iPhone X Failure May Result in Record Low Sales of iPhone in 2018

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It has been about six months since Apple Inc. (NASDAQ:AAPL) launched its much-awaited tenth anniversary iPhone, yet its sales are sluggish. It seems that Tim Cook and Apple slightly overestimated the appeal of the mighty iPhone X due to its overwhelming response in its first fiscal quarter and ambitious orders in Q1 2018. Amidst problems, analyst predictions continue to downgrade the sales estimate of iPhone for the rest of the year.

In the latest report, Goldman Sachs has slashed the Apple iPhone sales estimate for Apple’s fiscal 2018. The investment bank has said that it is trimming down its iPhone sales estimation by 1.7 million units for CY Q1 2018 and 3.2 million units in the following quarter from its previous forecast. After the revised estimation Apple is expected to sell 53 million and 40.3 million units during the calendar first and second quarters, respectively. The revised predictions can prolong the misery of Apple in the backdrop of another year of declining iPhone sales.

A downward trend in iPhone sales is running since fiscal 2016. After selling 231.22 million units of iPhones in fiscal 2015, Apple never tasted the same success again. It was the very first time in the history of Apple when iPhone sales declined 8.66% in fiscal 2016. In the following year, fiscal 2017, Apple recorded a negligible growth of 0.2% YoY in terms of iPhone sales.

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Analysts at The Wall Street also believe that Apple iPhone sales may remain below than expectations. Consequently, they have reduced iPhone shipment forecast by 2.5 percent to 217.3 million units for Apple’s fiscal year which ends on September 30, 2018. If Apple fails to match these revised estimations, it would only be the second time in the history of Apple when yearly sales of iPhone remain below than the previous year.

But that doesn’t end the problem for iPhone. It has also reduced their iPhone shipment estimation for fiscal 2019 and 2020 by 4 percent and 1.8 percent, respectively.

The current indications have framed Apple’s latest flagship iPhone X. The much-awaited 10th-anniversary handset was showcased with the latest design and innovative technology. Initially, it got hordes of current iPhone users desperate to upgrade but failed to translate into sales in the long run. Of course, getting past the lousy $999 price tag was not easy for everybody. In the wake of this, Apple is expected to cut prices of its upcoming iPhone 2018 models, according to an estimation from RBC capital markets.

Goldman Sachs mentioned that its expectation of the average selling price (ASP) of Apple products dropped 2% below market consensus for the fiscal third quarter. Yet, with the new upcoming models, ASPs are expected to recover in fiscal 2019 and 2020.

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As a result of declining iPhone shipments, the revenue forecast has been reduced by 2.4% to reach $256.6 billion for fiscal 2018 and 2.7% to reach $272.5 billion for fiscal 2019 year.

Goldman Sachs is not the only advisory firm that has revised its previous estimation on iPhone sales in fiscal 2018. The analyst team at Nomura has also revisited their previous estimation and has cut 5 million from its own estimate of iPhone sales in 2018 worldwide. They lowered their expectation from 221 million to 216 million units.

The Lukewarm Response to iPhone X Failed Apple?

iPhone “super-cycle” of upgrades that was expected to reverse years of diminishing sales was unable to offer much help to Apple. It is the first time in the history of Apple that the company had to face such underwhelming results in terms of iPhone sales, that too after the launch of its most overwhelming device to date. Its previous models like iPhone 8/8 Plus have not vexed sales like the incumbent, while iPhone 7 and 7 Plus produced the groundbreaking results.

Apple generated a record high revenue of $88.3 billion last quarter, and if we do a simple math we learn that nearly one-third of it came from the sales of iPhone X alone. Despite the sales figures of iPhone X remained much lower than The Wall Street expectations.

Its top competitors, like Samsung, are also responsible for the troubled period. New entrants, like Xiaomi, are giving neck-to-neck competition to Apple in some regions. Gradually and steadily Apple was overcoming its hurdles in iPhone sales when the analysts started picking on it with future predictions. In the light of all the revised estimates above, the iPhone X, in spite of packing almost everything tech, is not reaping appropriate results, yet. Apple may have gotten overconfident about the device, but the three more upcoming versions of iPhone X can relieve Apple from distress.

Despite all this, the total number of iPhone users continue to grow and the current estimate is about 631 million units worldwide, according to Goldman Sachs. Perhaps, there are people who honestly confide in Apple and its products. Who knows these are people who may find a great value in the next iteration of iPhone and go for an upgrade, resulting in Apple witnessing record-breaking fiscal 2019.

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