Bogus hot takes about low iPhone X demand being repeated about iPhone XS

Posted:
in iPhone edited December 2019
Financial blogs are taking seriously an early claim by a Rosenblatt Securities analyst who says he's discovered that preorders of Apple's new iPhone XS and XS Max were "weaker compared to iPhone X preorders" a year ago. Reports have failed to note, however, that analyst Jun Zhang was wrong last year, too.

iPhone XAnalysts who got iPhone X totally wrong are now weighing in on iPhone XS

A rotten reputation for reporting

After a year of remarkably terrible iPhone analysis, you might imagine that the financial press might look at analyst claims with a slight hint of skepticism. Over the past year, iPhone X launched as Apple's best selling smartphone and then remained its most popular model every quarter since-- despite its hefty $999 entry price, and stiff competition from Apple's other very good, less expensive iPhone models.

Despite this reality, the tech media and their financial press counterparts stridently maintained that iPhone X was a "disappointing" product, reported that it was selling poorly, and maintained that it was inherently not capable of attracting broad interest because of its price-- and perhaps even because it wasn't "innovative."

This notion was repeated over and over by financial blogs, tech blogs and even well-respected newspapers including the Wall Street Journal, Japan's Nikkei and Bloomberg.

Hammering those iPhone XS balls out of bounds

Right out of the starting gate, a new narrative cycle of iPhone failure is beginning, based on a data source so laughable that it makes channel checks sound almost legitimate in comparison.

Rosenblatt's analyst is basing his idea of weaker new iPhone XS demand "on his analysis of iPhone wait times," noted Emily Bary for Marketwatch.





To anyone who has ever watched Apple's estimated wait times for preorders, this is insane. Apple doesn't present an accurate-to-the-day estimate for shipping. It presents a large window period, generally of multiple weeks.

Apple's production ramp involves the building of tens of millions of devices per week, and its estimates change wildly as it adjusts production and shipping estimates for placed orders. You might be told your phone is slated to ship in a couple weeks, then see it shipped and en route the next day. There is no reliable data to pull from shipping estimates. They are a ballpark provided to manage the expectations of consumers.

Bary's piece actually did note that Jeffrey Kvaal of Instinet disputed the idea that demand was any weaker this year than last. However, Marketwatch used the more sensational Rosenblatt-Zhang prediction as its headline, and pluralized his idea to sound like it came from multiple analysts, rather than being so controversial that its writer couldn't even find two people to quote in agreement of this analysis.

Kvaal actually told Marketwatch that Apple "doesn't appear to be planning for 'slim availability' of any of the three phones it introduced last week," making it even more impossible to use "wait times" as a functional metric to use in estimating relative demand from iPhone buyers. You only have to wait if there is a constrained supply.

Of course, with the enhanced XS plus the larger and even more expensive XS Max in the channel now, and the more affordable iPhone XR coming soon, it would be impossible to make direct comparisons against the previous year even if you had substantial real data on shipments or unit mix. Last year iPhone X was entirely new, and was selling largely in competition with a very different, much more conventional iPhone 8 and iPhone 8 Plus lineup.

2018 iPhones


Analysts don't have any reliable access to Apple's actual unit shipments or product mix, and are forced rely on estimates that are largely just made up by other analysts or research firms who sell data they invent.

Analysts last year were unable to ascertain with all their channel checking, data modeling and guesswork-postulation that iPhone X would outsell Apple's entire lineup, including the far cheaper iPhone SE and iPhone 7 that hit those low price points that analysts have been insisting for years were key for Apple to bring its iPhones to a broader, high volume audience.

This all happened before

Bary's current coverage of Zhang's "wait time" checks presented an alternative perspective of a peer analyst, but didn't seem to think of checking whether Zhang's "wait time" analysis for Rosenblatt Securities had previously unearthed any valuable insight into Apple's iPhone sales. It sure didn't last year.

A quick search pulls up a report last October by Philip Elmer-DeWitt of Apple 3.0, who noted that Zhang had just delivered a note for Rosenblatt stating that preorders for iPhone X were strong, but that Zhang had "ongoing concerns regarding sustainability of this pace. We believe preorder volume declined quickly after the first day, which could be attributed to long wait times."





So Zhang's wait-time methodology previously predicted that iPhone X orders would fall off rapidly after its launch. They didn't.

Further, Zhang attributed the strong preorders observed in China specifically to "smaller retailers that may have been using software to quickly preorder iPhone Xs with plans to resell into the end user market," again implying that strong preorders were not a reliable metric of demand, but that somehow the divination of "wait times" published by Apple were.

In other words, Zhang was saying don't believe what you're seeing, listen to the irrational nonsense that I'm making up.

Apple's only hope in Asia, according to Zhang, would be future products down the road, including new iPads with Face ID, cheaper iPhones, a cheaper HomePod and a red iPhone. The only one of those to ship this year has been a Product(RED) iPhone 8.

iPhone X led Apple's sales and profitability, and it was Services, not new iPads or cheap devices, that lead to a surge in Apple's stock price this summer that Rosenblatt Securities entirely missed.

A year ago, as Apple 3.0 noted in October, Zhang had a Neutral price target of $150. Meanwhile, Apple rocketed to an all time high and a trillion dollar market cap. Yesterday, Rosenblatt sheepishly upped its price target for Apple to $200, below the company's actual current closing price well above $217.

Bizarrely, after the discounting of Apple was corrected this summer in response to investors finally seeing Services as Apple's path to strong growth (alongside new hardware categories including wearables), these analysts are again reverting to a myopic evaluation of iPhone shipments, and again going back to an old picture painted in the dark, with no thought given to how massive new sales of iPhones that last for many years are driving a critical mass of ongoing app sales, cloud services and subscriptions, along with peripheral sales of Apple Watch, AirPods and other connected devices.

Doubling down on a false claim that "iPhones aren't selling in Asia"

A few months later in March, Zhang was again in the headlines for claiming that "new iPhones aren't selling in Asia," a story run by CNBC that offered no data supporting the idea that new iPhones weren't selling, apart from Zhang stating that iPhone X continued to disappoint and that it "did not sell well during the Chinese New Year" and that "we are not surprised with the quick cooldown [sic] of iPhone X sales," along with his cut of "5.5 million" units from his own internal estimate.


Rosenblatt's Zhang was as wrong as one can be


Within two months, Anita Balakrishnan, the author of that same "report," turned around and quoted Apple's chief executive Tim Cook as noting that the new iPhone X "was the most popular smartphone in all of China last quarter," adding that "the company's performance in China is particularly impressive as overall smartphone sales were down in Q1."

That CNBC report pointed out that "the iPhone maker reported $13 billion in revenue from Greater China during its second fiscal quarter -- a 21 percent year-over-year spike," and that "China is one of Apple's most important and competitive markets."

Outside of China, the report stated that, "Apple also reported strong revenue growth in Japan, posting a 22 percent year-over-year jump. Revenue out of the Americas grew 17 percent; revenue in Europe grew 9 percent; and revenue in the rest of Asia Pacific grew 4 percent," all without ever noting that just two months earlier, the same writer for the same publication was providing a megaphone for an analyst who claimed "new iPhones aren't selling in Asia."

Zhang wasn't just wrong about iPhone X demand. He also told anyone who was listening last September that iPhone 8 preorders were "substantially lower" than prior iPhone 7 and iPhone 6 levels, apparently using the same data modeling used to claim that iPhone X was week a month later, and that iPhone XS model were weak this year.

And last summer, he actually insisted that iPhone 8 would not only ship later than expected due to Touch ID supply problems (based on the entirely wrong idea that Apple was trying to integrate Touch ID behind the display), but also claimed that full manufacturing wouldn't fully ramp up until the first calendar quarter of 2018.

How wrong can you be before you lose all credibility?

The overall outlook for Apple's iPhone sales over the last year has been outstandingly wrong. Prakhar Tripathi penned this typical take, replete with unfounded claims and explanations of why things that weren't actually happening were probably occurring:

"Over the last several weeks, analysts and research firms have been evaluating how Apple Inc. has hit the rock bottom with the lukewarm response of its latest flagship iPhone X," wrote Tripathi. "Even though the world was intrigued by the design and technology of Apple's top-of-the-line handset, its sales remain sluggish. The mighty iPhone X failed to lure the masses because of its hefty price tag."

He cited "checks from sources in the supply chain" by analyst Mehdi Hossein of Susquehanna Financial Group, which falsely laid out "a straight 73 percent drop in the sales of iPhone X as compared to the previous quarter," and claimed that "shoppers are preferring the older model of iPhones, and just aren't going for the latest and greatest," another dead-wrong prediction, presented by an analyst as fact and parroted by a blog as unverified truth.

Despite being consistently wrong, presenting asinine analysis from laughable pseudoscientific analysis of "wait time" estimates or wholly illegitimate "channel checks" that have been proven wrong year after year, tech writers keep citing analysts like Zhang without noting their terrible track records-- or even the predictions they stood by just weeks before Apple announced earnings data that blew away their questionably sourced, historically inaccurate assertions.
watto_cobra
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Comments

  • Reply 1 of 34
    Isn’t it possible the staggered launch of the XS and XR is causing people to wait to decide which model they want?
    crosslad
  • Reply 2 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    muthuk_vanalingam
  • Reply 3 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    lolliverwatto_cobra
  • Reply 4 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    watto_cobra
  • Reply 5 of 34
    i personally wanted the XS or the out going X model because of the dual cameras... that being said i need a new phone as my 6 is on the way out, i am holding off to see what possible deals might be offered by the carriers afte the Xr is released.. because we have 2 iphone 6’s on the way out replacing both most likely be the Xr model. but who knows might wait till christmas and get the Xs... i do wish these analysts would be discredited, that Kuo guy is always stating how bad demand is yet quarterly come out and apple hit target or surpassed it. makes me believe Kuo is shorting the stock
    racerhomie3watto_cobra
  • Reply 6 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    That always happens. I preordered my X at midnight last year but I checked the pick up option for the heck of it days later and I could have picked one up at launch. The new gold color does look nice. I was torn with gold or space gray but ended up going with the gray. Hopefully I won't regret my decision. 
    watto_cobra
  • Reply 7 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    Only with a crystal clear case will the beauty of the gold iPhone shine through.
    watto_cobra
  • Reply 8 of 34
    D_CMillsD_CMills Posts: 26unconfirmed, member
    It is amazing that these people are able to keep their jobs year after year.
    lolliverwatto_cobra
  • Reply 9 of 34
    I'm hopeful that the 512 GB Xs Max, which at 3:01am the night preorders began already had a 2-3 week delivery time, will be available sooner. 
    watto_cobra
  • Reply 10 of 34
    dewmedewme Posts: 5,760member
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    I don't think this is strange at all since Apple is partitioning available production inventory into multiple concurrent release streams around the world. Part of this includes pushing inventory out to all of the Apple Stores that are expected to have stock on-hand and in stores on release day. The availability of any one model comes down to how Apple decides to partition the release streams coupled with the actual demand for each individual model.  Some combinations are bound to occur that appear to deliver unusually fast while others appear unusually slow. My gut feel is that the 512 GB Xs Max (SuperMax) has somewhat less demand than models with less storage only because of the price. I normally buy the model with the maximum available storage but with iCloud and storage optimization I do not anticipate needing that much storage for the foreseeable future.  I ordered the 256 GB Max on the first preorder day and I may not see it until October 8th. 

    Also keep in mind as others have mentioned that the XR models are not available for preorder yet.

    Finally, take a close look at the track records on these financial predictors. They all suck.
    lolliverwatto_cobra
  • Reply 11 of 34
    Well Dan the media loves it. You forgot Forbes and contributor Ewan Spence. Apple under Cook is heading for a cliff. These new phones are taking a quite a bashing from many of the so-called tech pundits. I’m sure in October when Google reveals their new 'super' phone they will be angelic music and ecstatic gushes from the self same group. I agree when will it end. I guess never. Jobs is dead and Apple is now a has been according to them. The facts don’t count. Hey bad news and lies makes someone money.
    watto_cobra
  • Reply 12 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    There are so many more choices this year... I'm waiting for 'hands on' time with them all to decide. I sort of suspect that's happening with a lot of people as there isn't just 1 NEW phone. What's really interesting is I have been following Apple closely since about 1992. Worked in software and tech companies for years. The amount of odd manipulation of their stock is consistent and odd. I have researched various reasons and I have to admit I still don't know why people spend so much time messing with them. But, whatever. They'll sell more phones, they'll sell services, they aren't going away in a year or a month or a decade. Will they be what they are right now in 30 years? Most likely not. Remember what IBM used to be? What Microsoft was before they mad fun of the iPhone and missed the entire mobile turn. So someday they will diminish, but it's likely to be after I'm dead anyway!
    watto_cobra
  • Reply 13 of 34
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    That always happens. I preordered my X at midnight last year but I checked the pick up option for the heck of it days later and I could have picked one up at launch. The new gold color does look nice. I was torn with gold or space gray but ended up going with the gray. Hopefully I won't regret my decision. 
    Hopefully not. The gold and space gray are my favorite colors for this model. I didn’t like the gold on the 8. It looked more rose gold. Last year, I was very surprised they didn’t offer the gold. But I read somewhere just recently that the reason was because Apple couldn’t perfect the color in time for release. Don’t know if that’s true of if it was a deliberate move to get more people to upgrade to it this year. 
    watto_cobra
  • Reply 14 of 34
    bluefire1 said:
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    Only with a crystal clear case will the beauty of the gold iPhone shine through.
    Very true. I’m sure those clear cases will be extremely popular. I was talking to a guy about his iPhone X about 6 months after he got it and he said he specifically bought the silver and always places the phone face down. He said he wasn’t gonna have a $1,000 iPhone and not let anyone see it LOL
    watto_cobra
  • Reply 15 of 34
    It’s amazing how these analysis make their forecasts. If I applied the same methods in college my profs would have failed me. 
    lolliverwatto_cobra
  • Reply 16 of 34
    bluefire1 said:
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    Only with a crystal clear case will the beauty of the gold iPhone shine through.
    The problem with clear cases is they always end up turning yellow. I have yet to find one that doesn't do that. 
    macplusplusfirelockwatto_cobra
  • Reply 17 of 34
    As unlikely as this may be to ever happen again, carriers need to bring back the 2-year contract discount business model from before. All cellular phone manufacturers are experiencing drops in annual sales across the board. Not to mention, people are generally holding on to their phones longer.  This is not Apple's fault (or any other cell phone manufacturer, for that matter). This drop in sales can almost be directly linked to the change in the telecom business model. The worst part is US telecom companies could care less, especially when competition is abysmal in lots of flyover regions in the US. If only one telecom company would deviate from this business model, I think they could see very promising amounts of new business. I am sure cell phone manufacturers would appreciate it too. Maybe even go as far as to offer special temporary exclusivity deals with certain models where newer models are made available a month or two before it's made available with other carriers. The truth is, the current model is bad for telecom competition and it's hurting consumers and cell phone manufacturers, all the while, telecom companies are doing just fine whether you upgrade your phone or not.
  • Reply 18 of 34
    mike1mike1 Posts: 3,442member
    bluefire1 said:
    I just checked the Apple Store app. It says I can pick up a gold 512 GB XS Max at my local Apple store on Sept 21 if I order it now. That’s really odd seeing how whenever I pre ordered iPhones in the past, if I didn’t order right at midnight on pre sale day, I’d be waiting about a month.
    None of the Apple Stores in my area have any of the 512 GB Xs Max available for pick up on Sept 21. There are a lot of Apple Stores in my area. 
    I guess availability is spotty. No matter what, I’m sure these phones will be a huge hit, as always. I gotta say though, that new gold color is gorgeous. 
    Only with a crystal clear case will the beauty of the gold iPhone shine through.
    Very true. I’m sure those clear cases will be extremely popular. I was talking to a guy about his iPhone X about 6 months after he got it and he said he specifically bought the silver and always places the phone face down. He said he wasn’t gonna have a $1,000 iPhone and not let anyone see it LOL
    Sad that some people need others to validate their purchase.
    atomic101iMarc845muthuk_vanalingamwatto_cobra
  • Reply 19 of 34
    mike1mike1 Posts: 3,442member
    Pick your narrative.

    1. Apple launches new phone that has long wait times. They can't possibly sell because people won't wait. Apple's supply chain folks are idiots because they clearly didn't make enough. At least of the right size/color/storage capacity.

    or

    2. Apple has produced enough phones to satisfy much of the initial demand. They must be in trouble because if there's no wait time there must be no demand. Inventory is just piling up.
    lkruppiMarc845watto_cobra
  • Reply 20 of 34
    lkrupplkrupp Posts: 10,557member
    "How wrong can you be before you lose all credibility?”

    A long time, apparently. These analysts have been at it for decades now claiming Apple has one foot in the grave and the other foot on a banana peel. 

    iMarc845watto_cobra
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