iPhone X, pent up demand predicted to drive Apple sales for years to come -- if all factor...

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in iPhone
An analyst has mixed feelings about the iPhone X pricing and release schedule, and believes that it may drive Apple's valuation to new heights -- but if it is not well accepted, then it will eat into the company's earnings for years to come.




In a report seen by AppleInsider Daniel Ives from GBH Insights sees the possibility of a super cycle being generated by the iPhone X and its array of technologies. However, he also believes that Apple is in the midst of a "white knuckle" period, with the level of success that the iPhone X will have impacting the future greatly.

Ives believes that the iPhone X is the potential "game changer" that may fire up the so-called super-cycle of demand. While the iPhone 8 may be "slow out of the gates" based on collated data -- that is expected given that Apple unveiled the iPhone X at the same time.

Questions circling the release are how much will customers be willing to pay for the new phone, what does the upgrade cycle predict for the installed base, and how large a factor China's consumers will play.

China is expected to account for about 25 percent of Apple's total revenue in fiscal year 2018, with expectations that it will grow to 30 percent by 2020. The "sticker shock" of the iPhone X may be a factor, writes Ives, but he believes that the iPhone X will light a fire under middle-class and wealthy Chinese shoppers who have not committed to one platform or another.

Services have been a major source of Apple's revenue for the last few years, and Ives expects them to continue to expand. Fiscal year 2018 services are predicted to hit $36 billion, a 20 percent year-over-year expansion.

Ives expects that there will be sufficient uptake of the iPhone 8, iPhone 8 Plus, and iPhone X for the next 12 to 18 months to fuel its next leg of growth. As a result, a stock price range of between $160 and $175 is expected.

In a "bull case," Ives believes that a major average selling price increase driven by initial demand for the iPhone X, coupled with a resurgence in China could lead to a stock price up to $230 in the next year.

However, should the iPhone X "not bear fruit," then Apple may lack the growth catalyst that would be needed to fire up a super-cycle, and Apple stock would drop to as low as $135, with "much diminished earnings power" for the 2019 fiscal year, and going forward.
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Comments

  • Reply 1 of 26
    calicali Posts: 3,495member
    Doomed I tell ye!!!!

    I get the feeling iPhone 8 will be a “flop” like iPhone 5c and Apple Watch. Outselling the industry but still a “flop” to the android iPhone knockoff paid media. 
    StrangeDaysJWSCRacerhomieXshapetableswatto_cobraredgeminipa
  • Reply 2 of 26
    GeorgeBMacGeorgeBMac Posts: 3,406member
    I think the success of the iPhone X will largely depend on a combination of the economy and how many are willing to pay a premium for the latest and greatest.  (I list the economy because it determines how many can afford the latest and greatest and have the optimism to go for it).

    But, for the rest, essentially the iPhone X has no significant functional difference from the iPhone 8 -- or at least the 8+.  That is:  you can do everything on an 8 or 8+ that you can do on the X.  Really, at least to me, the benefits of the X are: 
    1) A better screen (OLED)
    2) A bigger screen in a smaller package (or some combination of the two depending on what you're comparing it to...)

    But that can be a functional difference to some:   For instance, I'm a runner who always carries his phone -- but I still want a larger screen.   So, the X just might be perfect -- Except!  Oh wait!  I could just get an AW with LTE and leave the damn phone in my car.  (Life is so complicated!)

    But, for longer term -- over the next 5-10 years -- my gut is telling me that Apple is in a transition period where they have made the current paradigm about as perfect as possible:   The next steps are/will be:
    1)  Longer battery life
    2)  More durable screens
    3)  Adding AI and AR features into the OS and embedded apps (such as Maps).
    4)  Expanding its footprint by enabling it to connect to and use external keyboards, mice and large screens.  So where a business man could, for instance, walk into his office and plug his phone into a dock similar to what he does today with his laptop -- and keep right on working.  One computer to rule them all!

    JWSCRacerhomieXredgeminipa
  • Reply 3 of 26
    calicali Posts: 3,495member
    I think the success of the iPhone X will largely depend on a combination of the economy and how many are willing to pay a premium for the latest and greatest.  (I list the economy because it determines how many can afford the latest and greatest and have the optimism to go for it).

    But, for the rest, essentially the iPhone X has no significant functional difference from the iPhone 8 -- or at least the 8+.  That is:  you can do everything on an 8 or 8+ that you can do on the X.  Really, at least to me, the benefits of the X are: 
    1) A better screen (OLED)
    2) A bigger screen in a smaller package (or some combination of the two depending on what you're comparing it to...)

    But that can be a functional difference to some:   For instance, I'm a runner who always carries his phone -- but I still want a larger screen.   So, the X just might be perfect -- Except!  Oh wait!  I could just get an AW with LTE and leave the damn phone in my car.  (Life is so complicated!)

    But, for longer term -- over the next 5-10 years -- my gut is telling me that Apple is in a transition period where they have made the current paradigm about as perfect as possible:   The next steps are/will be:
    1)  Longer battery life
    2)  More durable screens
    3)  Adding AI and AR features into the OS and embedded apps (such as Maps).
    4)  Expanding its footprint by enabling it to connect to and use external keyboards, mice and large screens.  So where a business man could, for instance, walk into his office and plug his phone into a dock similar to what he does today with his laptop -- and keep right on working.  One computer to rule them all!

    I don’t think Apple will ever make 1st party mice and keyboards connect to iPhone. That seems like a step backwards like adding a floppy disc drive or headphone jack. 
    peterhartwatto_cobraredgeminipa
  • Reply 4 of 26
    Rayz2016Rayz2016 Posts: 4,518member
    Well since I’ve never heard of this analyst I’m going to wait until Taylor Swift weighs in. 
    peterhartmacky the mackywatto_cobracali
  • Reply 5 of 26
    In a "bull case," Ives believes that a major average selling price increase driven by initial demand for the iPhone X, coupled with a resurgence in China could lead to a stock price up to $230 in the next year.

    However, should the iPhone X "not bear fruit," then Apple may lack the growth catalyst that would be needed to fire up a super-cycle, and Apple stock would drop to as low as $135, with "much diminished earnings power" for the 2019 fiscal year, and going forward.

    Soo... Some are some, and some are not!
    watto_cobra
  • Reply 6 of 26
    I think the success of the iPhone X will largely depend on a combination of the economy and how many are willing to pay a premium for the latest and greatest.  (I list the economy because it determines how many can afford the latest and greatest and have the optimism to go for it).

    With the Apple iPhone Upgrade Program a loaded iPhone X costs $56.16 per month and a loaded iPhone 8 costs $45.75 per month.  That's a $10.41 premium for the iPhone X.

    Hell, I spill more than that a month!

    Seriously, in our household of four, we will  each replace our 7 Plus models with with an iPhone X models.
    king editor the gratepeterhartwatto_cobraiqatedoredgeminipacali
  • Reply 7 of 26
    In a "bull case," Ives believes that a major average selling price increase driven by initial demand for the iPhone X, coupled with a resurgence in China could lead to a stock price up to $230 in the next year.

    However, should the iPhone X "not bear fruit," then Apple may lack the growth catalyst that would be needed to fire up a super-cycle, and Apple stock would drop to as low as $135, with "much diminished earnings power" for the 2019 fiscal year, and going forward.

    Soo... Some are some, and some are not!
    Yeah, some are, some are not. I really don't understand how two people can look at the same company and come out with completely opposite results. Even so, I know there is a problem with Apple even if I can't see it. My reasoning for this is that none of the FANG stocks have any negative opinions. Everyone says those stocks will outperform for years and there doesn't seem to be any dissenters on the point. Even Microsoft is given an overall better outlook than Apple although I'm not sure why. It's unfortunate for Apple shareholders that even massive buybacks and growing dividends don't seem to help Apple's long-term outlook. Apple still doesn't come close to matching any of the FANG stocks potential by Wall Street's standards. What is it that makes Apple so feeble that they can't seem to do anything to grow revenue? That overseas cash seems more like an anchor weighing the company down because it can't be used and there isn't much hope for corporate tax break. I had hoped that once Apple could use that overseas cash they could make some decent acquisition or do something that might excite investors. No such luck. Apple stock appears to have no chance of reaching $170 by the end of the year while the FANG stock soar ever higher which is rather disappointing.
  • Reply 8 of 26
    Wow, what insight!!!  If the iPhone X does well it will drive earnings and stock prices up, if it tanks then it will reduce earnings and drag the stock price down.

    My personal prediction is the iPhone X will do OK at $1,000 but will result in a further drop in year-over-year unit sales for fiscal year 2018.  Average selling price will be up but revenue will be flat or slightly declining.  The "supercycle" growth won't materialize as I think a lot of people waiting for the new design expected it to replace the three-year-old design that came out with the iPhone 6 at approximately the same price point as it has been for years.  Giving a rehash of the same old design with a $50 price bump and introducing a luxury model at $1,000 isn't going to appeal to the buyer who has been waiting to upgrade from a 5s or a 6.  At that point Apple will be faced with a serious long-term decision.  Do they keep their flagship in luxury goods territory and live with the lower sales on higher margins, or do they try and go for growth and have modern designed phones that are price competitive with the Galaxy and Pixel lines.

    As far as China goes, Apple has a high percentage of the flagship phone market but it is still a small slice of the overall market.  I don't see a lot of people who didn't buy the $650 iPhone 7 suddenly deciding to buy the $1,000 iPhone X.  The per capita income isn't there to drive growth in the luxury market.  Growth in China will have to start with the $500 phones and eventually work its way up as the overall economy improves for the common person.
  • Reply 9 of 26
    Supply will play a role too. IF there is a big backlog, and while I usually ignore these stupid rumors there is more evidence this time it may be at least somewhat true, how many people will wait 4-6 months for their new iPhone X and get it 4-6 months before the next iPhone is announced? Then if not do they buy the iPhone 8 family or wait till next cycle hoping for better supply? No one will leave the iPhone for Android as you'd be better off with your 5 than an Android. 
    watto_cobraradarthekatcali
  • Reply 10 of 26
    All this yap, yap! All I care about is the I want my iPhone X! I know I'm not alone by a long shot!
    king editor the gratewatto_cobracali
  • Reply 11 of 26
    So Apple stock will do well if people like the products and won’t if they don’t. Wow what a revelation. I should be a Wll Street sell side analyst.
    cali
  • Reply 12 of 26
    The huff 'n' puff over the cost of the X has gone over the top, so here are a few things to consider.

    When the 6 came out, I paid a significant premium for the Plus - ONLY because of the better camera(s) and image stabilization;  I came to discover over time that the Plus was too big for even my huge paws, but the phone was stolen before I could regret the loss of the camera.

    With the 8 I face the same tradeoff:  lesser attributes in a more hand-friendly size, or a better camera in a more awkward package for a significant markup, or ...but I also have the option for a MORE capable phone with better and bigger screen and better cameras AND the more handy size for yet another cash increment.

    The leap from the 8 to the 8 Plus, price-wise, is the same as it was allowing for the across-the-board $50 hike:  700 to 850, or 150 diff;  X  base model goes for 1000, another $150 diff.  If one is willing to to pay extra for the extra / enhanced capabilities and hardware of the Plus over the base, then one has already largely justified the cost of overcoming the Plus' primary drawback:  its physical size.

    Or to put it another way, if you're already committed to spending 700, another 300 can be less of a stretch than one might imagine.

    Oh, and NO - I'm not rich, and far too old to be called a hipster except as a joke, and will be shelling out my own actual money:  the X is the SOLUTION to my phone-upgrade conundrum, not a complication of an otherwise easy choice.

    Having said all that, having the X might make me more likely to KEEP the X for an extra year or two (I have been upgrading every 3 years ( first a 4, then a 6 Plus, stolen, replaced w/ 6s) ).
    edited October 2017 GeorgeBMacwatto_cobraradarthekat
  • Reply 13 of 26
    So Apple stock will do well if people like the products and won’t if they don’t. Wow what a revelation. I should be a Wll Street sell side analyst.
    It seems to me that financial analysts spend most of their time analyzing imaginary data that doesn’t exist yet, which amounts to an educated guess. Educated or not, it’s still a guess.
  • Reply 14 of 26
    cali said:
    I think the success of the iPhone X will largely depend on a combination of the economy and how many are willing to pay a premium for the latest and greatest.  (I list the economy because it determines how many can afford the latest and greatest and have the optimism to go for it).

    But, for the rest, essentially the iPhone X has no significant functional difference from the iPhone 8 -- or at least the 8+.  That is:  you can do everything on an 8 or 8+ that you can do on the X.  Really, at least to me, the benefits of the X are: 
    1) A better screen (OLED)
    2) A bigger screen in a smaller package (or some combination of the two depending on what you're comparing it to...)

    But that can be a functional difference to some:   For instance, I'm a runner who always carries his phone -- but I still want a larger screen.   So, the X just might be perfect -- Except!  Oh wait!  I could just get an AW with LTE and leave the damn phone in my car.  (Life is so complicated!)

    But, for longer term -- over the next 5-10 years -- my gut is telling me that Apple is in a transition period where they have made the current paradigm about as perfect as possible:   The next steps are/will be:
    1)  Longer battery life
    2)  More durable screens
    3)  Adding AI and AR features into the OS and embedded apps (such as Maps).
    4)  Expanding its footprint by enabling it to connect to and use external keyboards, mice and large screens.  So where a business man could, for instance, walk into his office and plug his phone into a dock similar to what he does today with his laptop -- and keep right on working.  One computer to rule them all!

    I don’t think Apple will ever make 1st party mice and keyboards connect to iPhone. That seems like a step backwards like adding a floppy disc drive or headphone jack. 
    Really?   Since when is adding important functionality a step backwards? 
  • Reply 15 of 26
    An OLED smartphone is great, but there are less expensive options that have more capable virtual assistants and let people watch EVERY NBA game in VR, plus integrate seamlessly into the really popular Chromebook platform. MOST people have already moved to streaming audio and are ready to let go of "iPod/iTunes mode"...so what's left to hold them on iOS --a bunch of technical mumbo jumbo, or threats about security that never stopped them from using Windows either? How are MOST people making more than $100K/yr (and thus capable of making that high monthly payment) going to benefit from Augmented Reality? And that "notch"?

    Lastly, reports say that it should be many months into 2018 before MOST people could even buy one, during which time they're going to be hearing about alternatives like Pixel 2 and HTC Mate that they can actually buy.

  • Reply 16 of 26
    cali said:
    I don’t think Apple will ever make 1st party mice and keyboards connect to iPhone. That seems like a step backwards like adding a floppy disc drive or headphone jack. 
    Really?   Since when is adding important functionality a step backwards? 
    Bluetooth mice and keyboards are First Party, and the are compatible with iPhone, so...what?
  • Reply 17 of 26
    analogjackanalogjack Posts: 1,060member
    An analyst... believes that it may drive Apple's valuation to new heights -- but if it is not well accepted....

    Translation: This is going to be brilliant for Apple, unless it isn't, in which case it won't be brilliant, but as long as it's not bad, then it will most likely be good, or not as the case may or may not be. Probably, or if not probably then definitely. Unless it isn't. 
    RonnnieOcali
  • Reply 18 of 26
    radarthekatradarthekat Posts: 2,898moderator
    78Bandit said:
    Wow, what insight!!!  If the iPhone X does well it will drive earnings and stock prices up, if it tanks then it will reduce earnings and drag the stock price down.

    My personal prediction is the iPhone X will do OK at $1,000 but will result in a further drop in year-over-year unit sales for fiscal year 2018.  Average selling price will be up but revenue will be flat or slightly declining.  The "supercycle" growth won't materialize as I think a lot of people waiting for the new design expected it to replace the three-year-old design that came out with the iPhone 6 at approximately the same price point as it has been for years.  Giving a rehash of the same old design with a $50 price bump and introducing a luxury model at $1,000 isn't going to appeal to the buyer who has been waiting to upgrade from a 5s or a 6.  At that point Apple will be faced with a serious long-term decision.  Do they keep their flagship in luxury goods territory and live with the lower sales on higher margins, or do they try and go for growth and have modern designed phones that are price competitive with the Galaxy and Pixel lines.

    As far as China goes, Apple has a high percentage of the flagship phone market but it is still a small slice of the overall market.  I don't see a lot of people who didn't buy the $650 iPhone 7 suddenly deciding to buy the $1,000 iPhone X.  The per capita income isn't there to drive growth in the luxury market.  Growth in China will have to start with the $500 phones and eventually work its way up as the overall economy improves for the common person.
    A year ago I moved from one of the wealthiest cities on earth (Boca Raton, FL) to one of the poorest countries, per capita, on earth (The Philippines).  I’m in a big city here, but even within the wealthy enclaves, one of which I live within, it’s hard to see how the huge upscale malls support all the high-end stores that exist here.  Until you realize that on any given day, among the tens of thousands of visitors to one of these mega malls, there are thousands of aspiring poor who might come to the mall from the outskirts and provinces only once a month.  But each day it’s a different set of such folks coming through the door.  If you believe all in China who might want the latest iPhone are currently holding an iPhone 7, you should see how even an iPhone 5 is coveted here in SE Asia.  Like those who make their monthly shopping spree to the high-end malls, there are those who will wait and save for a few years between iPhone upgrades.   It’s a longer cycle, but there’s always a subset ready to buy into what is seen here as a significant status symbol.  There will be plenty of buyers in China and across SE Asia of the iPhone 8 (lucky number) and the X.  
    GeorgeBMac
  • Reply 19 of 26
    iqatedoiqatedo Posts: 1,587member
    In a "bull case," Ives believes that a major average selling price increase driven by initial demand for the iPhone X, coupled with a resurgence in China could lead to a stock price up to $230 in the next year.

    However, should the iPhone X "not bear fruit," then Apple may lack the growth catalyst that would be needed to fire up a super-cycle, and Apple stock would drop to as low as $135, with "much diminished earnings power" for the 2019 fiscal year, and going forward.

    Soo... Some are some, and some are not!
    .. I had hoped that once Apple could use that overseas cash they could make some decent acquisition or do something that might excite investors...
    Haven't you heard? Apple is buying Google for $9B. Read it on the inter webs.
  • Reply 20 of 26
    iqatedoiqatedo Posts: 1,587member
    The huff 'n' puff over the cost of the X has gone over the top, so here are a few things to consider.
    Got to say that I love your handle captain, thinks, 'why didn't I think of that 13 years ago?'

    My big mits regard anything less then a plus model as a toy. For the average hand size though it would likely be cumbersome.
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