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

[I7guy]

I consider Apple's devices very bland.. Sorry!! It is just a boring device. Got a new xs Max and i cant even be excited about it. Only bought it because my 7 plus stopped working. Was going to hold out to boycott Apple's awful greed and pricing. I would have kept that phone as the Xs Max really doesn't do much more. Dont care for face ID after using it for 2 months. Its ok but not worth the extra cost because it doesn't do anything more than touch ID did. Face ID added a big cost to iPhone nobody asked for. It's OK, but not for a price premium.

Nobody asked for Touch ID...that’s apple raising the bar. After two days of using my max, I like Face ID better than Touch ID.

Only one scenario I had to be careful with Face ID, when I’m sleeping and I need to unlock the phone. The phone has to be held far enough away.

 

[Blaze4G]

Really? You honestly think Apple thinks it's customers are going to upgrade a $1300 phone yearly? To me that thinking is a bit off.

You also think that into today's day and age where many people are glued to their cell phones they don't think the value derived is anywhere close to a real computer? Why do you think the ipad can replace a "real" computer. Because a lot of what happens on cell phones is snapchat, instagram, facebook, netflix, youtube and emails.(imo) Sure as shooting don't need a high end nvidia card for that.
[doublepost=1544905424][/doublepost]
I think service revenue is somewhat disassociated from hardware sales. You don't need a new iphone to become an apple music subscriber or get icloud storage or subscribe to the as yet unnamed streaming service, or pay for an app, etc.

I would guess majority of other non Apple mobile users don't use Apple music or iCloud storage. Apple needs people to have Apple products in their hands to provide them with these services. I don't see Apple being veryvsuccessful targetting Android users to use iCloud or apple music.
[doublepost=1544920490][/doublepost]

They are already doing it. It’s in the data. Looks at services growth.

There are so many ways to monetize an existing user base of 1.3B devices. Sure, selling more hardware helps, but you don’t have to sell more than ever to do it.

Even flat or small unit sales declines can mean huge services growth. Apple has grown services at 25% with flattish unit sales for 3 years. They are moving to monetizing the base, because the base is huge.

Yes because their services are still in the infancy stages. So all the already existing user base they can target.

However, if hardware sales decline, then that's less customers to target for their services.

 

[I7guy]

I would guess majority of other non Apple mobile users don't use Apple music or iCloud storage. Apple needs people to have Apple products in their hands to provide them with these services. I don't see Apple being veryvsuccessful targetting Android users to use iCloud or apple music.

True, but existing apple customers who aren’t Apple Music subscribers can sign up for example. We don’t know enough to know the trend between new hardware sales and new services sales.

 

[dilbert99]

If I'm falling for Apples marketinng ********, maybe you don't understand how pricing for the value of your product works?

Its pointless arguing about what overcharged means. Obviously many people disagree with you. If they think it is overpriced then it is. Its all relative.

Technology moves on every year, but the new tech always commands the highest price. Having said that, it's my opinion, apple has established the prices (give or take a few bucks) for the next few years.

Again your opinion

Removing unit sales from the equation is lessening the way the analysts can dissect apples business, which is what apples wants and in-line with the way other companies report earnings.

You mean look over there not under the curtain. Everyone is suspicious of why Apple removed unit pricing and it is obvious that they did it because those figures don't look great anymore. Remember that Apples bottom line depends on the success of just one product and for a company to hide the sales of that product rings alarm bells.

And yes, there is no doubt the note 9 and xs max are expensive. Except the note 9 is already discounted and with the discount Samsung is giving away TVs.

Other companies do discounts, Apple doesn't. I think that is a reflection that people don't want to pay Apple prices for their tech so they end up having to discount to move units. Factor in the fact the fact that Apple does quite good in just in time manufacturing, this becomes less of an issue for them because they don't build up lots of inventory.
But we are starting to see signs that customers are baulking at Apple prices. Hence the stock price has nose dived 30%, That is a massive amount.

And I believe apple wants their customers to keep their phones longer and that is factored into the price.

No, Apple is in the business of selling hardware. The want to sell as many iPhones as possible.
We are at a point where computing power has gotten fast enough for most customers and because the price of an iPhone has increased they are keeping those devices longer.

It doesn't seem like apple has been increasing prices. Last year I paid $3 for a dozen eggs, today I'm paying $4. That's increasing prices.

You are conflating price rises with inflation.
Apples prices have risen at a higher rate than inflation. That is a price increase in real terms.

IMO, apple has factored the prices and longevity into the buy/sell cycle.

Apple has increased prices to keep shareholders happy, you can only milk the golden goose for so long.

Last years "X" was a flop by all accounts until the revenue reports. We won't know what the overall picture is until the next earnings call.

I don't think apple cares from this point forward about the iphone unit sales volume as much as some of the MRF posters. They are building a bigger services infrastructure that will be the gap in the revenue numbers.

Fact: Apple care about the unit sales volume because this is directly linked to revenue
They just don't want to show flat/falling unit sales of their number one product.

I'm guessing you have shares in Apple?
[doublepost=1544921420][/doublepost]

True, but existing apple customers who aren’t Apple Music subscribers can sign up for example. We don’t know enough to know the trend between new hardware sales and new services sales.

Non Apple customers are more likely to sign up to a music subscription service based on the hardware they have.
That means Alexa/Echo customers will go with Amazon music
Google home/Android customers will go with Google music.
I don't think it makes sense for people without iPhones to go with Apple music.
Where is the unique selling point?
How will they play the music?
[doublepost=1544921510][/doublepost]

There are so many ways to monetize an existing user base of 1.3B devices.

How many active iPhone customers are there?

Apple today announced that its active installed base of devices has reached 1.3 billion, a milestone the company hit in January. That includes iPhone, iPod touch, iPad, Mac, Apple TV, and Apple Watch models in use around the world

- https://www.macrumors.com/2018/02/01/apple-now-has-1-3-billion-active-devices-worldwide/

 

[Baymowe335]

I think that irked me a lot because it literally added an extra $300 to the cost of the MBP.
[doublepost=1544912334][/doublepost]

It's easy to grow from nothing.

They just grew services at over 20% y/y.

Apple’s services business is bigger than most entire companies. Nearly the size of all of Facebook, for example and far bigger than Netflix.

 

[Abazigal]

How many active iPhone customers are there?

Last count, 795 million. And still growing (thanks to the 2nd hand market).

https://appleinsider.com/articles/1...-only-16-percent-of-iphones-used-for-payments

I guess we can debate whether that is a sizeable user base for Apple. I feel it is, not least because Apple consumers tend to be more willing to spend on average. Which more than offsets the smaller market share compared to Android.

 

[thePhil907]

I finally saw the Xr in person... it’s no mystery why that thing is not selling. It’s enormous, and worse, chunky. Also, I know this sounds illogical, but the bezels are far more noticeable than they ever were on my current 8 or any iPhone I’ve owned prior.

I used to work in graphic design and one of the most basic rules is take an idea/design all the way or else it just looks like a mistake.

 

[chatin]

The stock is down 5% from this time last year. Tim's year-end bonus is going to be small. Deservedly so because he is no longer the least bit questioning or hungry on innovation. When MSFT is out-hustling you there are really big problems with strategy.

 

[I7guy]

Its pointless arguing about what overcharged means. Obviously many people disagree with you. If they think it is overpriced then it is. Its all relative.

Again your opinion

Obviously some people disagree and others agree. Again your opinion. Overcharged, overpriced, raising prices. Nobody knows what the sales of the units are. Only knows facts are rumors.

You mean look over there not under the curtain. Everyone is suspicious of why Apple removed unit pricing and it is obvious that they did it because those figures don't look great anymore. Remember that Apples bottom line depends on the success of just one product and for a company to hide the sales of that product rings alarm bells.

I'm not suspicious. I have my own opinion. And just to point out the universe will do what it will regardless of our opinions.

Other companies do discounts, Apple doesn't. I think that is a reflection that people don't want to pay Apple prices for their tech so they end up having to discount to move units. Factor in the fact the fact that Apple does quite good in just in time manufacturing, this becomes less of an issue for them because they don't build up lots of inventory.
But we are starting to see signs that customers are baulking at Apple prices. Hence the stock price has nose dived 30%, That is a massive amount.

The stock nosedive was part of a broader market decline. But if your opinion is that apple is not moving iphones due to prices, that is your opinion.

No, Apple is in the business of selling hardware. The want to sell as many iPhones as possible.
We are at a point where computing power has gotten fast enough for most customers and because the price of an iPhone has increased they are keeping those devices longer.

Of course apple is in the business of selling hardware, but they also have a sizable services revenue that is partially independent of hardware. And IOS 12 is proof apple expects us to keep our devices longer.

You are conflating price rises with inflation.
Apples prices have risen at a higher rate than inflation. That is a price increase in real terms.

Is the Xs selling at the same price as the X? Did Apple raise those prices. Did apple raise the price of the Xs Max? Did it exist prior to Sept 2018?

Apple has increased prices to keep shareholders happy, you can only milk the golden goose for so long.

If last year I paid $3 for a dozen eggs and this year I'm paying $4. I can say prices were raised. Please tell me where apple raised prices.

Fact: Apple care about the unit sales volume because this is directly linked to revenue
They just don't want to show flat/falling unit sales of their number one product.

I'm guessing you have shares in Apple?

Sure apple cares about volume in the same way the every company that sells a physical product cares about volume. What does stock ownership have anything to do with this argument.

Non Apple customers are more likely to sign up to a music subscription service based on the hardware they have.
That means Alexa/Echo customers will go with Amazon music
Google home/Android customers will go with Google music.
I don't think it makes sense for people without iPhones to go with Apple music.
Where is the unique selling point?
How will they play the music?

With a large untapped reservoir of customers (hundreds of millions), there are many potential apple music subscribers.

I finally saw the Xr in person... it’s no mystery why that thing is not selling. It’s enormous, and worse, chunky. Also, I know this sounds illogical, but the bezels are far more noticeable than they ever were on my current 8 or any iPhone I’ve owned prior.

I used to work in graphic design and one of the most basic rules is take an idea/design all the way or else it just looks like a mistake.

It's not mystery the rumor mill says it's not selling. I wonder what the truth is.
[doublepost=1544927861][/doublepost]

The stock is down 5% from this time last year. Tim's year-end bonus is going to be small. Deservedly so because he is no longer the least bit questioning or hungry on innovation. When MSFT is out-hustling you there are really big problems with strategy.

Should we all cry for Tim? What do you consider small? $500 million in stock?

 

[kakinc]

Well, it's understandable. Especially consider that a lot of iPhone users do not do carrier contracts.
Me and most people I know, prefer just get Apple products from directly from Apple store at retail price.
The same people who can afford to buy iPhone outright doesn't mean they don't have expectations on how much a phone should cost them. When Apple cross that line, they will just say No.

The worse thing is, when an Apple user switch to Android, they also lost that service revenue.
And most likely never get them back consider the options (devices) and convenience (compatibility) for Android devices.
Apple please choose your pick. Product or Service?

 

[I7guy]

Well, it's understandable. Especially consider that a lot of iPhone users do not do carrier contracts.
Me and most people I know, prefer just get Apple products from directly from Apple store at retail price.
The same people who can afford to buy iPhone outright doesn't mean they don't have expectations on how much a phone should cost them. When Apple cross that line, they will just say No.

The worse thing is, when an Apple user switch to Android, they also lost that service revenue.
And most likely never get them back consider the options (devices) and convenience (compatibility) for Android devices.
Apple please choose your pick. Product or Service?

Churn is part of the game. Apple users switch and android users switch...it’s not a one way street.

 

[OlegOlesyaKotovRozovsky]

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 cheaper to produced. And LCD on the iPhone XR is already great but don't get me wrong, OLED is definitely better.

 

[mi7chy]

I would guess majority of other non Apple mobile users don't use Apple music or iCloud storage. Apple needs people to have Apple products in their hands to provide them with these services. I don't see Apple being veryvsuccessful targetting Android users to use iCloud or apple music.

That's where Apple service-to-hardware lock-in is advantageous to force people to buy Apple hardware. Outside of Apple there's too much better competition in services so it's a tough sell pitching Apple services to non-Apple hardware. And, to increase services which is Apple's new focus they need to sell more devices so this where they got greedy and failed by dropping the entry price iPhone SE and pricing the iPhone Xr way too high relative to market.

Short term milking of profits at the expense of marketshare will cost them more of their future as warned by Steve Jobs.

 

[ksec]

Ok so.....if Apple says the XR is their best seller daily since launch and if this report is accurate....that means the XS demand is EVEN WORSE than the XR. So where are those headlines? Or is this all a bunch of BS as usual. Apple has little to zero reason to lie about the XR being their top seller.

They are not lying, The XS had a one month Head start with plenty of stock, by the time Xr launches Xs sales growth were already flattening, making the Xr best selling model. This is also shown in the Mixpanel trend metrics report.

 

[dilbert99]

Last count, 795 million. And still growing (thanks to the 2nd hand market).

I would guess that the installed base is going to shrink for a couple of reasons

1. People are holding on to their iPhones much longer than before.
2. Because phones are older, they are worth less, and people like me would rather just keep the phone in a drawer than go to the bother of selling it. They could of course hand it down in the family if there is someone who doesn't mind an older phone, my wife got my new replacement 6 just as I bought the XR. My old 5,4 and 3GS are sitting on a shelf. Not sure it would be worth selling the 5 and it can serve as a backup device. So there will be less older phones in circulation. I guess thinking about it points 1 and 2 are really the same thing.
3. Cheaper phones are getting better all the time.

 

[ksec]

I don't understand why the Xr is considered too expensive. Last year, Apple sold the iPhone 8 plus for $799 at launch. The Xr seems to be a better deal for $749 at launch.....bigger screen in a smaller footprint, Face ID, A12 Bionic, more color options.....etc.

Maybe it is because people are comparing the Xr to prior Apple "economy" devices, like the iPhone 5c. But in terms of product positioning, I don't think Apple ever expected the Xr to sell to the same target market as the 5c.

Based on what Apple said at the Keynote, they are trying to offer most of the new technology features of the Xs/Xs-max in the lower cost and less premium package of the Xr. I think Apple is well aware of the fact that there are cheaper alternatives. The Xr is not Apple's response to the low cost competitors. The older iPhones (8, 7, 6s) are Apple's low cost offerings. I guess what has people worked up is that Apple no longer offers a new low cost option.....SE, 5C, etc.

Apple must have decided that creating a new low cost phone is not profitable given their target market and cost structure, and that it is a better strategy to develop technology for the higher end market and just offer the older phones for people that want to stay in the ecosystem at a lower price. Now, we can all criticize Apple's pricing structure and business decisions, but none of us have access to the type of proprietary information required to make this call. All we can do is vote with our pocketbooks.

Frankly, I think Apple is in a bit of a bind. They are in the higher end consumer technology business at a time when computing devices (laptops, tablets, phones, etc..) are becoming more and more like appliances with less and less product differentiation. The typical MR reader might be well aware of the technology differences, but the average consumer just does not care.

It is not a bigger screen, the actual Area is the same as Plus Model, but there are people who would have wanted a Max Screen Size but not the Max Price. Making one model create confusion, it is neither as small as the iPhone 8 nor as big as the iPhone 8 Plus.

The Bezel is big fat ugly to some. bearable to others.

You loss a Camera Lens. to some, the is backwards. It is a trade off that some consumer will ask. ( One reason why Apple is working its ad on Xr picture quality )

And basically it was getting quite lot of bad press from everywhere. Internet forums, Youtube Reviews.

And Generally Xr is perceived as a 5C, a Cheap variant of iPhone. I have said if they had make an updated iPhone 8s, may be it would have sold better.

 

[dilbert99]

Obviously some people disagree and others agree. Again your opinion. Overcharged, overpriced, raising prices. Nobody knows what the sales of the units are. Only knows facts are rumors.

Not much point in discussing if they are overpriced then.

I'm not suspicious. I have my own opinion. And just to point out the universe will do what it will regardless of our opinions.


The stock nosedive was part of a broader market decline. But if your opinion is that apple is not moving iphones due to prices, that is your opinion.

Apple has taken a bigger dive than most that would worry me as a shareholder

Of course apple is in the business of selling hardware, but they also have a sizable services revenue that is partially independent of hardware. And IOS 12 is proof apple expects us to keep our devices longer.

Thats your opinion. iOS 12 is better because people were claiming obsolecense which Apple put in without telling anyone, they were found out. iOS 12 is their attempt at changing perceptions

Is the Xs selling at the same price as the X? Did Apple raise those prices. Did apple raise the price of the Xs Max? Did it exist prior to Sept 2018?

There are three kinds of lies: lies, damned lies, and statistics.
As i said in previous posts, the price of Apple phones has increased, I gave my figures but you fail to give yours.
A bit of a case of put up or..

If last year I paid $3 for a dozen eggs and this year I'm paying $4. I can say prices were raised. Please tell me where apple raised prices.

Yes if eggs cost $3 one year and $4 the next then yes prices have risen above cpi.
Remember that tech either get cheaper or you get more for your money.
Where haven't Apple raised prices is probably a better question.

But to save you looking back through previous posts. Removing currency fluctuations from the pricing, and using the AUD price because US pricing had subsidised prices for the prior to 2012

If you are going for min storage size:
The 3GS cost $681 AUD in 2009
The 8 cost $783 AUD in 2017
The 8 plus cost $891 AUD in 2017
The X cost $1098 AUD in 2017
The XR cost $790 AUD in 2018
The XS cost $1079 AUD in 2018

So you can clearly see that best that Apple has to offer is going up in price.

Even if you go for the smallest increase of 3GS to 8 the price increase is $100 AUD
And if you look at inflation in Australia from 2009 to 2017 the a $681 device in 2009 would cost $811 in 2017.

I put the above comparison in because it is obviously the one that you would use.

I personally think different. Technology always gets better with each year and will either reduce in price or you get more for your money so a fairer comparison is comparing the 3GS to the XS
So from 3GS to the XS going from $681 to $1079 if you use the smaller model of XS or a whopping 58% or if you allow for inflation, a whopping 40% increase and only gets worse if you compare the XS max

Why do I think this is fair? Because if you look at laptop or tv sizes they have increased in size and quality over the years just like the iPhone has, TVs used to have low quality screens and now have progressed to larger and larger oled screens.

Sure apple cares about volume in the same way the every company that sells a physical product cares about volume. What does stock ownership have anything to do with this argument.

BIAS

With a large untapped reservoir of customers (hundreds of millions), there are many potential apple music subscribers.
Weren't people talking about Apple music on non Apple devices?

 

[ksec]

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.

PWM.

 

[I7guy]

Not much point in discussing if they are overpriced then.

Overpriced is a value judgement, which has been said all along.

Apple has taken a bigger dive than most that would worry me as a shareholder

Apple was also the first to $1T. Apple probably is happily buying back shares and I don’t know how the mass of shareholders feel about this.

Thats your opinion. iOS 12 is better because people were claiming obsolecense which Apple put in without telling anyone, they were found out. iOS 12 is their attempt at changing perceptions

Sure and you’re entitled to your opinion. The conspiracy theorists do believe that Apple engaged in planned obsolescence. I don’t.

There are three kinds of lies: lies, damned lies, and statistics.
As i said in previous posts, the price of Apple phones has increased, I gave my figures but you fail to give yours.
A bit of a case of put up or..

Right and then there is the reality. I laid out my case and asked you what the max should cost. But you gave declined to answer.

The price of Apple phones have gone up. So has gas, cars, good. Top tier tech is valued appropriately.

Yes if eggs cost $3 one year and $4 the next then yes prices have risen above cpi.
Remember that tech either get cheaper or you get more for your money.
Where haven't Apple raised prices is probably a better question.

New Tech doesn’t get cheaper. Old tech does. Apple has valued their phones according to the tech inside. Samsung did that, car companies price accordingly. Show me where the price of the max was raised.

But to save you looking back through previous posts. Removing currency fluctuations from the pricing, and using the AUD price because US pricing had subsidised prices for the prior to 2012

If you are going for min storage size:
The 3GS cost $681 AUD in 2009
The 8 cost $783 AUD in 2017
The 8 plus cost $891 AUD in 2017
The X cost $1098 AUD in 2017
The XR cost $790 AUD in 2018
The XS cost $1079 AUD in 2018

So you can clearly see that best that Apple has to offer is going up in price.

Even if you go for the smallest increase of 3GS to 8 the price increase is $100 AUD
And if you look at inflation in Australia from 2009 to 2017 the a $681 device in 2009 would cost $811 in 2017.

I put the above comparison in because it is obviously the one that you would use.

Covered above, ad-nauseam and beat the horse. Companies value price their products.

I personally think different. Technology always gets better with each year and will either reduce in price or you get more for your money so a fairer comparison is comparing the 3GS to the XS
So from 3GS to the XS going from $681 to $1079 if you use the smaller model of XS or a whopping 58% or if you allow for inflation, a whopping 40% increase and only gets worse if you compare the XS max

Why do I think this is fair? Because if you look at laptop or tv sizes they have increased in size and quality over the years just like the iPhone has, TVs used to have low quality screens and now have progressed to larger and larger oled screens.

BIAS

You’re welcome to view this through your own filter or bias. But the price of the Xs stayed the same as the x. There is no comparable phone to the max to say if apple “increased prices” or not. They priced the new tech accordingly.

 

[ghanwani]

The phones are too big, too heavy, hard to grip, and for most part, not even aesthetically pleasing. Throw on a case (which is pretty much a must given they break easily when dropped + the cost of replacement), and you have a phone that is even bigger, even heavier, and even less aesthetically pleasing.

 

[MacBH928]

Whats surprising?
confusing lineup and names, ever increasing prices, little increase in value, phones from 2-3 years ago can do 90% the same thing. There is a thing called market saturation, you won't sell 100M $700 phones every year.

 

[dilbert99]

You’re welcome to view this through your own filter or bias. But the price of the Xs stayed the same as the x. There is no comparable phone to the max to say if apple “increased prices” or not. They priced the new tech accordingly.

You pick your stats to fit your narrative, which shows your bias.
I showed the facts. There is a big difference.

I think you missed my point re tech and prices.

If technology stands still it gets cheaper. If not it improves and stays the same price.

Hence why I used the correct example that the 3GS was $681 AUD and the XS was $1079 AUD
So a price rise of 40% after accounting for inflation.

Technology does not stand still, it improves every year but prices stay the same (apart from CPI increases) because this is what the market will bear. i.e. inflation stays the same.

Apple hasn't done this but has improved the tech (not by much) and raised prices.

 

[ivanhoe888]

PWM.

Why do I need to pay an extra $250 for an OLED screen on the phone? I got an XR a few weeks ago and happy with it. Takes great pics. The sound is much better (than my old 6+ LOL). Size is just right, even though its screen is bigger than my last phone.

 

[Rob_2811]

They are not lying, The XS had a one month Head start with plenty of stock, by the time Xr launches Xs sales growth were already flattening, making the Xr best selling model. This is also shown in the Mixpanel trend metrics report.

No they weren't lying rather spinning it into a good news story.

The Mixpanel trend metrics show that there was a spike in demand for the iPhone 8 and 8 Plus after the Xs, Xs Max and Xr were announced which suggests there were people who weren't impressed with the new phones.

That in particular isn't good news for the iPhone Xr, despite it being the biggest seller customers are opting to buy the older models instead.

 

[AliceDK]

OnePlus have shown us how premium (Android) smartphones can be had for a fraction of the prices Apple demand for their iPhones.

My boyfriend has been an iPhone owner since the 3GS. His 6S broke down a year ago and he went with 6S again because it was fine for his needs and he got a decent deal (in Apple/iPhone terms) through his carrier.

However, if he was in the same situation now he would strongly consider switching to Android as he has discovered how much functionality, storage, design and raw power you can get today with Android smartphones.

Keep in mind that the entry Xr is around $940 here in Denmark. I only know a few enthusiasts rocking the X, Xs and even the Xr over here because of the insane prices on these phones.

In contrast, I see a lot of people still carrying the 6, 7 and 8 around here. I think Apple has hit the limit.

Unfortunately, that isn't enough for the shareholders. They want more profit, bigger sales numbers every single year and I think that is going to be Apple's ultimate downfall, the shareholders.