Is the iPhone in trouble? Demand for Apple’s flagship handset has gone ‘from bad to worse,’ analysts claim
- Wall Street analysts say Apple continues to struggle with weak iPhone demand
- China is still a major pain point and supply chain members say sales are down
- As concerns grow around iPhones, investors are now turning their attention to Apple’s Services, which is likely to see updates at the firm’s March 25th event
There may be ‘iPhone fatigue’ after all.
Several Wall Street analysts claim public demand for Apple’s flagship handsets is getting worse, particularly in China.
The reports come after Apple published weak results for the latest quarter, underscored by steep declines in revenue from China and slowing iPhone sales.
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There may be ‘iPhone fatigue’ after all. Several Wall Street analysts claim public demand for Apple’s flagship handsets is getting worse, particularly in China
‘With iPhone demand acceleration on the horizon, we currently do not see any catalysts near term to drive significant [profit] upside,’ Shawn Harrison, an analyst with Longbow Research, wrote in a note to clients, according to Bloomberg.
‘…Multiple iPhone price cuts did not stop China iPhone search trends from weakening further while February supplier sales were abysmal, decelerating on a year over year basis vs. January.’
Harrison added that Apple’s suppliers appear to be feeling the heat from weak iPhone demand, with 37 out of 42 companies from its supply chain reporting ‘worse than seasonal sales’ for the previous three month period.
Similarly, UBS analysts said data showed that demand for Apple products in China was ‘still weak,’ Bloomberg reported.
‘The annual rate of decline for Apple iPhones in the month of February (down 67 percent y/y) is similar to the weakness in January and December months,’ UBS analysts explained.
Apple’s struggles in China are by no means a new revelation. Apple CEO Tim Cook previously warned investors last December that economic weakness in China would hurt revenue
Apple’s struggles in China are by no means a new revelation, however.
The tech giant highlighted sluggish sales in the world’s biggest smartphone market in its most recent earnings report.
Greater China revenue declined a whopping 26 percent compared to last year, with sales in the region coming in at $13.17 billion.
In his January letter to investors, Apple CEO Tim Cook cited economic weakness in China, which accounts for 20 per cent of its global sales, as one of the primary reasons for ‘fewer iPhone upgrades.’
Additionally, earlier this year Apple announced it would slash the price of iPhones outside the U.S.
Instead of pegging the device’s price to the strong U.S. dollar, it would instead peg it to its retail value in local currencies, offsetting the price tag considerably.
That said, Harrison claims the price cuts have done little to jumpstart iPhone sales in China.
With growing concerns about iPhone sales, Apple has tried to turn attention to its Services segment. Apple is expected to launch new services at its March 25th event in two weeks
With growing concerns about iPhone sales, Apple has tried to turn attention to its Services segment, which includes iCloud, iTunes, Apple TV and the App Store.
Investors, too, are looking to the Services segment as a way for Apple to continue to fuel growth.
In the most recent quarter, Services revenue reached $10.8 billion, in line with Wall Street estimates.
On Monday, the firm announced a March 25th event where it’s widely expected to debut a new video streaming service and a premium news subscription plan.
It sent out invites that said ‘It’s showtime,’ along with a film reel counting down before revealing the Apple logo.
WHAT SHOWS WILL BE AVAILABLE ON APPLE’S NEW NETFLIX-RIVAL STREAMING SERVICE?
Apple is making a billion-dollar bet on its own on-demand television service that is tipped to launch in 2019.
The streaming platform, which will rival popular services Netflix and Amazon Prime Video, is set for release as early as next March, reports suggest.
Since October 2017, the firm has bought a dozen projects – nine of which have been green-lit for a full series.
The shows are backed by a budget that is set to top $1 billion (£760 million).
The programming would only be available on a subscription channel, most likely bundled with the company’s existing Apple Music streaming service.
They include —
- A psychological thriller by ‘The Sixth Sense’ director M. Night Shyamalan about a couple searching for a lost child.
- A drama series about a network morning show starring Jennifer Aniston and Reese Witherspoon.
- A series on the life of hip hop magnate Dr Dre called Vital Signs.
- A drama series from ‘La La Land’ director Damien Chazellae.
- A revival of Steven Spielberg’s critically acclaimed 1985 anthology series ‘Amazing Stories’.
- A space drama from Battlestar Galactica creator Ronald D. Moore.
- The company is also working on projects with comedienne Kristen Wiig and Academy Award-winning actress Octavia Spencer.
According to sources close to the project, several of the projects have been delayed by Apple, which has pushed back on mature content.
M. Night Shyamalan’s show has reportedly been pushed back because Apple requested the removal of crucifixes from the house of the main characters.
The news network drama series has also been pushed back because execs were hoping for a more ‘upbeat’ show.
Vital Signs has been cancelled completely after Apple CEO Tim Cook took issue with scenes featuring cocaine, an orgy and ‘drawn weapons’.