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Apple faces more bad news on IPhoneX

by on27 December 2017

Predictions get gloomier

Staff at the fruity cargo cult Apple will be hitting the Christmas spirits over the holidays as it looks like the company's cunning plan of keeping its iPhone cash cow alive by making users pay more has failed.

According to Bloomberg, analysts have lowered iPhone X shipment projections for the first quarter of next year, citing signs of lacklustre demand at the end of the holiday shopping season.

Sinolink Securities analyst Zhang Bin said in a report Monday that handset shipments in the period may be as low as 35 million, or 10 million less than he previously estimated. "After the first wave of demand has been fulfilled, the market now worries that the high price of the iPhone X may weaken demand in the first quarter", Zhang wrote.

JL Warren Capital said shipments would drop to 25 million units in the first quarter of 2018 from 30 million units in the fourth quarter, citing reduced orders at some Apple suppliers. The drop reflects “weak demand because of the iPhone X’s high price point and a lack of interesting innovations,” the New York-based research firm said in a note to clients Friday.

"Bad news here is that highly publicised and promoted X did not boost the global demand for iPhone X", according to the note.

While many phone manufacturers have to come up with new technology and price reductions to shift their phones. Apple adopted a novel strategy of making users pay much more for pretty much the same phone with an OLED screen which had a minimal impact on performance and a face reader which could not see the difference between Chinese people. For this Apple charged more than double and hoped that the margin would make up the difference for the expected falling sales.

But what Apple has found is that sales shrank terribly as users proved that even they were not that stupid.

Apple is said to have trimmed its first-quarter sales forecast to 30 million units from 50 million, Taiwanese newspaper Economic Daily News reported, citing unidentified supply chain officials. It also said Hon Hai Precision Industry Co.’s main iPhone X manufacturing hub in Zhengzhou, China, stopped recruiting workers.

Shares of Asian suppliers, such as Lens Technology, Shenzhen Desay Battery Technology and Largan Precision fell Monday on the report. Lens recovered some of the losses on Tuesday, while Largan continued to slide. Shenzhen Desay was little changed. This is the woe of suppliers who lean too much on Apple.

Hon Hai shares slid for a second day Tuesday, on track for the lowest close since March. Touchscreen maker General Interface Solution Holding plunged 8.4 percent Tuesday after slipping yesterday slightly.

Apple received a rare downgrade last week from Nomura Instinet analyst Jeffrey Kvaal, who said iPhone X sales, as well as other positive factors, were already baked into the stock price. He lowered his rating to "neutral" from "buy".

Last modified on 27 December 2017
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