Could Apple See a Rebound in iPhone Sales?


Sep. 16 2019, Published 9:24 p.m. ET

In a research note released yesterday, Apple (AAPL) analyst Ming Chi Kuo stated his observations of the first 72 hours of the latest iPhone sales in pre-order. He said that more people from the US could choose the iPhone Pro than the iPhone 11. Several trade-in programs, strategic pricing, and zero-interest installment schemes are the major factors driving the high-end iPhone sales.

The iPhones have been available for preorder since Friday on Apple.com, and the first batch is expected to reach buyers on September 20.

Kuo added that despite higher demand for the iPhone Pro, the iPhone 11 also has an active market in the US. However, China is a better market for iPhone 11, because many iPhone 6 and iPhone 7 users consider it as an “excellent upgrade choice,” according to Kuo.

Due to the upbeat early signals, TF International Securities is optimistic about the latest iPhones. It has raised its forecast of the iPhone 11 and iPhone Pro sales to 70 million–75 million units. The previous estimate was 65 million–70 million units.

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Apple strives to revive iPhone sales

In the tech giant’s typically impressive event on September 10, Apple launched the iPhone 11, iPhone Pro, and iPhone Pro Max. All three iPhones have high-quality cameras and offer an upgraded photography and videography experience.

The iPhone 11 has a starting price of $699, while the iPhone Pro and the iPhone Pro Max have starting prices of $999 and $1,099, respectively.

The shrinking pie of Apple’s iPhone revenue is a significant stress factor for the company. Although it’s currently focusing on its Services and Wearable Devices segments, Apple wants to revive the iPhone.

In the third quarter of fiscal 2018, the net sales from the iPhone fell about 12% year-over-year. The tech giant launched iPhone 11 as a feature-rich affordable smartphone aimed at boosting its sales. The updated forecast by TF International Securities indicates brighter times ahead for the iPhone maker. However, there could be a few roadblocks.

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Risk factors for the Apple iPhone

The most significant risk factor underpinning TF International Securities’ forecast is the intensification of the trade war. The iPhones will be subject to the 15% tariffs on Chinese imports starting on December 15. These tariffs are officially entered in the Federal Register.

However, Kuo opines that Apple is not expected to pass on the tariff-induced price hike to consumers. The company may absorb the price hike and take a hit on its profit. For now, Apple is looking to boost its flagging iPhone sales.

Kuo added that the company could gradually shift its production base from China to other locations like Vietnam or India. Eventually, the impact of the tariffs could be mitigated.

On September 15, Forbes reported that Alphabet (GOOG) had fixed one of its significant issues with Android. Users will now be able to restore backups through the Google One App. The company plans to offer it under a subscription plan for Google’s One cloud.

Although iPhone users have always been able to restore their devices through iCloud, any backup above 5GB would require a paid subscription. On the other hand, the One Cloud subscription charges begin at $1.99 per month for a storage capacity of 100 GB.

By making the backup and restore options easier to access on Android, Google is preparing to stand against Apple. The company is set to launch its Pixel 4 smartphone next month.

At 3:51 PM EDT, Apple stock gained 0.5% to trade at $219.88. Tomorrow, the European Union’s Seventh Chamber of the General Court plans to hear appeals from Apple and Ireland regarding the $14 billion tax evasion lawsuit. Apple stock started on a positive note last week but ended on a subdued one. Let’s see how this week unfolds for the iPhone maker amid a mixed bag of events.


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