iPhone Demand Remains High Despite Technology Market Slowdown, Say Analysts

[MacRumors]

iPhone demand this quarter has thus far remained "surprisingly resilient" despite the widespread supply chain issues and other factors affecting the tech industry, according to Wedbush analysts Daniel Ives and John Katsingris.

Summing up their research findings in a new investor note, the market analysts said Apple's flagship devices had been holding up well despite "compression across the board in tech" and fears of a growth slowdown rising, as reflected in Apple's reduced share price.

The albatross for the June quarter in our investor conversations over the past month have naturally been the Covid lockdowns in China which will negatively impact revenue by between $4 billion and $8 billion as a headwind according to Cook & Co.'s guidance given last month.

As of now we believe iPhone demand is holding up better than expected (despite the various supply issues that have plagued Apple and the rest of the tech sector) and are trending better than management's guidance thus far in the quarter.

Apple last month said that lockdown disruptions in China and silicon shortages would continue to make it difficult to make enough product to satisfy strong consumer demand as the year progresses, and that this would ultimately affect Apple's June quarter revenue.

Wedbush said lockdowns and supply chain issues should be "peak worry" in the June quarter, but that then they would subside into the key September and December quarters on the heels of Apple's iPhone 14 launch.

We believe the initial bogey and production plans for iPhone 14 should be up modestly from iPhone 13 out of the gates which speaks to Apple's confidence that pent up demand for this next release remain healthy despite the jittery macro.

Wedbush analysts claim the stickiness of Apple's upgrade cycle is being underestimated by investors and Apple's installed user base will be key to iPhone 14 sales this year, with almost a quarter of the 1 billion iPhones in general circulation having not been upgraded for roughly 3.5 years.

On top of this advantage Apple holds over rivals, Wedbush expects Apple's services business to account for roughly $80 billion of annual revenue this year and is set to grow at a "steady double- digit clip" into 2023. "We believe Apple's services business is worth alone north of $1 trillion which coupled with the flagship hardware business makes the risk/reward very compelling at current levels," said the analysts.

Article Link: iPhone Demand Remains High Despite Technology Market Slowdown, Say Analysts

 

[Aluminum213]

My self esteem is low and I badly need that new iPhone 14 Pro

 

[44267547]

Well, what we do know is, the average consumer won’t likely prioritize purchasing a ‘new’ iPhone with inflation the way it is currently with the economy average I believe at ~8.4%.

I suspect the last thing consumers will do, is spend their money on superfluous tech they don’t need, which means they will retain their current smart phone for a longer duration, especially if said person is making payments on it.

 

[ian87w]

Well, what we do know is, the average consumer won’t likely prioritize purchasing a ‘new’ iPhone with inflation the way it is currently with the economy average I believe at ~8.4%.

I suspect the last thing consumers will do, is spend their money on superfluous tech they don’t need, which means they will retain their current smart phone for a longer duration, especially if said person is making payments on it.

It will be interesting to see. Luxury goods tend to not be too influenced by inflation/economic events. Just look at the record breaking quarter over quarter by Apple during the pandemic.

As for people keeping phones longer, that's already happening for years. There's a reason Apple increased the iPhone pricing (eg $999 iPhone X). Also, every new iPhone release never targets last year's iPhone users. They would target 2, 3 generation, or older iPhone users.

Apple will release a cheaper large iPhone this year, the iPhone 14 Max. I'm predicting we will see sales matching the iPhone 6Plus level as people will be able to purchase a larger iPhone without spending more for the Pro Max.

 

[cocky jeremy]

My self esteem is low and I badly need that new iPhone 14 Pro

WTF does wanting a new phone have to do with self esteem? If you want something and see that what it offers is worth the price, why not? Besides, $1500 for a new phone isn't really much money to most people.

 

[SactoGuy18]

It comes down to this: you can use your iPhone for many years. I could still be on my old iPhone X, but I wanted 5G (and a WAY better radio modem chip).

 

[Abazigal]

That's one of the upsides of Apple products offering that unique experience. If a particular product isn't in stock, chances are the consumer will simply wait for supply to eventually catch up, rather than opt for an alternative offering. Eg: people are willing to wait months for their M1 MBP to ship rather than buy a windows laptop that's currently available.

So it just means deferred sales, not lost sales.

 

[DelayedGratificationGene]

Well, what we do know is, the average consumer won’t likely prioritize purchasing a ‘new’ iPhone with inflation the way it is currently with the economy average I believe at ~8.4%.

I suspect the last thing consumers will do, is spend their money on superfluous tech they don’t need, which means they will retain their current smart phone for a longer duration, especially if said person is making payments on it.

The carriers now are so desperate on keeping you that they give you a free iPhone for your old iPhone every year. Same thing with iPhone 14 etc…so there’s no question about upgrades anymore.

 

[44267547]

The carriers now are so desperate on keeping you that they give you a free iPhone for your old iPhone every year.

Which carriers are giving ‘free’ iPhones every year? And if so, which iPhone model are you inferring that’s free?

I’m not buying into the ‘desperation’ part of your post. There’s no loyalty to a carrier from a consumer standpoint (With the exception the device needs to be fully paid) or vice-versa, when they recruit new customers all the time. However, they have some really lucrative promotions ‘mid-cycle’, like “$800 for trade-in” on certain models was a recent promotion through Verizon.

 

[freedomlinux]

That's one of the upsides of Apple products offering that unique experience. If a particular product isn't in stock, chances are the consumer will simply wait [...]

So it just means deferred sales, not lost sales.

This is the same thing I say when they take down Apple.com for announcements. A large majority of people who wanted to shop will just come back later.

There must be some limit where customers are too frustrated by delays, or have an urgent situation, but in general *shrug*

 

[MatthewUT44]

Cell phone providers are handing iphones out like candy I can see why demand is growing

 

[Mr. Dee]

It comes down to this: you can use your iPhone for many years. I could still be on my old iPhone X, but I wanted 5G (and a WAY better radio modem chip).

I’m still on my iPhone X which works just fine. I’m not gonna pay more for 5G when I already got free WiFi at work and home. Replying to you at the bus stop on LTE. I don’t watch videos on the go or stream music either; too distracting, I need to be aware of my surroundings.

If the iPhone 15 Pro Max is enticing enough next year, I am likely to upgrade.

 

[Duncan-UK]

WTF does wanting a new phone have to do with self esteem? If you want something and see that what it offers is worth the price, why not? Besides, $1500 for a new phone isn't really much money to most people.

I wish I was one of your most people!!

 

[FattiesGoneWild]

I wish I was one of your most people!!

? out of touch. I mean $1,500 is like $15 bucks for most people. Common peasant get with the program. It’s just for a phone you know….

 

[lawrencesmac]

Even iPhone 13 series still selling strong, I see people are still buying.

 

[Freeangel1]

enjoy the good times while they last.

U.S. may be barreling toward recession in next year, more experts say

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[I7guy]

[...]There's a reason Apple increased the iPhone pricing (eg $999 iPhone X). [...]

True and the reason is the new faceid tech, imo, was expensive at the time. New tech always cost more than old tech.

 

[I7guy]

enjoy the good times while they last.

U.S. may be barreling toward recession in next year, more experts say

The U.S. economy could be heading for a recession in the next year, according to growing warnings from banks and economists, as a sudden bout of economic pessimism hammers financial markets that had been counting on sustained economic momentum. Although major swaths of the economy - including...

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What good times?

 

[_Spinn_]

I'm impressed that Apple has been able to keep demand up through COVID, lockdowns, supply chain issues, and now rising inflation.

 

[jav6454]

Cell phone providers are handing iphones out like candy I can see why demand is growing

That or perhaps we are coming out of the cellphone plateau from a while back. Recall that people tend to stick to upgrade cycles and right now it seems the cycle of a vast segment of the population are coming to an end; hence, people buying lots of phones.

 

[SactoGuy18]

I’m still on my iPhone X which works just fine. I’m not gonna pay more for 5G when I already got free WiFi at work and home. Replying to you at the bus stop on LTE. I don’t watch videos on the go or stream music either; too distracting, I need to be aware of my surroundings.

But I did like the switch BACK to the Qualcomm Snapdragon X55 radio modem chip on my iPhone 12. It had way better reception in general even on LTE.

 

[MrMojo1]

The carriers now are so desperate on keeping you that they give you a free iPhone for your old iPhone every year. Same thing with iPhone 14 etc…so there’s no question about upgrades anymore.

Name the carriers that are giving out 'free' iPhones every year to keep subscribers.

 

[MatthewUT44]

Name the carriers that are giving out 'free' iPhones every year to keep subscribers.

Verizon, ATT, tmobile, etc

 

[svish]

Demand will always be there for an iPhone!! iPhone always sells.

 

[ian87w]

I'm impressed that Apple has been able to keep demand up through COVID, lockdowns, supply chain issues, and now rising inflation.

It's the power of branding and luxury segment.

In my country, prices of Apple products are generally at least 30% marked up from the official US MSRP, yet every pre orders of iphone always sold out.