Pretty much everyone thinks the iPhone 8 is going to be Apple’s biggest hit to date, with some Wall Street pundits even claiming its success will transform Apple into a trillion-dollar company.
Some analysts at Deutsche Bank don’t agree, however. In a note to investors, analysts Sherri Scribner, Adrienne Colby and Jeffrey Rand write that they think “investors will be disappointed by iPhone growth in FY-18 and FY-19.” Here’s why.
Can’t match the iPhone 6 and iPhone 6 Plus
While they’re certainly not expecting the iPhone 8 to flop, they write that it’s unlikely to top the “supercycle” of the iPhone 6 and iPhone 6 Plus back in fiscal 2015. That year, “everything went right” for Apple — from the hardware upgrades on offer to the addition of China Mobile as a new carrier to the growth of the smartphone market.
“That cycle saw peak iPhone shipments of 231M in FY-15, a shipment level the company has not been able to repeat,” they note. “Given most smartphones are now refreshed on a roughly 2.7 year cycle, we think FY-18 should be measured against FY-15. This cycle and our installed base estimates suggest Apple could ship about 230M iPhones in FY-18. However, Street expectations are modeling shipments of 244M units, implying an additional 13M iPhones shipments beyond refresh.”
Deutsche Bank isn’t sure those extra 13 million buyers exist. The market is largely saturated, and 65 percent of smartphone shipments are for sub-$300 phones.
Things aren’t helped, they note, by rumors that the new iPhone 8 could cost in excess of $1,000, making it Apple’s most expensive phone yet.
“Generally, when prices go up, demand goes down,” they write. “A scenario where prices go up and demand goes up seems highly unlikely in our view.”
Apple is expected to launch three new iPhones this year. These are expected to include a high-end “boutique” iPhone 8 and two iPhone 7s models that will bring processor upgrades but generally look like current models.
Via: Business Insider