Over the last few weeks, there have been tons of reports that the iPhone X didn’t as well as Wall Street analysts expected during the holiday quarter. Supply chain reports also suggest that Apple has asked its suppliers to cut iPhone X production by 50% due to poor sales. However, a new report from Counterpoint Research says the new iPhones broke all sales records in the US during the holiday period. The research firm added that the iPhone X outsold iPhone 8 and 8 Plus by 2:1 ratio.
Counterpoint rubbishes the reports of poor sales
Counterpoint Research said Wednesday (via Apple Insider) that Apple sold a record 22.4 million iPhones in the US during the December quarter of 2017. It helped Apple garner a 44% market share in the US, up from 37%. The iPhone X outsold iPhone 8 and 8 Plus not because the other two handsets witnessed poor sales, but because the anniversary model was the favorite choice of buyers.
The research firm’s statement contradicts the ongoing narrative that Apple was cutting the iPhone X production due to poor sales. It’s worth pointing out that Counterpoint’s data is just for the US market. It didn’t shed light on how the new iPhones performed in other key markets such as China and Europe. Past reports have suggested that older models such as the iPhone 7 and 7 Plus were selling particularly well in China.
Counterpoint Research Director Neil Shah said the worldwide iPhone X sales were “softer than expected” due to its high price. But the phone performed well in the United States, where consumers were willing to shell out the additional money for new features like Face ID and Animoji. The iPhone X, iPhone 8, and 8 Plus were “top three selling phones in the US” during the December quarter, said Neil Shah.
The iPhone X outsold the iPhone 8 and 8 Plus by a 2:1 margin since its launch on November 3rd. The 10th anniversary iPhone helped the “super-premium segment” grow from almost 0% in previous years to 25% of the total US smartphone sales in Q4. Counterpoint Research Director Jeff Fieldhack added that Apple was also able to “take share away” from Samsung in the premium segment.
Counterpoint Research said the success of the iPhone X and iPhone 8 Plus would help boost the iPhone’s average selling price (ASP). Out of the 22.4 million iPhones sold in the US during Q4, at least 10.5 million units were priced above $850. It means the “super-premium” handsets generated about $9 billion in revenue in the US. Wall Street analysts on average expect the Q4 iPhone ASP to be above $800.
Analysts , suppliers hint at iPhone X production cuts
Nikkei Asia Review reported earlier this week that Apple had reduced the iPhone X production orders by 50% due to poor sales during the holiday period in the US, Europe, and China. KGI Securities analyst Ming-Chi Kuo has also told investors that Apple could discontinue iPhone X when 2018 iPhone models enter production. According to Bloomberg, Apple suppliers Broadcom and Qualcomm have also indicated in their respective earnings calls that iPhone orders were down more than usual for this time of year.
Qualcomm said in its earnings call that orders from a “large, thin model customer” had declined more than usual. Bloomberg speculates that the chipmaker was referring to Apple. Separately, sources within the supply chain told the Wall Street Journal that Apple had slashed the iPhone X production from 40 million to 20 million units in the January-March quarter.
What to look for in Apple’s earnings call
Apple is set to report its December quarter results later today at 2 PM Pacific Time (5 PM ET) after the markets close, where it could offer clues regarding the iPhone X’s performance. The tech giant doesn’t reveal sales numbers by model, but the total iPhone sales metrics would indeed offer clues. Most Wall Street analysts estimate that Apple sold 80-82 million iPhones in the holiday quarter. On average, analysts predict Apple would report revenues of $87 billion with $3.83 per share in earnings.
Above Avalon analyst Neil Cybart said if the average selling price of iPhones comes out above $800, it would suggest a healthy performance by the iPhone X. But an ASP below $750 would imply that the iPhone X sales were disappointing. Investors will be particularly interested in Apple’s performance in China, where the iPhone X along with the cheaper iPhone 7 and 7 Plus could boost growth. In the last few years, Apple has lost significant market share to local vendors in China.