KGI: Larger-Sized iPhones Coming This Year Will Offset Weakening Demand for iPhone X in China

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Weaker-than-expected demand for iPhone X in China has led market analysts to revise down shipments for the first half of 2018, but larger-sized iPhone models in the pipeline should see Apple grow its overall worldwide shipments year-on-year, according to KGI Securities analyst Ming-Chi Kuo, who shared the information in a new research report obtained by MacRumors.


We revise down 1Q18 and 2Q18 shipments of iPhone X to 18mn units and 13mn units, respectively, lower than market consensus of 20-30mn and 15-20mn units. We expect iPhone X will go to end of life (EOL) around mid-2018 and that total life cycle shipments will be around 62mn units, lower than our previous forecast of 80mn units.
Two main reasons are given for the weaker-than-expected demand for iPhone X in China. First, in Q4 2017, consumers were willing to wait on average 10 months longer before replacing their existing phones, compared to shorter replacement cycles in the year-ago quarter. In Q4 2016, smartphone users upgraded after between 14 and 16 months of ownership, compared to between 24 and 26 months in Q4 2017. The numbers are said to be reflected in lower shipment forecasts by Chinese phone makers for the second half of last year.

The second big factor is said to be Chinese consumers' penchant for larger displays. According to Kuo, the notched design on the iPhone X isn't yet compatible with many popular Chinese apps, leading many customers to see it as offering less usable screen space than 5.5-inch iPhone Plus models. This confusion, coupled with the high price of iPhone X, is thought to have undercut replacement demand.

Despite the downward revisions in shipments for the first half of this year - and Kuo's moot point that Apple might end iPhone X sales in the summer - Kuo believes overall iPhone shipments will maintain year-on-year growth of 0-5 percent over the first half of 2018, mainly thanks to Apple's corrected supply chain share. However, Kuo thinks Apple's next product line-up will significantly improve competitiveness in the second half of the year, when Apple's "real super cycle" will kick in.

Kuo has previously predicted Apple will introduce three iPhones in 2018: an OLED model that measures in at 5.8 inches like the current iPhone X, an OLED model that measures in at 6.5 inches that will serve as a sort of "iPhone X Plus," and a 6.1-inch model that features an LCD display. Kuo believes all three models will be equipped with a full-screen notched design and TrueDepth camera system like the iPhone X.
We believe the addition of 6.5-inch OLED and 6.1-inch LCD iPhone models will boost Apple's market share in China, and that the US$650-750 6.1-inch LCD iPhone will make it easier for users worldwide to own a 3D sensing and full-screen design iPhone which offers an innovative user experience.
For these reasons, Kuo believes iPhone shipments will grow 5-10 percent year on year over 2018. Kuo's estimate is better than the market consensus of overall smartphone shipment growth worldwide, which is expected to experience between a 5 percent decline and 5 percent growth. As a result, KGI retains a positive outlook for the iPhone supply chain in the second half of 2018.

Article Link: KGI: Larger-Sized iPhones Coming This Year Will Offset Weakening Demand for iPhone X in China
 

charlieasmith96

macrumors member
May 17, 2013
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According to Kuo, many potential buyers are under the misapprehension that iPhone X's notched design means it has a smaller screen than 5.5-inch iPhone Plus models. This confusion, coupled with the high price of iPhone X, is thought to have undercut replacement demand.
The iPhone X does have a smaller screen by surface area than the iPhone Plus models. Why is this a misapprehension?
 

dazzer21-2

macrumors regular
Dec 3, 2005
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What on earth os the point of a 500ppi screen? All those extra pixels that no-one is going to appreciate need extra CPU/GPU to drive them and for what? Only difference between that and a 300ppi screen is...? And then it'll need to be throttled later on down the line because the battery is shagged in half the time it otherwise would be. #herewegoagain
 

JohnApples

macrumors 65816
Mar 7, 2014
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What on earth os the point of a 500ppi screen? All those extra pixels that no-one is going to appreciate need extra CPU/GPU to drive them and for what? Only difference between that and a 300ppi screen is...? And then it'll need to be throttled later on down the line because the battery is shagged in half the time it otherwise would be. #herewegoagain
Someone addressed this point when the iPhone X came out: the OLED display uses tech called “PenTile” which actually makes text and such “fuzzier”. To compensate for this, you need a higher PPI to achieve the same clarity as a typical Retina screen.

I’m no expert on screen tech, but that reasoning makes sense to me.
 

recoil80

macrumors 68030
Jul 16, 2014
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Still not buying these 6.1 inch LCD rumours...
I'd like something in the middle between X and X plus. As a plus user I love the 5.5'' display and the aspect ratio, but I wouldn't say no to less bezels on the top and the bottom.
The 8+ with faceID and without an home button and thinner bezels would be perfect.
As for LCD I'm fine with it, I like the OLED screen on X but the true tone display on my 8+ is great too, so I'd buy an LCD model if it costed less than the OLED. The main reason why I didn't buy X was the price, then the aspect ratio.
We know nothing about the alleged 6.1 LCD, but if they keep selling X and its successors at more than $1000 they need to sell some other iPhones at lower prices, and that's why they may introduce a third model this year
 
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timmyh

Contributing Editor
Mar 18, 2016
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The iPhone X does have a smaller screen by surface area than the iPhone Plus models. Why is this a misapprehension?
Indeed, thanks for pointing that out. It wouldn't be a misapprehension, I'm not sure why he calls it that. I've reworded this bit in the article to reflect what I believe to be the point Kuo is trying to make:

According to Kuo, the notched design on the iPhone X isn't yet compatible with many popular Chinese apps, leading many to see it as offering less usable screen space than 5.5-inch iPhone Plus models.
 

braintumor

macrumors regular
Mar 23, 2010
217
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I think pricing also plays a major role in the weaker then expected demand. I know many people, including myself that will not pay $1000+ for ANY smartphone, even though I have the money to afford it.
The iPhone X screen size is perfect and I would like to replace my iPhone 6, but at this price point, no way!

If Apple doesn't come down with their pricing to previous levels, they will lose me to the android competition. The following in my opinion is a fair price for the coming next-gen iPhone line-up:
- iPhone X 6.1" LCD = USD 600-700
- iPhone X 5.8" = USD 700-800
- iPhone X Plus 6.5" = USD 800-900
These prices mentioned are the base prices, that means with more extras or memory they will cost more...

It's exactly as I expected, after the release of the iPhone X, the die hard Apple fanboys bought, but since the initial hype has faded, the consumer with some sense is hesitant and the sales figures are reflecting it.

I just hope that Samsung and others will not keep following Apple and also increase the smartphone prices. This is getting seriously ridiculous! It's the first time in tech history that pricing is trending up, rather than down, as it has always been before...
 

djcerla

macrumors 68000
Apr 23, 2015
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Again, let's stick with known facts for once: Apple guided for a monster quarter, and did not revise their guidance lower with a shareholders warning.

Kuo has always been remarkably spot on with rumors about new products, and remarkably wrong about actual sales of Apple products. Different kinds of sources.
 
I don’t understand the appeal of a phone larger than the X. It’s like perfect size. My 7 plus isn’t exactly comfortable and I have huge hands. Do they all hold their phones with 2 hands over there?
Look around. People come in different sizes. How they use their tech differs from how you use yours. This very same kind of post was written a thousand times when Apple was clinging to 3.5" screens being the "perfect" size... and then again when Apple was clinging to 4" screens being the "perfect" size. Now the vast majority of us say the same stuff about the current sizes of screens Apple offers- apparently now there are 2+ "perfect" sizes, depending on who is writing the post and which one they chose for themselves. They all can't actually be the "perfect" size- just the right size for that individual. Hands aren't evolving so fast to make a 5 or 6 inch screen just as "perfect" today as a 3.5" or 4" screen was only a few years ago.

The simple reality is that your perfection is not representative of how everyone sees their technology. That 7+ screen may indeed be perfect for you but the next guy may want the SE and some other guy may dream of 6+ inch screens in an iPhone. The clothes you wear... the car you drive... the type of home you live in... the laptop you use... may all be perfect for you... but the next guy probably opts for different clothes, a different car, a different type of home, etc- all deemed perfect for them.

It's great that you can appreciate the phone you have as perfect for you. But don't assume what is perfect for you is perfect for everyone else too. Lots of us do that too much around here, often magically aligning with whatever Apple happens to have for sale right now... then changing "our own" opinion when Apple rolls out a new "perfection."
 
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aimbdd

macrumors 6502a
Dec 10, 2008
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East Cost
I think pricing also plays a major role in the weaker then expected demand. I know many people, including myself that will not pay $1000+ for ANY smartphone, even though I have the money to afford it.
The iPhone X screen size is perfect and I would like to replace my iPhone 6, but at this price point, no way!

If Apple doesn't come down with their pricing to previous levels, they will lose me to the android competition. The following in my opinion is a fair price for the coming next-gen iPhone line-up:
- iPhone X 6.1" LCD = USD 600-700
- iPhone X 5.8" = USD 700-800
- iPhone X Plus 6.5" = USD 800-900
These prices mentioned are the base prices, that means with more extras or memory they will cost more...

It's exactly as I expected, after the release of the iPhone X, the die hard Apple fanboys bought, but since the initial hype has faded, the consumer with some sense is hesitant and the sales figures are reflecting it.

I just hope that Samsung and others will not keep following Apple and also increase the smartphone prices. This is getting seriously ridiculous! It's the first time in tech history that pricing is trending up, rather than down, as it has always been before...
There’s no way that the plus x would cost less than the current x. I think you need to add $100 to the min and max prices, and that’s What we will see this year.
 
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