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No recovery from ‘peak iPhone’ this year, total shipments “likely below 200M units” – KGI

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KGI’s Ming-Chi Kuo – an analyst with an excellent track-record on AAPL – has forecast that year-on-year iPhone shipments will continue to fall this year, and end up well below market expectations. In an investment note seen by 9to5Mac, KGI says that total 2016 iPhone shipments will likely fall below 200M units, and that the iPhone 7 will see lower sales than the iPhone 6s/Plus.

Kuo says that lower-than-expected iPhone 6s/Plus sales showed that replacement demand was falling in developed markets, while new demand from emerging markets has not yet picked up the slack. KGI does not believe that the launch of the iPhone 7 later this year will be sufficiently appealing to see the iPhone return to growth …

The note argues that the iPhone 7 appears likely to adopt a broadly similar form factor to the 6s/Plus, with the only notable upgrade leaked to date being the dual camera expected to be found in the iPhone 7 Plus, limiting its potential appeal. With the feature found only on the larger model, and many competitor smartphones also expected to feature dual cameras – some of them already on the market – consumers could be underwhelmed by the iPhone 7.

We’re still a fair way out at this stage, meaning that Apple could well have surprises in store, but KGI does have excellent supply-chain contacts that have so far revealed no sign of additional new features.

Finally, KGI is also skeptical about a CNBC report that the iPhone SE saw 3.4M retailer pre-orders in China, stating that it was unable to find any evidence to substantiate the number.

The Wall Street consensus is for total iPhone sales of 210-230M, while Kuo believes it will fall within the 190-210M range, with the number likely to fall on the wrong side of 200M.

Apple saw record sales from both the iPhone 6/Plus and the iPhone 6s/Plus as it tapped pent-up demand for larger-screen phones, but there is concern now that this demand has been satisfied, the company may struggle to achieve future growth. I argued earlier this year that ‘peak iPhone’ was likely to be a temporary phenomenon, but that the company might have to think the unthinkable on price – something it subsequently did with the launch of the iPhone SE. If KGI is right, that may not be enough.

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Comments

  1. applegetridofsimandjack - 8 years ago

    I think Apple needs a new flagship product. Something that had a magical effect like iPod or iPhone back in 2001 and 2007. Apple Watch hasn’t been nearly as magical as the iPod and iPhone were when those were launched.

    And Apple is going to lose market share because of their greedy behavior. Yes the iPhone SE is a great deal but the prices for storage upgrades are still theft, so are the cellular upgrades for iPads and the iPad prices overall.

    I think the SE will slow the decline of iPhone sales but it won’t prevent it because the flagship iPhone will remain the same price and it’s prices have risen every year or two in European countries (more than the currency fluctuations).

    Apple has tanked billions thanks to their awesome products but now that their pace of innovation has slowed and the magical effect of iPhone has gone, they’re going to lose big. And nobody can deny the declining success of the iPhone. iPhone 6S orders were slashed by 30% in January I think and you can notice that in shops where they have huge stock of iPhone 6S’.

    And I am happy for this, despite the fact I love Apple products. I was extremely disappointed when the iPhone 5 was announced and the camera had barely been improved, iPhone 5S was barely improved also and so was the iPhone 6. They also stuck with 1GB of ram for ages. And if you’re going to stick with 1GB of ram (which only allowed me to have 3-4 tabs open on iPad 4) you should not be allowed to advertise that product as a multitasking device. Apple does these things like not putting 2GB of in the iPhone 6 just so they can add it to the 6S to give people a reason to upgrade their iPhone 6’s the year after.
    And their pathetic strategies to get people to buy a 64GB iDevice by making the entry model 16GB are despicable as well.

    Apple makes great products, but it is by far the greediest company of all time.

    • PMZanetti - 8 years ago

      No.

    • nate23532452342 - 8 years ago

      No

    • appgarlaschelli - 8 years ago

      No

    • jacosta45 - 8 years ago

      Yes lol

    • shareef777 - 8 years ago

      I can see it to some extent. But when you consider each iteration had one break-through innovation and then subsequent improvements it’s not bad. iPhone 4/4s with Siri, 5/5s with touchID, 6/6s with 3D touch. So one (and each of the the ones I listed was pretty invaluable IMHO) major improvement every two years isn’t that bad.

      Though I do agree with you on the memory/storage. I can see keeping those held back on earlier revisions (4/4s) as it did impact the bottom line to increase them. At present, it’s inexcusable. Though they did upgrade the memory I’d imagine they’ll upgrade the base storage for the iPhone 7. If not, then it just solidifies the notion that they’re artificially increasing the base price of the iPhone by keeping the lowest tier as a non-viable option for most of the population.

      I think the declining sales are nothing more then market saturation. I mean practically everyone that wants or could be persuaded to get an iPhone has one. Everyone else is hard set on their preferred phone, which is not an iPhone. I don’t think there’s anything Apple could do to persuade those people to switch for whatever reason they decided to not get an iPhone. It’s for the same reason that many iPhone users wouldn’t ever consider getting an Android device. People are just set in their ways.

      • applegetridofsimandjack - 8 years ago

        I agree Touch ID was truly innovative. But 3D Touch and Siri? Not so much, at least not yet. Maybe in the future.

        I also agree with most of your points, but I also think people are upgrading their iPhones less often then before.

        Also forgot to mention that I think Apple released way to many products, I mean how many iPad models are they selling? It’s just ridiculous.

      • shareef777 - 8 years ago

        I use 3D touch on my home screen a lot (i.e., using it to get directly into a doc in Numbers). Though it could/should be implemented in other more meaningful ways. As for Siri, it definitely took me a couple years before I started using that feature more regularly. It’s awesome in the car being able to read/respond to text messages.

  2. PMZanetti - 8 years ago

    “The note argues that the iPhone 7 appears likely to adopt a broadly similar form factor to the 6s/Plus, with the only notable upgrade leaked to date being the dual camera expected to be found in the iPhone 7 Plus, limiting its potential appeal.”

    Is this what sells the product? Does Apple have to radically change the appearance of the iPhone every 2 years to keep people interested? What if they’ve evolved into the best possible design for the product? Do they have to just keep changing it anyway? I firmly believe this is not how the real world works…just the fake world that bloggers and anal-ysts inhabit.

    • appgarlaschelli - 8 years ago

      I think even though your reasoning makes sense and it would be nice for the world to work that way, you are not completely right. A new design is just something that everybody sees. The media covers it extensively and people see it as something new and better so it gets more attention.
      Also, you and me know it’s not only about having a new design but the average consumer doesn’t care about how many transactors that processor has. They just want something new. And they want it to look new.
      So yes, I think they would have to change it even if they found the best possible design ever

      • jacosta45 - 8 years ago

        Unfortunately this is true.

      • But the 7 is already confirmed, without question, to change up the design of the previous generations. This assessment that radical change is needed doesn’t hold water when you look at the sales performance of every single S release either.

        KGI has a terrible track record for predicting sales numbers going forward a generation. Look back to previous statements – something no analyst ever likes people to do.

      • PMZanetti - 8 years ago

        Again, I’m pretty sure that is just the fake online news world that so many people confuse with actual reality.

    • shareef777 - 8 years ago

      Breaking news, people are vain!

      Honestly, I love the iPhone 5/5s/SE design more then my current 6s. I’d rather take a 4.7″ SE based design (that allows a bigger battery). Same for my 2012 rMBP. 4 years in and I think it’s the epitome of perfection in design and a new design would not have an impact on my purchasing decision. I’m looking to upgrade and just wish they’d put Skylake into the current body with some TB3 ports. Again, they’re delaying the laptop so that they can re-design it because they recognize a lot of their business is from people’s vanity and desire to get the latest/greatest. But latest/greatest to a lot of people only applies if OTHER people can tell it’s the latest/greatest which means a design change.

    • sally (@FedGoat) - 8 years ago

      Yes. Apple Does need to change the design. iPhone 6, to me, is pretty ugly and uncomfortable to hold.
      Apple also needs to get rid of those MASSIVE bezels at the top and bottom. Move the finger print reader to the back, in the apple logo.
      The 6S+ is Bigger than the Note 5 in Height and Width.
      The Note 5 has a 5.7″ screen AND a place for a pen and a bigger battery in a smaller package.
      It slightly thinner because apple is Obsessed with thin vs better batter life. And now that they make battery cases, you can bet it will get thinner so that you will HAVE to buy a battery case to make it thru the day.

      I also have to agree with the first post. Apple customers get so screwed, yet they take it, and like it.
      A 16GB phone in 2016 is an absolute JOKE. But, if they sold a 32GB, they wouldn’t sell as many 64/128 models with a $100-$200 price Jab.
      A $200 addition for 8GB more ram in their computers is a Massive RIP OFF, but people don’t care. 8GB ram is about $49 on newegg.

      And who says people WANT dual cameras? The new LG G5 has that feature and I actually like iOS AND Android at the SAME TIME. OMG! Mind Blown?
      But, I couldn’t care less about a “normal” and “wide angle” dual camera. One Awesome camera is better than 2 “good enough” cameras.

      Apple could win back 50% of its lost market share by simply adding Real Widgets, (not that lock screen garbage), Let people put icons where they want ( turn off the idiotic auto arrange garbage), and Native App choice.

      I love Apple products. I have many of them, but I also am not a blind fanboy that thinks everything apple does is right and has no room for improvement.

      • PMZanetti - 8 years ago

        No cares about any of that.

      • PMZanetti - 8 years ago

        Your ideas suck.

    • aces99 - 8 years ago

      I agree, if the phone has a great form factor and design why change it. Also there is only so much you can do with a phones design. What are you supposed to do put wings on it. The iPhones design is pretty good and doesn’t really need to be changed all that much. Maybe a few tweaks here and there like the atenna lines but that’s about it.

  3. rogifan - 8 years ago

    If Ming-Chi Kuo says so that makes it so? God I wish rumor sites would stop publishing this crap. Kuo doesn’t know anymore than you or I do. It’s all guessing based on tumors to begin with.

  4. mdw1951 - 8 years ago

    This insider is inside Apple’s ass and can’t see a thing.

  5. Rodrigo Martins - 8 years ago

    I really wish apple will change a lot more in iPhone 7 than has been noticed. Analyst did’t expect anything new but the processor. If they want it to be appealing, dual camera must have be in all new iPhones. No one would change just because a better ( but not so better) processor.

    • applegetridofsimandjack - 8 years ago

      True, but rumors suggest Apple will release an iPhone 7, iPhone 7 Plus and an iPhone 7 Pro, so it could mean only the Pro gets all the new features and best specs. I would hate this btw. Tim Cook is spamming the product line-up.

      • Jake Becker - 8 years ago

        I will seriously look into how to successfully mail rotten vegetables to Cupertino if they put out an iPhone with a “Pro” suffix.

  6. macnificentseven48 - 8 years ago

    So Mr. Kuo has spoken and he’s some sort of prophet who sees all and knows all… BS! Like anyone else, it’s doubtful he could see the future or he wouldn’t be working as an analyst and be retired on some sunny island. He’s skeptical about those iPhone pre-order numbers but if Musk says he’s got 300,000 pre-orders for Model 3 Teslas, everyone believes him at word with no proof at all. There are always lies being thrown around and it’s very difficult to know who to believe. If Apple sells less iPhones this year then so be it. Maybe consumers will have better things to do with their money than buy new iPhones.

    Why don’t these analysts simply wait until there is some official word about actual sales instead of guessing based on pre-orders. A lot of people are basing low demand on the iPhone SE due to there being no one standing on line for them. Maybe consumers are interesting in getting the iPhone 7 but, of course, Kuo believes demand will be underwhelming based on his broad knowledge of how consumers think about a product they’ve never seen. These analysts just talk to be talking with very little knowledge about the future. Many analysts come to different conclusions over iPhone sales so one analyst’s conclusion may be no better than any other.

    I believe there could be “peak iPhone” every few years as sales growth slows in a saturated market. That’s true for nearly every product being sold in a saturated market. It’s really nothing to be ashamed of. It’s a natural phenomenon of selling products to a finite number of consumers. Even so, Apple will be making plenty of money with almost zero growth, easily sustaining the company. It would be nice if Apple could find some new product for added revenue but I don’t have a clue what product that would be.

  7. Robert - 8 years ago

    iPhone sales will “continue to fall this year”.

    The fact is that iPhone sales have always increased in the year on year comparison. They have never fallen!

    Growth has slowed and the next report is expected to indicate a small fall. This will be the first fall in sales. It hasn’t happened yet!

    The 2014 move to larger screens was an anomaly which caused huge growth (as much as 29.54%). Apple has thus far equaled these sales figures with the 6s! The Apr-Jun quarter this year will see very strong year on year growth (maybe 50%) because of the SE.

    It is simply a myth that iPhone sales are falling.

    Year on year growth has slowed only because of the anomaly of huge growth in 2014. Apple iPhone sales actually have linear growth of about 5-6% if you ignore the anomaly of the move to larger screens. Analysts don’t understand the uniqueness of what happened in 2014, they are foolish to expect Apple to repeat 29% growth every year!

    • Ben Lovejoy - 8 years ago

      Apple is forecasting a substantial fall for the current quarter. It’s not official until Apple announces it, but if anything radical had happened to change it, Apple would have had to say so.

      • Robert - 8 years ago

        Apple’s outlook 10 weeks ago was for negative growth in Jan-Mar.

        1) their outlook is always conservative, they always do better

        2) the outlook was qualified, they cited the macroeconomic conditions and sales in China. Since then the dollar weakened and reported sales in China went up.

        3) at the time of the outlook it is unlikely they had fixed the release date of the SE. Whilst it launched after the quarter ended, Apple may be able to count as sales, launch day stock sold to third party retailers.

        Growth will still likely be negative but only slightly and the final numbers remain to be seen.

        The media already have their “iPhone sales drop” headlines and articles ready. They just left a space for the actual numbers and they intend to publish them within minutes of Apple’s report.

        The real story on April 25th will be the outlook for our current quarter.

  8. Dinu Razvan Alexandru - 8 years ago

    Well it might be true
    The facts are there and yes I own apple iPhone 6s in case any1 wanna acuse me of beeing a fanboy but the facts are there
    1.Apple is greedy and cheap c’mon 16gb or 64 why not 32 and 64 its only 6$ or something per unit 1st of all
    2.They fall behind on display yes I know you get to a point where you cant tell like monitors 60mhz or 120mhz no1 can tell except something to meassure but ppl buy them for more ppi better resolutin(dont get me wrong you can tell from 2160 and 1134 but you cant see like pixel wise)
    3.Wireless charging
    4.And on the other side there is this market share has nothing to do with the company cuz those china phones are low buget none of the big companyes cant compete in the low segment
    5.The only thing thats keeping apple alive atm and they keep selling is the iOS the softwear makes the difference

  9. RP - 8 years ago

    I still say a lot of it has to do with the 6series itself. Sure there was initial pent up demand, but it’s just not a great upgrade from nicer previous iPhones other than screen size. And if screen size was the main issue for someone, then Samsung has better phones that don’t look as bad and have smaller footprints.
    As of right now, the only thing that Apple has over the competition in iOS. That’s a big thing of course, but we saw Apple slack in the design department and like all previous landmark companies before it, Apple played it safe with the 6 series and merely blew-up the previous design to a larger size, unlike the other companies who released modern phones.
    Apple has been playing it safe and that’s been the death knell to every top company who has seen itself disappear.

  10. taoprophet420 - 8 years ago

    Brean Capital also is predicting a dip these year, but in 2017 return to growth with selling 237 million iPhones 5 million more then 2017.

  11. cydianerd - 8 years ago

    Apple has already set too many records of selling iPhones, and it is getting harder and harder to keep breaking the older records.

Author

Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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