iPhone X Predicted to 'Absorb' Up to $30B in Holiday Spending at Expense of Other Retailers

[MacRumors]

High demand for the iPhone X will drive an upgrade "supercycle" this holiday season that could see shoppers spending the bulk of their holiday cash at Apple Stores, according to a note from Morgan Stanley analyst Katy Huberty (via Business Insider).

Given the high price of the iPhone X, which starts at $999, the iPhone X could "absorb" $30 billion of discretionary spending during the holidays, impacting other retailers. Huberty believes customers will be drawn to all of the new features in the iPhone X, and will reduce spending in other categories in order to afford the device.

"Apparel is a wallet share donor to other categories, with cell phones/technology and services being two of them. We see this upgrade supercycle coupled with the very high $999 iPhone X average selling price as a significant headwind to Specialty Retailers and Department stores in the fourth quarter."

After spending upwards of a thousand dollars on a phone, Huberty believes customers will be left thinking things like "'I just bought a $1,000 phone last month, I don't really need another pair of jeans.'"

Combined, Huberty believes iPhone X, iPhone 8, and iPhone 8 Plus could take approximately $52.6 billion of spending away from other categories this holiday season. Given the limited supply of the iPhone X, other retailers could be impacted by sales of the device well into 2018 as Apple works to reach supply/demand balance.

Apple has not provided insight into iPhone X sales thus far, but the company has said demand for the new device, which sold out in just a few minutes after pre-orders went live, is "off the charts."

Article Link: iPhone X Predicted to 'Absorb' Up to $30B in Holiday Spending at Expense of Other Retailers

 

[maramok]

Apple no longer makes money, they absorb it.

 

[flat five]

yeah.. that's believable..
i imagine they're going to absorb another thousand from me before year's end.. it will be a great gift in all reality

(and how that relates to the topic--- Prada likely won't be absorbing the thousand bucks this year from me )

 

[NIKKG]

Ya right.

 

[mi7chy]

Lets see the lines like with the iPhone 8.

 

[Andres Cantu]

Yeah, let's see what the next cycle will look like. I'm sure they won't be doing much absorbing there, probably more leaking

 

[KENESS]

But don't most people buy it on one of the various installment plan options? Either through their carrier or Apple directly?

For better or worse, that pretty much eliminates the psychological "I just spent $1000 on a phone..." mindset which is the crux of this analysts argument.

 

[filmantopia]

Why would people waste their money on clothes when they can get an iPhone?

 

[Abazigal]

Apple is doomed, I tell you. Doomed.

To keep making more and more money.

 

[fjfjfjfj]

I know nothing about nothing but I don’t think this is necessarily true. Don’t the majority of buyers get them on installment plans with carriers or Apple? Meaning they will notice little difference in their disposable income?

 

[sulpfiction]

Sure! Even if there was a shiny new X under the tree, people are still going to buy the normal other gifts. As Wilma Flintstone and Betty Rubble would say... Chhaaarrrggeee It!

 

[levitynyc]

To be honest, the $1000 price tag caused me to take a step back and examine how much I was spending on technology.

I’m not buying a new phone this year for the first time since the iPhone 3GS.

 

[Williesleg]

Sounds to me like a sale followed by a return.

 

[Falhófnir]

Good for Apple’s bottom line now, but what about next year when everyone’s satisfied with their X and unwilling to spend any more for at least two years, if not more due to the extra cost this go round?

 

[jbizzybeetle]

I bought Christmas for family already, before the X. That took care of that!

 

[cylack]

I bought the iPhone 8 on Apple’s payment plan. I pay $40 a month over 2 years. I don’t sit around multiplying my monthly internet, electricity, water bills by 12. That ’s the same way I look at the phone purchase. It’s the one piece of technology I use the most in a day. I want the best experience and cost really isn’t a factor. The iphone X is going to cost around $47 a month on the Apple payment plan, which isn’t going to deter most people.

 

[69Mustang]

Good for Apple’s bottom line now, but what about next year when everyone’s satisfied with their X and unwilling to spend any more for at least two years, if not more due to the extra cost this go round?

I think the hope is that next year will be sustained by the people who didn't buy 1st gen cuz 1st gen, or had an older phone and just hung on a little longer. The year after that you get the 7's and the 8'ers. Year after that you get the 1st gen X'ers. Basically the same thing that happens now.

 

[jayducharme]

Apple no longer makes money, they absorb it.

"iPhone: the most absorbent smartphone on the market! It can sop up more than ten times its weight in cash!"

I'll find out just how convinced I am in a few days. I want to try out the X with my own hands before I make that expensive a decision.

 

[deanthedev]

Makes sense. I know several people opting for the 256GB iPhone X. With AppleCare and taxes that’s almost $2,000 in Canada. And several mentioned they’re postponing other purchases (like laptops or 4K TVs) until later so they can get their iPhone now.

 

[Princejb134]

I think the hope is that next year will be sustained by the people who didn't buy 1st gen cuz 1st gen, or had an older phone and just hung on a little longer. The year after that you get the 7's and the 8'ers. Year after that you get the 1st gen X'ers. Basically the same thing that happens now.

Yup I agree. I usually always get the second model when a new phone is revised. I been stuck on the S models since the 3GS. Currently been holding my 6s for 3 years now and still running strong

 

[Falhófnir]

I think the hope is that next year will be sustained by the people who didn't buy 1st gen cuz 1st gen, or had an older phone and just hung on a little longer. The year after that you get the 7's and the 8'ers. Year after that you get the 1st gen X'ers. Basically the same thing that happens now.

Possibly, though supercycle would surely imply a significantly reduced pool of potential upgrades for next year? And considering the iPhone is still 60%+ of apple’s business a slow year would be pretty dire, even if they do clean up this year...

 

[Krek]

Hardly anyone is spending the entire $1000. They are doing payment plans. The rest of the retailers will do just fine.

 

[Michael Scrip]

Last year... Apple sold an iPhone for $969... and nobody said a word.

Now there's an iPhone at just $30 more... and economists are re-evaluating the entire Holiday spending season.

 

[jonnysods]

That's a lot of clams. I'd love one for Christmas but that would absorb our entire family budget and more for Christmas

 

[840quadra]

I question this, simply because it is hard to acquire one of these devices now, and, the entry price. Granted, you can still get one shipped before DEC 25.