KGI: iPhone 8 sales in line with expectations, analysts overplay short Apple store lines

Posted:
in iPhone edited September 2017
Sales of Apple's iPhone 8 and 8 Plus are off to a solid start despite claims from analysts and media citing a lower than usual turnout at Apple store locations as evidence of decreased interest in the new smartphone lineup.




Citing analysis of first weekend sales, alongside research provided by Localytics, KGI analyst Ming-Chi Kuo in a note to investors on Tuesday said worries over a slower than normal iPhone release are exaggerated by an "excessively negative" market.

Analysts and media outlets portrayed weakened sales for Apple's flagship device, citing unusually low turnout at the company's retail locations on launch day last Friday. Some speculated the short lines were in large part due to a looming iPhone X launch, pre-orders for which are slated to start on Oct. 27. Kuo agrees, but notes demand is in line with Apple's production plan.

The analyst pegs iPhone production as split for iPhone X and iPhone 8/8 Plus models, with Apple dedicating a full half of its smartphone manufacturing might toward the new flagship phone. This appears to match consumer sentiment, Kuo said, as combined first-week adoption rates for the iPhone 8 and 8 Plus are roughly half that of iPhone 6s and iPhone 7 launches.

Notably, Kuo believes iPhone 8 Plus outsold iPhone 8.

According to Kuo, market analysts tend to overlook sales momentum within cellular carrier and contract channels, instead focusing on observed momentum in outlets that deal mostly in unlocked or SIM-free devices. Apple stores are one such example of an unlocked/SIM-free channel, Kuo said.

"While we acknowledge that queues outside SIM-free channels have been much shorter than after previous iPhone launches, we see stable first-weekend demand for the iPhone 8/8 Plus in carrier channels," Kuo writes. "Most of those camping outside unlocked-device outlets are presumably hardcore Apple fans and heavy users, whose plan this year is to gear up for the iPhone X."

Diving deeper into production-side observations for the currently available 8 series, Kuo notes manufacturing during the third fiscal quarter will be roughly split between the 4.7-inch and 5.5-inch models. Together, production of iPhone 8 and 8 Plus should yield 16 to 18 million units hitting the channel.

Apple CEO Tim Cook commented on iPhone 8 and Apple Watch Series 3 supply constraints, or lack thereof, in an interview last week.

"We've sold out of iPhone 8 and 8 Plus in some stores, but we've got good supply there. You can see what's going on here this morning -- I couldn't be happier," Cook said.
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Comments

  • Reply 1 of 47
    Exactly mirroring my sentiment. Unfortunately not everyone share the same opinion. At the end of the day, only Apple can confirm the numbers and none of these speculations would matter (except for stock buyer).
    jamesschaeffercaliwatto_cobra
  • Reply 2 of 47
    emig647emig647 Posts: 2,413member
    kevin kee said:
    Exactly mirroring my sentiment. Unfortunately not everyone share the same opinion. At the end of the day, only Apple can confirm the numbers and none of these speculations would matter (except for stock buyer).
    Exactly. The amount of subjective comments are frustrating on that other rumor site. As you say, only Apple truly knows. /endthread
    StrangeDayswatto_cobra
  • Reply 3 of 47
    SoliSoli Posts: 9,208member
    emig647 said:
    kevin kee said:
    Exactly mirroring my sentiment. Unfortunately not everyone share the same opinion. At the end of the day, only Apple can confirm the numbers and none of these speculations would matter (except for stock buyer).
    Exactly. The amount of subjective comments are frustrating on that other rumor site. As you say, only Apple truly knows. /endthread
    They suck here, too. I can't wait for Sog to chime in with how much Tim sucks and that on one wants the iPhone 8.
    mwhitemacseekerStrangeDayspscooter63watto_cobra
  • Reply 4 of 47
    "Excessively negative" market???
  • Reply 5 of 47
    "Excessively negative" market???
    Perhaps that sounds better rhan “trolling” market 😂
    jbdragonStrangeDaysjamesschaefferpscooter63albegarcwatto_cobra
  • Reply 6 of 47
    Quite easy to say sales are within expectations but the fact that there were virtually no queues outside most stores on launch day and Apple store dispatch times have never gone past two weeks show how different the 8 launch has been to any previous iPhone launch. All guesswork of course as nobody outside of Apple production knows to what level production is being set at but still seems a bit odd to produce two flagship phones knowing that most will see the X as the actual flagship. Maybe would have been better to have an X and 8 without the plus so there’s a differentiation
  • Reply 7 of 47
    saareksaarek Posts: 1,140member
    bobby88 said:
    Quite easy to say sales are within expectations but the fact that there were virtually no queues outside most stores on launch day and Apple store dispatch times have never gone past two weeks show how different the 8 launch has been to any previous iPhone launch. All guesswork of course as nobody outside of Apple production knows to what level production is being set at but still seems a bit odd to produce two flagship phones knowing that most will see the X as the actual flagship. Maybe would have been better to have an X and 8 without the plus so there’s a differentiation
    The Plus model generates more than each non plus model sold. Many of those who bought the iPhone 8 Plus would probably have stuck with the iPhone 8 as opposed to moving to the X if the plus was not an option and this would have dropped revenue.
    edited September 2017
  • Reply 8 of 47
    saareksaarek Posts: 1,140member
    I'm more than happy with my iPhone 8 Plus, the X does not appeal to me at all. I don't want the hideous notch or to lose Touch ID and I certainly wouldn't pay a premium for it.

    I'm sure that for every person that feels like me there will be another person who will opt for the X.
    SoundJudgment2old4fun
  • Reply 9 of 47
    iPhone 8/Plus buyers reception will be just fine. In fact might be more than the iPhone X when compared whole year. For next year Apple can put touch id under screen for iPhone 8S to keep party going. Going forward it is all about edge to edge screen, irrespective of LCD or OLED.
  • Reply 10 of 47
    I was all set to purchase an 8 plus but since I am having issues with iOS 11 on my 7 plus I decided to wait. 
    albegarc
  • Reply 11 of 47
    lkrupplkrupp Posts: 7,170member
    As DED would say, “We’ve seen this all before.” Every launch comes with built-in negativity from analysts and critics. Read some of the Macalope’s articles over at MacWorld. His latest features a tech blogger declaring the Pixel will finally kill off the iPhone. When you are on the top of the mountain everybody wants to see you fall. Double or triple that desire because it’s Apple. Apple is almost always right on the money with its guidance for a quarter so I tend to believe KGI’s report rather than the doomsayers.
    StrangeDayswatto_cobra
  • Reply 12 of 47
    avon b7avon b7 Posts: 4,072member
    As a non shareholder and non Apple executive, I don't care about how many 8 series phones have been sold or the ASP or the share price.

    The most important thing is to move more units overall, as the bigger base of active hardware will provide a bigger base to feed off with extra services.

    It also helps when it comes to services that require negotiation with third parties. The bigger your installed base, the bigger your leverage.

    Right now we are seeing the biggest product and price spread in Apple's handset business, ever.

    The lower your budget, the older the hardware you get (or smaller screen) but at least you now have many options on price. It's a reasonable first step and allows Apple to squeeze the most out of their product investments.

    I dumped iPhones for the lack of a nice spread on product and price options. No doubt this new move will help retain some users who are in the same situation as I was.

    As long as they sell units in larger quantities, factoring out the impact of the supercycle, they will reap the benefits even if the ASP comes down. I doesn't matter if the 8 series is not as successful as the 6 or 7 series. What counts is the global picture because now, that picture is bigger than ever.

    Wall Street and shareholders might not be happy but users and the platform itself will.
    edited September 2017
  • Reply 13 of 47
    BebeBebe Posts: 121member
    saarek said:
    I'm more than happy with my iPhone 8 Plus, the X does not appeal to me at all. I don't want the hideous notch or to lose Touch ID and I certainly wouldn't pay a premium for it.

    I'm sure that for every person that feels like me there will be another person who will opt for the X.
    The notch doesn't bother me.  The disappearance of the TouchID on the X is disappointing as I use this feature a lot.  But I will still get the X just to see what this FaceID is all about  :D
    ben20watto_cobra
  • Reply 14 of 47
    gatorguygatorguy Posts: 20,932member
    lkrupp said:
    Read some of the Macalope’s articles over at MacWorld. His latest features a tech blogger declaring the Pixel will finally kill off the iPhone.
    What??!! If true it's plainly ridiculous to even think that much less print it. He may be a blogger but certainly not one that knows much about tech. Always gotta be one of there for flame fanning. The only company out there with the power to kill the iPhone is Apple themselves, and that ain't happinin'.

    EDIT: Having now read the source article the headline doesn't match what it says in the body copy. The headline was typical clickbaiting. A moot point anyway since what the author presumed could happen vis a vis Google and HTC did not.
    edited September 2017
  • Reply 15 of 47
    BebeBebe Posts: 121member
    I don't think that the lack of queues are any indication that the 8/8+ are not selling well. It could be that Apple is now getting better in meeting demand and online ordering is the way to go.
    watto_cobra
  • Reply 16 of 47
    jbdragonjbdragon Posts: 2,154member
    Apple has been pushing for people to order their phones ONLINE then having lines at the stores. You still get them on release day, without having to stand in a line. Sounds good to me as I hate standing in lines. Lines have been getting shorter every year. I'm also sure a lot of people are also holding out for the iPhone X. Apple doesn't care about that. If anything it's a larger profit margin for them. It's still a Apple sale and so it really doesn't matter either way. Apple is doing just fine.
    StrangeDayswatto_cobra
  • Reply 17 of 47
    asdasdasdasd Posts: 5,312member
    I like Ming-Chi Kuo  now

    When he said things, however truthful, that were bad news I didnt like him. I didnt rate him. Now I like him and rate him. He's great.
    gatorguy
  • Reply 18 of 47
    asdasdasdasd Posts: 5,312member
    ^

    This might change again.
    gatorguy
  • Reply 19 of 47
    analysts overplay short Apple store lines
    Short Apple store lines? Are you kidding me? How is that "short"? Short store lines my ass...

  • Reply 20 of 47
    lkrupplkrupp Posts: 7,170member
    gatorguy said:
    lkrupp said:
    Read some of the Macalope’s articles over at MacWorld. His latest features a tech blogger declaring the Pixel will finally kill off the iPhone.
    What??!! If true it's plainly ridiculous to even think that much less print it. He may be a blogger but certainly not one that knows much about tech. Always gotta be one of there for flame fanning. The only company out there with the power to kill the iPhone is Apple themselves, and that ain't happinin'.

    EDIT: Having now read the source article the headline doesn't match what it says in the body copy. The headline was typical clickbaiting. A moot point anyway since what the author presumed could happen vis a vis Google and HTC did not.
    The Macalope has made a name for himself by finding mind blowing blogs and articles about Apple and literally tearing them limb from limb with his wit and logic. His followers will often refer crackpot articles they come across to him for feeding. He likes tech blog alfalfa like the current one claiming the Pixel will destroy Apple once and for all.
    edited September 2017 watto_cobra
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