iPhone X, pent up demand predicted to drive Apple sales for years to come -- if all factor...
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.
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.
Comments
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.
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!
Soo... Some are some, and some are not!
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.
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.
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) ).
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.
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.
My big mits regard anything less then a plus model as a toy. For the average hand size though it would likely be cumbersome.