Ming-Chi Kuo Says iPhone XR Demand Has Been Lower Than Expected, Slashes Shipment Estimates

[MacRumors]

iPhone XR demand has been lower than expected, according to Apple analyst Ming-Chi Kuo, who has slashed his overall iPhone shipment forecast by 20 percent for the first quarter of 2019. He now expects Apple to move 38-42 million iPhones in the quarter, down from his original estimate of 47-52 million.

Kuo, in a research note with TF International Securities, obtained by MacRumors:

We have reduced our 1Q19 iPhone shipment estimation by 20% to 38-42mn units (vs. our previous forecast of 47-52mn): We cut the 1Q19 iPhone shipment estimation again for the following reasons. (1) Lower-than-expected XR demand. We have reduced our 1Q19 XR shipment estimation to 15-20mn units vs. our previous forecast of 20-25mn units. (2) The increase in orders of legacy iPhone models cannot offset the decline of XR and XS series shipments because of the low season impact.

Apple reported sales of 52.2 million iPhones in the first quarter of 2018, which corresponds with the second quarter of Apple's fiscal year, so as few as 38 million units in the first quarter of 2019 would be a significant year-over-year decline.

For the iPhone XR in particular, Kuo has revised his shipment estimate to 15-20 million for the first quarter, down from 20-25 million.

Kuo estimates annual iPhone shipments will fall between 205 million and 210 million in 2018, and based on that, forecasts that annual iPhone shipments in 2019 will decline up to 10 percent to a range of 188 million to 194 million. This would fall below Wall Street's consensus estimate of around 212 million units in 2019.

While this news paints a pessimistic outlook for the iPhone, declining unit sales will likely be at least partially offset by the rising average selling price of iPhones. Apple's latest iPhone lineup is its most expensive yet, with the $349 iPhone SE discontinued and the iPhone XS Max topping out at $1,449 with 512GB of storage.

Kuo:

We believe that the iPhone ASP could at least keep growing YoY until 3Q19, and it will offset the YoY shipment decline. However, most suppliers will face growth challenges due to iPhone shipment decline. We believe that specific suppliers can grow, thanks to the component price increase or the ability to obtain new orders, but the visibility of the beneficiary list will not be clear until 1Q19 because some spec and order allocations of 2H19 new iPhone models are not confirmed yet.

Apple will no longer be disclosing unit sales in its quarterly earnings reports going forward, so investors will have to look towards iPhone revenue to determine how well the handset is selling. If unit sales are particularly bad, then a rising average selling price might not be enough to hide the weakness.

Apple has been aggressively marketing its latest iPhones. On its website, for example, the iPhone XR and iPhone XS take up the entire homepage with advertised starting prices of $449 and $699 respectively. However, each have an asterisk that leads to fine print that says pricing is based on an iPhone 7 Plus trade-in.

Apple's earnings results for the first quarter of 2019 will likely be released in May, so we're still some time away from real numbers.

Article Link: Ming-Chi Kuo Says iPhone XR Demand Has Been Lower Than Expected, Slashes Shipment Estimates

 

[Andres Cantu]

Maybe now is the time for better XR carrier promotions. I would have considered some but the offers were nowhere near as good as years prior.

 

[newyorksole]

Jeez. Apple Stores also have easels holding up a poster about “XR starting at $449”. Never seen some type of promo like that.

I really hope they learned their lesson this year. Sheesh.

 

[usersince86]

Decrease the price (and/or the size) and sales will increase.

And don't make us trade in a phone.

 

[cristianvaldez]

The greed in price increases is starting to take a toll. They should lower the prices or people are going to switch to Android or look somewhere else.

Apple needs more innovation and less greed. Go back to Steve Jobs days maybe?

 

[tridley68]

I can see why this is happening with Apple having two other better options .

 

[tromboneaholic]

Kuo is usually right about leaks of upcoming products, but wrong about sales estimates every year.

His crystal ball predicting sales is not as reliable as his contacts at Foxconn who leak product info.

 

[brofkand]

Jeez. Apple Stores also have easels holding up a poster about “XR starting at $449”. Never seen some type of promo like that.

I really hope they learned their lesson this year. Sheesh.

It's on the homepage of apple.com as well. Now that they've spilled the discount milk there's no going back. People won't buy until there's a sale.

 

[Sasparilla]

I read someone saying Apple should have stayed with an original iPhone design option (8 / 8 Plus) for another year (9 / 9 Plus) because there is a big chunk of the market that want their old iPhone and doesn't want a different looking X and the relearning that goes with UI change (no matter how small that is).

(Where's my battery percentage? How do I unload power hungry apps, I used to double click the home button? ApplePay is how? How do I go back to my main screen display, from a secondary screen of apps, it was just a single push of the home button before? etc.)

Since the Xr is cheaper than the 8 Plus was in the U.S. (the cost isn't higher), its hard to see a (potential) 20% drop in sales as anything but a repudiation by a significant chunk of their customer base of the forced change in design and how the UI works of the X series on the customer.

 

[Radon87000]

Why would anyone go for LCD when OLED is available? The XR is redundant. I am not expecting Apple to introduce its new upgraded version next year.

 

[Pepe4life]

Next up:
iPhone XR for $99*

*after kidney trade-in

 

[Rogifan]

And he knows this how?

 

[newdeal]

Hopefully Tim Cook can have a good idea as to where to go next. Releasing new products at higher prices than the old products and keeping the old products available around the same price didn't really seem like a thing that Jobs did. Generally if they were releasing a computer or a phone it was the same price or lower and then if they kept the old one around they would drop the price. Doesn't seem to be happening anymore.

 

[Silver Idaten]

I hope Apple learns a lesson after this year, the price is too damn high. The XR should’ve started at $449 without any trade in. It’s a shame too, I have a XR, it’s a damn good phone, so it doesn’t deserve the bad rep it gets.

 

[T'hain Esh Kelch]

And he knows this how?

There are companies that follow shopping patterns, so he likely gets some information from these. On top of that, he has pretty good information from companies that produce the iPhones, along with suppliers of parts.

 

[MacFather]

Deleted.

 

[The Game 161]

Sounding like a broken record now...think we know smartphones in general the demand isn’t as high as it was before.

 

[gsmornot]

I bought one full price for my wife. Really, it's a great phone. I almost picked one up instead of my XS Max but didn't want to wait the extra month until it came out. Wife was more patient.

 

[neuropsychguy]

Why would anyone go for LCD when OLED is available? The XR is redundant. I am not expecting Apple to introduce its new upgraded version next year.

Because it's $250 less; multiply that by some number if you need to upgrade multiple phones and the money quickly adds up. The Xr is worlds better than my 7. It's a terrific phone. Yes, the Xs or Xs Max are better but $250+ is a significant savings.

 

[Silver Idaten]

Because it's $250 less; multiply that by some number if you need to upgrade multiple phones and the money quickly adds up. The Xr is worlds better than my 7. It's a terrific phone. Yes, the Xs or Xs Max are better but $250+ is a significant savings.

Not only that but there’s something going on with the XS screens, it can’t just be PWM because many OLED phones use PWM and I don’t feel anything using them, but the XS I immediately feel strained and get a headache later.

 

[ozziegn]

I work for one of the two biggest carriers and the XR is by far our best selling phone. So this news comes at a surprise to me.

 

[tromboneaholic]

I work for one of the two biggest carriers and the XR is by far our best selling phone. So this news comes at a surprise to me.

The same thing happened last year with Kou and his iPhone X sales estimates.

 

[Caliber26]

They shoulda made this thing 5.3” and priced it at $649.00.

It would be a completely different story.

 

[Radon87000]

Because it's $250 less; multiply that by some number if you need to upgrade multiple phones and the money quickly adds up. The Xr is worlds better than my 7. It's a terrific phone. Yes, the Xs or Xs Max are better but $250+ is a significant savings.

The display on XS looks so much better to the point I would pay the $200. The display is the component you are going to be looking at all day. XR has a lower PPI than the 8 Plus it replaces and wont be as sharp.

 

[Ballis]

Probably difficult to promote, but god damn the batterylife on this phone. Its next level!