Optimistic analyst gets gloomy about iPhone XR

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iPhone XR performance is stellar, far better than many Android devices that cost more.
Some of the early optimism about iPhone XR sales might have been unjustified.
Photo: Apple

Respected Apple analyst Ming-Chi Kuo just slashed his estimates for the number of iPhone XR units that will sell over the next year. That’s a real turnaround, as Kuo had previously been bullish on Apple’s latest handset.

And he’s not the only analyst expressing concerns about sales of the iPhone XR. But it’s also possible this model is just following a pattern first laid down by the iPhone X.

A note from Kuo sent to investors this morning says:

“We have reduced our iPhone XR shipment estimation from 100mn units to 70mn during the new product lifecycle (4Q18–3Q19) for the following reasons: 1) Negative impacts on consumer confidence from the trade war, especially in the Chinese market, 2) expectations from more users for more affordable XR or the dual-camera and narrower bezel design to be provided at the current price level, and 3) competition from Huawei’s Mate 20 series.”

Just a few week ago, this analyst from TF Industries — who we once labeled “the best Apple analyst on the planet” — predicted that the iPhone XR would eventually outsell the iPhone XS and iPhone XS Max. He’s not saying that any more.

iPhone XR sales affected by larger problems

Kuo mentioned the growing trade war between the U.S. and China. The Trump administration is considering putting tariffs on all remaining imports from China, including Apple products.

The Chinese have signaled that they are likely to retaliate against big American companies, including Apple.

iPhone XR too expensive?

Kuo’s second reason for soft iPhone XR sales prediction suggests he thinks this model is too expensive. At $749, it’s much more affordable than the iPhone XS series. However, this “affordable” Apple handset still costs far more than many Android rivals. It goes for $30 more than the Galaxy S9, Samsung’s flagship smartphone.

And, as the analyst points out, people need only wait a year for a new iOS model that might prove cheaper — or offer more features at the same price.

The Mate 20 series mentioned by Kuo is a recently released collection of Android models. Given that it contains Huawei’s new flagships, and starts at 799 euros, it’s a bit surprising that it’s being compared with the iPhone XR.

Besides, the Mate 20 series won’t be introduced in the United States because of the concerns many Americans have about this company’s strong ties to the Chinese government.

A familiar pattern

Kuo isn’t the first analyst to express growing doubts about iPhone XR sales. He wasn’t even the first one to do so today.

But negative comments about Apple’s latest handset are starting to sound very familiar. In the months after the iPhone X was released, there was a growing consensus among analysts that this top-tier model wasn’t selling well. All their gloomy reports turned out to be completely incorrect. In fact, the iPhone X had been selling strongly all along.

That’s not to say that predictions of doom and gloom from analysts automatically mean that the iPhone XR is selling like gangbusters. But everyone reading them should apply a gain of salt.