Consumer product

Apple’s iPhones 8 and X Face Demand Doubts

Customers browsing devices in an Apple store

A photo showing people checking out devices in an Apple store. Recently, people browsing Apple products were less than previous years’ launches.

Apple Inc’s iPhone 8 receives muted launch and faces doubt on demands after customers held up for iPhone X, which is set to launch later this year.

“I think demand is down from last year, for no other reason than you have another flagship phone,” said Neil Cybart, who is an Apple analyst. “A portion of the iPhone launch demand is not materializing quite yet.”

Cybart added that this could leave this weekend’s initial sales lower than any point since iPhone 6 launched in 2014.

Other factors that could affect demand for the iPhone 8, as well as iPhone 8 Plus, include Apple Inc’s decision to price the smartphone comparatively higher than last year’s model. Mobile carriers have also done a less aggressive launch push, which can also have an impact on the customer demand.

“The lack of operator promotions and anticipation for the iPhone X have dampened investors’ launch-day expectations,” said Walt Piecyk, who is an analyst at BTIG Research. “Wireless operators have pulled back on their promotions this year and it doesn’t look like that will change when the iPhone X is released.”

Previous years exhibited long and chaotic lines appearing outside Apple stores every time a new phone was released, so the Cupertino-based company encouraged its customers to resort to online purchasing up to ahead of the device shipping. However, this persuasion turned out to be detrimental when it comes to estimating iPhone sales, which is getting more difficult nowadays.

Analysts have minimize their efforts in counting the number of people queuing up outside flagship stores around the world, and they are now instead tracing the lead for items purchased through Apple’s website in search for hints pertaining to customer demand. However, this technique has become unreliable since the amount of manufacturing supply has not yet been known.

Additionally, Apple Inc has stopped announcing launch weekend sales figures.

Price Increases of Apple Devices

Apple Inc has decided to grant higher pricing on its Apple products this year, primarily in order to sustain its growth. It has done this while protecting its margins from the similarly higher costs of different components such as flash memory and/or semiconductor chips.

The iPhone X, which will be released in November, costs $999 and is considered the most expensive Apple smartphone ever. The iPhone 8 and iPhone 8 Plus are $50 and $30 more expensive than their predecessors last year.

Piecyk said that the price increases “should reduce the reliance on unit growth to deliver revenue for Apple.”

Other products have also become more expensive, including iPad Pro (those versions with higher memory capacity), Apple Care insurance, and iPhone screen replacements. These price hikes are projected to be felt even further outside the United States.

Meanwhile, these price increases are seen by Morgan Stanley analysts as a sign of Apple’s confidence in its innovation ability.

“An aspirational brand, high customer loyalty and weaker US dollar allow Apple to increase prices without hurting demand. In fact, demand for iPhone is directly correlated to the direction of ASPs –higher prices, higher demand, and vice versa,” they said in a note.

Poor Reviews Stunted iPhone 8’s Asian Launch

The smartphone’s launch witnessed a muted response from customers even in Asian regions. Compared to previous debuts, there were less people queuing to lay hands on the device, emphasizing a less lively reception.

Aside from the anticipation of iPhone 8, this weak turnout is also blamed to reviews giving poor ratings to the phone.

“It is pretty similar to the iPhone 7 but it shoots 4k 60 frames per second and it’s got a new glass back instead of the metal which is apparently more durable. There aren’t too many new features to this one,” said Mazen Kourouche, who lined up for 11 days outside an Apple store so that he could buy and review the product on Youtube.

Meanwhile, China’s Weibo, which is an indicator of consumer interest, exhibited less mentions of iPhone 8 and iPhone X on its social media platform partly due to the devices’ higher price. However, some loyal iPhone customers still praised the phone’s camera.

“I waited until midnight to watch the launch event with my boyfriend to learn what’s new with this iPhone. Its photograph function is pretty good. So I think I must change with no hesitation,” said Ta Na, who is a 29-year-old consumer in Shanghai.

Poor reviews pulled Apple’s share down to $152.75 on Thursday. This figure is almost a two-month low.

iTWire.com’s technology editor Alex Zaharov-Reutt said that the iPhone 8 will “only cater those who want a new version but do not want to pay a hefty $999 for the iPhone X.”

iPhone X has been labeled by Tim Cook, Apple’s CEO, as “the biggest leap forward since the original iPhone.” Apple has launched its third generation Apple Watch along with its 2017 smartphone line-up.

 

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