Decline in iPhone Shipments Could Make Apple Worst-Performing Top Five Smartphone Brand of 2016

MacRumors

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Apple's global iPhone shipments will fall short of analysts' consensus estimates of 210 to 230 million units in the 2016 fiscal year, according to a new research note issued by respected KGI Securities analyst Ming-Chi Kuo. In a worst case scenario, iPhone shipments in 2016 are expected to reach just 190 million units, which is an 18% reduction in shipment growth and 3 million fewer iPhones than Apple sold in 2014.

Even in a best case scenario, said Kuo, Apple is expected to sell 205 million units, 5 million short of the lower end of analysts' estimate range and amounting to a 11.6% reduction in growth. Regardless of the best or worst case scenario, Kuo predicts Apple will underperform the industry and become the only global top-five smartphone brand to see shipments decline in 2016.

Mockup of iPhone 7 case.

The analyst described slowing market demand for large-screen handset replacements and limited iPhone 7 selling points as key factors behind the expected decline, noting that the contribution of revised-up iPhone SE shipments in the 2016 fiscal year will remain "insignificant".
Given the fact that shipments fell YoY for the first time in 1Q16, we don't think large-screen replacement demand will contribute much to growth. To sustain growth, the iPhone needs to come up with more innovative features to revitalize the user experience, for example in form factor design, software and hardware specs. We don't see many attractive selling points for iPhone 7 in 2H16 and are conservative on 2H16F shipments. While we revise up 2016F iPhone SE shipments from 12mn to 18mn units, this won't offset overall iPhone shipments decline.
Kuo's note predicts that out of Samsung, Apple, Huawei, Oppo, and Vivo, only Apple will see shipments fall year-on-year, which suggests to KGI Securities that the decline in iPhone sales can't be solely blamed on industry structure.

"While we believe the high-end smartphone market still has room for growth, the development of a newer, more innovative user experience is a prerequisite for growth," said Kuo. "We believe only iPhone will see shipments fall YoY in 2016, for three reasons: (1) intensification of market competition; (2) time needed for commercialization of new user experience technologies; and (3) iPhone needs a makeover (e.g. form factor design) to keep attracting consumers."

As far as a handset makeover is concerned, rumors indicate the iPhone 7 will share a design similar to the iPhone 6s, but may be slightly thinner, perhaps through the removal of the 3.5mm headphone jack and the implementation of a thinner Lightning port. Antenna bands across the back of the device may be removed, but are expected to remain at the top, bottom, and sides of the iPhone, while the rear camera may be flush with the case.

Other rumors suggest Apple may be planning to introduce two versions of the iPhone 7 Plus - one with a single lens and a second with a dual-lens camera system that offers DSLR-like image quality with 2-3x optical zoom and improved performance in low light conditions. Whatever form the iPhone 7 takes, Apple will be hopeful of exciting consumers in ways that perhaps the iPhone SE could not, as the company strives to overcome what some commentators have called "peak iPhone".

Apple's earnings announcement for the second fiscal quarter (first calendar quarter) of 2016 takes place on Tuesday, April 26, and will provide a look at sales of the iPhone 6s, 6s Plus, and SE following Apple's record first quarter, which saw the company announce 74.8 million iPhone sales and $18.4 billion profit on $75.9 billion in revenue.

Apple has warned that iPhone sales will decline in the March quarter and has provided Q2 2016 guidance of $50 to $53 billion in revenue and gross margin between 39 and 39.5 percent. Should Apple only take in $50 to $53 billion, the company will see its first year-over-year revenue drop in 13 years.

Article Link: Decline in iPhone Shipments Could Make Apple Worst-Performing Top Five Smartphone Brand of 2016
 

NewtonPippin

macrumors regular
Jan 18, 2015
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Apple's global iPhone shipments will fall short of analysts' consensus estimates of 210 to 230 million units in the 2016 fiscal year, according to a new research note issued by respected KGI Securities market analyst Ming-Chi Kuo.
"Respected"? MacRumors, how much is Ming Chi Kuo paying you for these articles?

Also, gotta love the huge range there. Hey guys, I think they'll sell anywhere between 500 and 500 million units. If I'm right, I hope I will become the "respected" market analyst NewtonPippin.
 

peterh988

macrumors 6502a
Jun 5, 2011
595
985
There was no compelling reason to update this time round. Beyond new users, people on their natural update cycle, and guys who just have to have the latest, there wasn't an incentive to abandon an old phone and contract (at expense) just to have the new model.

That doesn't make it a bad product, just not one people just had to have at any cost.
 

prestonkd

macrumors member
Jun 15, 2007
78
34
Alabama
Oh no, only 205 million units best case scenario! It's the end of Apple! How can they possibly survive on $50 million quarterly iPhone revenue when some fool says it should have been $53 million! Sell your shares quick! This thing is going to go down faster than the Titanic! We all knew it was coming. Heaven forbid if a company ever stops growing faster than it has in the past, it must mean terrible things are coming. I'd like to see follow-up analysts reports six months later when Apple or whatever company blows the lid off whatever bad was predicted to happen. It would read something like " Ummmm...... Sorry. False alarm."
 

ozaz

macrumors 65816
Feb 27, 2011
1,266
285
UK
Market saturation sucks. It happened to tablets and PCs. :apple: Need a new signature product and the :apple:Watch didn't do it.
Market saturation is fine. It's the stock market that sucks.

The iPhone is a fine product that's making massive profits and will continue to sell in large amounts.
And yet just because of ridiculous shareholder expectations they have to keep growing.
 

joe-h2o

macrumors 6502a
Jun 24, 2012
998
443
The Galaxy S7 Edge would definitely tempt me over an iPhone 6s Plus if I didn't already own the iPhone. Curved screen, OLED display, better camera, waterproofing etc.
I held an S7 Edge in a phone store a couple of weeks ago because I was curious. It just... didn't feel quality. It might have been the fact that it was a display model, but it was a working device. It just didn't feel good in the hand.
 

WarHeadz

macrumors 6502a
Aug 30, 2015
900
5,068
Long Beach, California
If Apple is under the impression that they can release a minorly updated 6S in late 2016 and make it a huge seller, they're sadly mistaken. If that's the case, I won't be upgrading from my 6 Plus anytime soon.

See, Apple has a tendency of being late to the party with new features, but when they finally arrive they're awesome. At least that's how it used to be. At this point Apple is moving from "fashionably late" territory to just plain rudely late to the party.
 

Michael Scrip

macrumors 603
Mar 4, 2011
5,304
3,880
NC
Other reports are predicting a decline this quarter for Apple as well:

Google News link

This will be the first quarter Apple does NOT outsell themselves from the year-ago quarter.

Does this mean Apple is doomed? Not quite. They should still sell close to 200 million units this year which would still make them the #2 smartphone manufacturer in the world by volume. (and the #1 by profit)

All companies hit a growth limit eventually.

Maybe Apple will never sell 75 million iPhones in a quarter ever again. But they'll still sell more than enough.
 

markrath

macrumors member
Nov 23, 2011
43
39
"Respected"? MacRumors, how much is Ming Chi Kuo paying you for these articles?

Also, gotta love the huge range there. Hey guys, I think they'll sell anywhere between 500 and 500 million units. If I'm right, I hope I will become the "respected" market analyst NewtonPippin.
I say somewhere between 1 and 500 BILLION. There! Now I will be more respected than you, especially when I talk about the huge decline in sales because sales were no where near 500 billion.

I also predict. . . The next iPhone released will be newer that than older one. Tim Cook will talk about the new hardware then turn it over to someone else for a demonstration. It will then be turned back to Tim who will talk about the iOS and then turn it over to someone else to demonstrate. Back to Tim who will then introduce someone who has been using the new software to create something. They will come out and obviously not be as well rehearsed or articulate as the Apple presenters and the crowd will politely clap. Tim's turn again who will state "We have never been more excited or proud of a product as we are of this one. It's gorgeous"