The iPhone X demand remains strong in the world’s largest market despite some people saying that the demand has cooled off after the initial euphoria. Apple is now offering one-day delivery in the US if you order the iPhone X online. That’s a surprising improvement from early November when shipping times were pushed back by 5-6 weeks. RBC Capital Markets analyst Amit Daryanani says the improvement in delivery times is mainly because of improved production rather than a softening iPhone X demand.
Chinese buyers prefer the 256GB iPhone X model
In his latest research note to investors (via Apple Insider), Amit Daryanani talks about the data collected from prospective iPhone buyers in China. According to RBC Capital Market’s survey, 62% of the prospective iPhone buyers wanted to buy the latest and greatest iPhone X, which is much higher than 28% people in the US. The data also revealed that most consumers prefer the higher storage versions, probably because Apple doesn’t offer a microSD card slot for memory expansion.
For instance, 66% people interested in the iPhone X said they would opt for the higher 256GB model. Also, 64% of the iPhone 8 series buyers and 75% of the iPhone 7 series buyers were interested in the highest storage versions, reports Apple Insider. The strong demand for the higher storage options in the world’s largest market points to a massive quarter for Apple.
There's a gold rush coming as electric vehicle manufacturers fight for market share, proclaimed David Einhorn at this year's 2021 Sohn Investment Conference. Check out our coverage of the 2021 Sohn Investment Conference here. Q1 2021 hedge fund letters, conferences and more SORRY! This content is exclusively for paying members. SIGN UP HERE If you Read More
Amit Daryanani told investors that there would be a “stronger than anticipated mix shift” in China. Initially, there were concerns that the iPhone X’s premium price tag may turn off buyers. Daryanani said consumers’ desire for higher storage versions would drive up the average selling price of the iPhones. The analyst expects the US iPhone X demand to remain strong as well.
Apple to report a strong holiday quarter on the back of the iPhone X demand
RBC Capital Markets predicts Apple is set to report a blowout holiday quarter next month. The Cupertino company predicts the December quarter revenues to be in the $84 billion to $87 billion range with 38% to 38.5% gross margins. Even if the revenue is on the lower end of Apple’s projection, it would be a new all-time record. Apple’s highest ever quarterly revenue was $78.4 billion in the 2016 holiday quarter.
Apple has been able to ramp up the iPhone X production faster than anticipated. Before the phone’s launch, analysts predicted that a large chunk of the iPhone X deliveries would be pushed back to the March quarter. According to KGI Securities analyst Ming-Chi Kuo, Apple is now churning out 450,000 to 550,000 iPhone X units a day to meet the holiday demand.
Apple’s online stores in many countries including the UK, US, Canada, and Japan have listed the iPhone X as in-stock. They promise to deliver the phones within 1-2 days to customers. The iPhone X is also now easily available at the carrier and third-party stores. Meanwhile, Loup Ventures analyst Gene Munster predicts Apple will be able to catch up with the global iPhone X demand by mid-January.
Munster told investors that the anniversary iPhone was available at an average of 44% of the Apple retail stores in the United States as of last week. That’s a significant improvement from 25% the previous week. The analyst also believes that the phone’s $999 price tag will boost the iPhone average selling price (ASP). The iPhone ASP will skyrocket to $740 during the fiscal year 2018, predicted Munster. Prior to the iPhone X launch, the iPhone ASP was $619.
Older iPhones bringing more people into the iOS ecosystem
A few days ago, Cowen & Co analyst Karl Ackerman said in a research report that the iPhone X doesn’t have enough new technologies to justify its $999 price tag. As a result, most Apple customers were opting for the cheaper models such as the iPhone 7 series and the iPhone 8 series. If you take out the TrueDepth camera and the bezel-less OLED display, the iPhone X is same as the iPhone 8 Plus.
Cowen & Co is “increasingly concerned” that the iPhone X demand had been “below initial expectations.” The iPhone X sales have been “good” so far, but they are not indicative of the much-hyped “super-cycle.” Cowen predicts Apple would ship 79 million iPhones during the current quarter, which is only a small jump from 78 million iPhones sold in the holiday quarter of 2016.
The older iPhones have been selling well, helping Apple bring more people into the iOS ecosystem. But people who have been using older models such as the iPhone 6 and 6S have experienced that their phones have slowed down considerably. Earlier, there were speculations that Apple deliberately slows down older models to get people to upgrade to the latest and more expensive phones.
It turns out, Apple indeed slows down older models using a software system called powerd. Powerd controls the CPU speed and power, and is separate from the Low Power Mode. As an iPhone’s battery gets older and starts delivering a lower battery life, powerd deliberately slows the CPU/GPU down to ensure that the phone offers a full day of battery life even with an older battery. In short, if you want better speed on your older iPhone, consider replacing its battery.