Analysts with sobering certainty say Apple is set to report its first ever decline in iPhone sales. Reports of cutbacks in production and shipments, and chatter about the iPhone 6s and 6s Plus not offering enough new features to inspire a rush to upgrade all point to one bummer of an earnings report.
But they might be overlooking one indicator – sales of older iPhones.
Ben Bajarin, analysts for Creative Strategies, believes the Apple earnings report for the fiscal quarter ending in December could reveal better-than-expected figures because of an uptick in the sales of older phones.
“New phones are usually between 70 percent and 80 percent of sales,” Bajarin told The Street, a digital financial media service that published his observations over the weekend. “This quarter, it could be between 60 percent and 70 percent . . . This hasn’t happened before and could be a new wrinkle in people’s models.”
The iPhone has been a gravy train for Apple, its sales representing nearly 63 percent of its total revenue last year. But overall sales of smartphones are slowing, according to analysts. The functionality and speed on current smartphones means users can hang onto their handsets longer. In making its competitors raise their games, Apple is now up against companies, especially in China, offering high-quality devices at lower prices.
During a previous earnings call, Cook acknowledged a low number of iPhone users were upgrading to the S series.
In building new markets in densely populated India, Apple encountered a sluggish reception to the iPhone 6s and 6s Plus because of the steep price tag. Apple rebounded and actually hit record sales in India after it offered price cuts and buybacks.
Three price cuts in three months to the iPhone 5s also helped Apple end its year in India on a high note.
Bajarin also told The Street Apple didn’t do itself any favors with the advertising campaign for the 6s and 6s Plus with the line “Not much has changed.”
Regardless of what Apple reports on Tuesday, the news could be forgotten by year’s end because of excitement around an iPhone 7.
Source: The Street
David Pierini is a former newspaper writer and long-time photographer. Considered a luddite by most of his friends, they did not believe him when he broke the news that he would be writing for a technology website. He is fascinated by human nature and would love to cultivate stories about the people driving the tech bus. Reach out to him at [email protected].
5 responses to “Old iPhones could erase gloom from earnings report”
Dream on. I’m sending this From my iPad air2. I just bought an lg G4 with a spare battery and a charging unit for £289. The screen and camera are better than the iPhone. That’s why I’ll never swap my phone. Too much money for low tech. The software on iOS needs some sorting too. “It just works” said rubbish.
The death of subsidies will hurt smartphone sales. We all know you aren’t getting a new iPhone for $200 on a new contract, but that’s an easier pill to swallow than the device installment plan or buying it upfront.
Doesn’t help that the 6s was a horrible “upgrade” from the 6.
The used smartphone market will flourish and sales will drop overtime
I’m not sure would call it a horrible s year upgrade since s year upgrades normally consist of processor speed increases. This years upgrade had force touch, a camera megapixel bump from 8 to 12, burst mode, and is waterproof. Yes, it still has those ugly plastic bands and is almost impossible to grip without a case, but it’s still probably the most significant s year upgrade ever.
You’re right about the death of subsidies hurting smart phone sales in the short term, but once people make the adjustment it will probably be up to the manufacturers to create compelling products. If Apple is selling more older models, that probably means that people are switching from other platforms, which makes sense given the dismal year Samsung had. I don’t see how that can not be good for Apple over the long haul.
I’ve made a conscious decision to be agnostic towards all smartphone manufacturers and I stand by that.
However, I and so many others have been warning for years and years about the day that Apple would peak if they insist on offering few new features at a premium price. This sort of thing is inevitable.
Luckily for the manufacturers, any long standing complaint and loss can be easily reversed as long as something better can be offered next time.
The iPhone is Apple. If the iPhone goes down, Apple goes down. Everyone knows it. I truly beleive Cook will do everything in his power not to let that happen and expect great things from the iPhone 7.
If Apple has to “borrow” ideas from other companies, and lower it’s prices, then do it!
They may have sold cheap old phones to Indians, but they will only use free apps. If Apple allowed free trials to the apps (do they still do that for apple music?), these Indians will keep trying to cheat apple by making new icloud emails and registering anew. So really, all they will only profit from hardware sales, but even that willl be reduced by the price cuts.