Despite Apple stock having fallen to reflect lower iPhone X demand, one Wall Street analyst claims that expectations are “still too high.”
In a note to clients, Nicolas Baratte of CLSA says that any estimate over 35 million for Apple’s fourth quarter iPhone X volume estimate is overstating demand. The prediction follows hot on the heels of a Taiwanese news report claiming that weak demand has caused Apple to cut orders for the iPhone X from 50 million to 30 million units.
“We maintain that 2017 fourth-quarter iPhone X volumes were at 30 to 35 million, and we are very skeptical that volumes will increase in the first quarter of 2018,” wrote Baratte in a note published on Tuesday. “This does not reconcile with the expectation of pent-up demand or push-out to the first quarter of 2018 in our opinion: consumers who wanted to get an iPhone X in December 2017 already have it.”
The report from Baratte suggests that Apple may reduce the price of the iPhone X to try and increase sales.
iPhone X demand and supply
Reports of lower-than-expected iPhone X sales came as something of a surprise. At first, it appeared that Apple had simply done a great job of managing demand by getting supply to meet demand to such an extent that next day delivery was achieved for all models of the iPhone X by the end of 2017.
However, now it appears that may be less a case of Apple’s operations wizardry than of weaker-than-expected demand. If that is the case, it would likely be due to Apple’s high price point for the handset, since this has been the most significant iPhone refresh in years.
Ultimately, we won’t find out until Apple announces its next quarterly earnings. It’s also important to note that, whatever sales the iPhone X does, Apple also has the lower cost/lower spec iPhone 8 and 8 Plus to add to sales. If they over-perform, Apple could still pull out an impressive quarter.