Demand for iPhone has gone ‘from bad to worse,’ analysts claim
There may be ‘iPhone fatigue’ after all. Several Wall Street analysts claim public demand for Apple’s flagship handsets is getting worse, particularly in China.
The reports come after Apple published weak results for the latest quarter, underscored by steep declines in revenue from China and slowing iPhone sales.
‘With iPhone demand acceleration on the horizon, we currently do not see any catalysts near term to drive significant [profit] upside,’ Shawn Harrison, an analyst with Longbow Research, wrote in a note to clients, according to Bloomberg.
‘...Multiple iPhone price cuts did not stop China iPhone search trends from weakening further while February supplier sales were abysmal, decelerating on a year over year basis vs. January.’
Harrison added that Apple’s suppliers appear to be feeling the heat from weak iPhone demand, with 37 out of 42 companies from its supply chain reporting ‘worse than seasonal sales’ for the previous three month period.
Similarly, UBS analysts said data showed that demand for Apple products in China was ‘still weak,’ Bloomberg reported.
‘The annual rate of decline for Apple iPhones in the month of February (down 67 percent y/y) is similar to the weakness in January and December months,’ UBS analysts explained.
Apple’s struggles in China are by no means a new revelation, however.
The tech giant highlighted sluggish sales in the world’s biggest smartphone market in its most recent earnings report.
Greater China revenue declined a whopping 26 percent compared to last year, with sales in the region coming in at $13.17 billion.
In his January letter to investors, Apple CEO Tim Cook cited economic weakness in China, which accounts for 20 per cent of its global sales, as one of the primary reasons for ‘fewer iPhone upgrades.’
Additionally, earlier this year Apple announced it would slash the price of iPhones outside the U.S.
Instead of pegging the device’s price to the strong U.S. dollar, it would instead peg it to its retail value in local currencies, offsetting the price tag considerably.
That said, Harrison claims the price cuts have done little to jumpstart iPhone sales in China.
With growing concerns about iPhone sales, Apple has tried to turn attention to its Services segment, which includes iCloud, iTunes, Apple TV and the App Store.
Investors, too, are looking to the Services segment as a way for Apple to continue to fuel growth.
In the most recent quarter, Services revenue reached $10.8 billion, in line with Wall Street estimates.
Last Monday, the firm announced a March 25th event where it’s widely expected to debut a new video streaming service and a premium news subscription plan.
It sent out invites that said ‘It’s showtime,’ along with a film reel counting down before revealing the Apple logo.