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Apple may have a large iPhone sales problem



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Finance companies and investment analysis companies both set their expectations for Apple's Q4 results as rumors of bad news stuck around the company. We at ET have been careful not to beat this drum too hard ̵

1; last year's predictions of poor performance for Apple's iPhone sales didn't really happen despite repeated reports from various companies that the company faced with demand issues around both the iPhone 8/8 Plus too old and iPhone X (difficult to produce, expensive). In the end, this came mostly to nothing. The iPhone X continued to be the best seller. Apple's three new phones, launched this year, all jacked up prices, while the company simultaneously canceled its initial products at reasonable price points like the iPhone SE.

For all accounts, this has moved exploded in Apple's face and the weakness is spreading. Initial reports focused on the apparently weak demand for the iPhone XR and Apple's trimmed prices, along with its decision to offer additional purchasing credit this holiday.

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But now, Citi Research analyst William Yang slashed his iPhone sales estimates by 5 million phones to 45 million. Yang cut the sales figures for the iPhone XS Max by 48 percent and believed that "2018 iPhone enters a destocking phase, which does not cause the supply chain." Influential analyst Ming-Ch I expect 2019 iPhone shipments will be 5-10 percent lower than the whole of 2018, while the first quarterly transports fall by 20 per cent.

Apple's significant inbound value expansion has been seen as a signal of how weak demand for new devices is. What has not been explored is how effective the sales tactic has been in bringing customers into the stores. Apple historically does not offer discounts, so the unusual move can pay dividends we haven't seen yet.

However, a potentially unfortunate facet of the situation is the fact that analysts are now expanding their expectations of reduced sales to devices outside the iPhone XR. Historically, Apple has not done so well with budget units. The iPhone 5c has not sold well against the 5s, and iPhone SE did not sell well enough to continue to be produced. The iPhone 8 and 8 Plus was rumored not to sell particularly well last year because buyers were waiting for the iPhone X. If XR did not sell well because everyone went up to the iPhone XS / XS Max, it would hardly be a problem from Apple's perspective. But it doesn't look like what happened. Rosenblatt analyst Jun Zhang has predicted that Apple could cut production by another four million units in 2019, and there are widespread reports that the company has already cut production several times on several product lines. The suppliers have also reported to expect lower than expected income, which has provided further speculation on how bad the decline is. Of course, Apple won't say that. The company no longer reports its unit sales from the last quarter.

While Apple has no risk of losing its incredibly lucrative phone business, a significant sales hall would be the first major headwind company to hit since Steve Jobs's death. How the company would react and what strategies it can take to meet demand is still unknown. When I speak personally, as an Apple user, I have been unhappy with the company's emphasis on increasing its service prices and AppleCare costs, along with the ever-increasing price of devices for a while. It is too early to conclude that these factors, in particular, have turned people off by Apple, but we know how bad the damage is in a few weeks.

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