new product lifecycle (4Q18–3Q19) for the following reasons: 1) Negative impacts on consumer confidence from the trade war, especially in the Chinese market, 2) expectations from more users for more affordable XR or the dual-camera and narrower bezel design to be provided at the current price level, and 3) competition from Huawei’s Mate 20 series. We have reduced our XR shipment estimations for 4Q18, 1Q19, and 2Q19 by 30–35%, 25–30%, and 25–30% to 30–35, 20–25, and 10–15mn units, respectively.
Note that Kuo had previously said that iPhone XR pre-orders were exceeding iPhone 8 and 8 Plus pre-order numbers.
It seems obvious that even though Apple increased the price of the ‘lower-cost’ iPhone XR, customers are smart enough to think that the cost does not justify the purchase. Apple has been gradually pushing the average selling price (ASP) across all their products to higher levels. The constantly increasing prices of new iPhones every year is proof of this. Feeling confident with their success so far, Apple even increased prices for the new MacBook Air and Mac mini, computers which were previously known to be priced as entry-level products.
Whether the market reacts positively to these price bumps is yet to be seen and we might have to wait for Q4 2018 results to find out. However, news leaks from Apple’s suppliers on order cuts, up to 30%, and weaker profits by Foxconn, provide fuel to analyst’s pessimism. Apple has already lost $190 billion in market cap in 5 weeks, partly due to the company’s announcement that they will not report iPhone unit sales moving forward.
Perhaps, Apple’s strategy to keep pushing their product prices is not sustainable over the long run. Except for the basic iPad model, which severely lacks features when compared to the new iPad Pro, Apple has almost no new ‘entry-level’ products.