An analyst note today from Barclays’ Mark Moskowitz and company predicts that Samsung is in position to take more of the premium smartphone market share with the launch of its Galaxy Note 8. They are also concerned that less than 1 in 5 potential iPhone buyers will spend $1,000 or more on a new iPhone.
The note shares that even though the Note 8 isn’t a “revolutionary” device, it still represents a return to stiff competition in the premium smartphone market, particularly between Samsung and Apple.
The analysts share doubts and predict challenges for Apple as according to one if its surveys, only 18% of possible iPhone buyers will plan to shell out $1,000+ for a new iPhone.
While the device itself seems more evolutionary than revolutionary, we believe this launch represents the return of staunch competition into the premium segment ($700+ ASP) of the smartphone market following Samsung’s Note 7 debacle last year. For Apple, we are concerned that the company needs to meet momentous investor expectations following the expected launch of three new iPhone devices in September. This could be made more challenging when considering that only 18% of potential iPhone buyers are willing to spend $1,000+ for a new device (Wireless Subscriber Survey; 08/09/17), which is below the 30-35% figure investors seem to be expecting.
Barclays believes that Samsung’s reputation hasn’t been damaged long term after the Note 7 disaster, as it already saw growth in the premium market during the last quarter.
In addition to the increased competition in the $700+ market, Barclays says Apple will see more challenges (particularly abroad) as more consumers will move to the midrange market.
This is even more concerning due to our view that smartphones will continue to “mix down” to the midrange segment, where competition from Huawei, OPPO, and vivo continues to intensify.
The note forecasts that AAPL will continue to grow in the near term, but shares uncertainty for the long-term outlook.
Beyond the near-term, we remain concerned that Apple could be lacking a meaningful “what’s next” story that keeps revenue growing. As a result we remain on the sidelines.
Barclays has lowered its AAPL target price 9% to $146 from the current $159.78 To catch up on all the latest iPhone 8 news, check out our guide here.