Apple fatigue: Have we passed peak iPhone?

Gladys Abbott
November 13, 2018

The Apple iPhone XR is supposed to be the somewhat-budget-friendly alternative to the company's ultra-luxury iPhone XS and iPhone XS Max models. While this explains the reduction in order, there's no denying the slowdown in iPhone sales.

The firm hoped the iPhone XR would persuade owners of older iPhones to switch to the newer model, which costs $749 (£749) - a sizable discount from the $999 iPhone XS and the $1099 XS Max.

JP Morgan analysts weighed in by cutting their price target for Apple by $4 to $270 pointing to poor orders for the new iPhone XR.

By Jeran Wittenstein and Mark GurmanIn a world where iPhone demand is on the wane, Apple Inc. has a Plan B. As customers wait longer between upgrades and the smartphone market saturates, Apple can fall back on charging higher prices for each handset and raking in more money from services such as streaming music, digital videos and data storage. Now that forecast is being echoed by TF Industries' Ming-Chi Kuo.

"Many suppliers have lowered numbers due to their unnamed 'largest customer, ' which is Apple", said Elazar Capital analyst Chaim Siegel.

Among other Apple suppliers, South Korea's LG Innotek Co., which gets about half its revenue from Apple, slid as much as 9.5 percent.

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Analysts said the lack of technological breakthroughs in Apple's product line has put a cap on demand, which would persist in the coming quarters.

The iPhone XR began shipping on October 25th and, since then, has been mired with speculation of weak sales.

"In addition to more durable iPhone offerings, we worry that the combination of a smartphone market that has gone ex-growth and increased iPhone ASPs, especially relative to the market, risks materially pushing out replacement rates for iPhone", he wrote on Monday, referring to average selling prices.

Apple CEO Tim Cook was directly asked about this possibility during Apple's most recent conference call.

'For Apple, the iPhone shipment has reached its peak. Our installed base is growing at double digit, and that's probably a much more significant metric for us from an ecosystem point of view and the customer loyalty, et cetera. "It doesn't matter a lot how many units there are in there in terms of the overall value of what's in the cart".

"For Apple, the iPhone shipment has reached its peak".

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