KGI: iPhone 8 sales in line with expectations, analysts overplay short Apple store lines
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.
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.
Comments
I'm sure that for every person that feels like me there will be another person who will opt for the X.
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.
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.
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.
This might change again.