The upcoming Apple Inc. (NASDAQ:AAPL) iPhone 8 is undoubtedly the most anticipated smartphone of the year, and that is saying something considering all the other high profile launches in 2017. In fact, many industry analysts believe that iPhone 8 could be the most anticipated smartphone of all time. For months now, analysts have been predicting record breaking sales for the upcoming iPhone. We at Dazeinfo outlined a detailed segment on this so-called iPhone “Supercycle”, which is expected to surpass even the iPhone 6. However, since then there have been hiccups along the way for Apple, ranging from component shortages to lack of consumer interest. Now, analysts at Deutsche Bank have concluded that the “supercycle” will not be all that it has been built up to be and that the sales of the iPhone 8 may actually disappoint.
Let us have a closer look at the changing scenario, and how it may impact Apple and its rivals.
What Is The iPhone “Supercycle”?
A while back we covered the iPhone 8 in detail, and how it was vital to Apple’s dwindling growth numbers. It is no secret that iPhone sales growth has been falling for a while now. Facing tough competition from Samsung and Chinese OEMs like Huawei, OPPO, Vivo, etc. is hurting Apple’s own margins. The situation worsens when we consider that markets like the US and Europe are saturating, both regions which are highly lucrative for Apple.
In such a situation, Apple needs the iPhone 8 to be a resounding success to regain momentum. Up til recently, all indications were positive for Apple. The tenth anniversary of the iPhone, along with numerous innovations were expected to make the upcoming iPhone a smashing hit. Industry experts predicted the iPhone 8 to spur a massive upgrade cycle among existing iPhone users leading to record-breaking sales. In fact, Apple’s valuation rose to stratospheric levels, crossing $800 billion incredibly due to the anticipation of the iPhone 8.
Nothing Super About This Cycle: Is Apple In Trouble?
Despite all the industry hype surrounding the iPhone 8, a recent report by Deutsche Bank expects a much more tepid response to the upcoming iPhone. Their analysts believe that investors are likely to be disappointed by iPhone growth numbers in the fiscal year 2018 and 2019 due to unreasonably high expectations. In fact, analysts believe that the iPhone 8 cycle may not even be able to match the iPhone 6 cycle.
The generational shift to a larger screen, as well as carrier penetration in China, were huge driving factors in the success of the iPhone 6. However, now Apple does not have anything quite so seminal to offer to their customers. They are also facing increasing competition in the Chinese market. Factoring in these realities, analysts estimate 230 million iPhone shipments in fiscal 2018. This falls well short of the industry expectation of 244 million shipments. In fact, this number even falls short of the 231 million shipments of iPhone 6 in FY 2015.
There are several factors which could likely hurt Apple’s bottom line:-
Saturation In Elite Markets
Smartphone penetration crossed 80% in the US for the first time in 2016. This indicates saturation in a market which accounts for a sizable portion of Apple’s revenue. As a result, user growth will likely be lower than desired.
Competition In China
China is another hugely important market for Apple, with tremendous potential for expansion. Unfortunately, Apple has been dropping market share in China amid the onslaught of Chinese OEMs. Huawei, OPPO, Vivo, etc. are all eating away at Apple’s market share.
Of late there have been several reports outlining component shortages that Apple is facing. Apple has faced NAND chip shortages, as well has OLED display shortages. Both of these threaten to either delay the launch or limit stocks, which would result in poor sales.
Ridiculous Price Tag
A while back, we reported on the growing concern that the expected $1,000 price tag on the iPhone 8 is too excessive, and may put off customers. Now, the situation looks to have deteriorated even further, with some reports suggesting a $1,200 price tag!
Some reports suggest that Apple is having trouble implementing their screen integrated fingerprint sensor. Some are even claiming that Apple may scrap Touch ID entirely from the new iPhone. The screen integrated Touch ID is one of the iPhone’s most anticipated new features, and its omission may greatly disappoint prospective customers.
Slower Refresh Cycles
Smartphones have made significant developments over the past few years. The hardware, in particular, has become extremely powerful. Many devices now feature octa-core processors with 6 or even 8 GB of RAM! As a result, refresh cycles have extended to around 2.7 years now, as users don’t feel the need to upgrade quite so quickly.
Tough Competition From Samsung
Apple now also face the added headache of stiff competition from a newly rejuvenated Samsung. The Galaxy S8 was extremely well received, and the Galaxy Note 8 could be a genuine iPhone 8 killer. To top it off, Apple is now increasingly dependent on Samsung for NAND chips and OLED displays.
Lack Of Consumer Anticipation
A recent study by Branding Brand found that only a mere 26% of US iPhone users were planning to upgrade to the iPhone 8. This is a worrying sign for Apple, as the US accounts for a huge portion of Apple’s revenue.
It is seemingly apparent that what was supposed to be their crowning glory is quickly turning sour for Apple. Only time will tell if Apple can manage to sort out their myriad issues and make the iPhone 8 a thumping success.