Apple's next earnings report could reveal a worrisome trend. In a new write-up, analyst Ming-Chi Kuo says the Cupertino-based company should expect significantly lower sales for the iPhone XS and the iPhone XR. The entire iPhone line will be in for a similar drop, too. Throughout the iPhone line, Apple might be exposed to the mobile industry's two biggest problems.
The report suggests Apple will see iPhone shipments drop sharply next year. In 2018, Kuo projects around 210 million units are going to ship. However, that figure drops to as little as 188 million the year after. Hardware sales are down in the mobile industry, and Apple's unbreakable sales estimates could be in limbo soon.
Kuo originally projected the iPhone XR would land 20-25 million shipments in Q1 2019, and that's changed to 15-20 million. The weak demand continues plaguing expectations.
Without question, the iPhone XS and the iPhone XR are failing to secure sales. Oversaturation has damaged the industry, and consumers are hanging onto their old smartphones for longer periods. Apple's previous iPhone models can't offset any of that despite being more affordable.
The sky isn't falling, though. Apple has plenty of cash in the bank, and the premium nature of its portfolio keeps revenue at a high level. iPhone sales are hurting, but it's not at a point where Tim Cook and other executives in Cupertino need to panic.
In an effort to push the latest iPhone models, Apple decided to increase trade-in credits. So you're able to get the iPhone XS or the iPhone XR for a lot less money if you ditch your old iPhone. That doesn't create strong demand, but it does upgrade customers to more expensive hardware even though Apple takes a small hit on the discount. Apple just wants to get the iPhone XS and the iPhone XR into more hands.
The 2019 iPhone models are likely to start appearing in leaks in early 2019. Kuo doesn't have information on them yet, but he did note it'll take a few more months for anything to materialize. Then it'll become clear how Apple plans on turning around iPhone sales.
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