Graph shows why iPhone 8 will disappoint
GIVEN the rate customers upgrade their smartphones, the iPhone 8 was expected to be the driving force for a "supercycle" of sales not seen since the 2016 release of the iPhone 6.
However, respected analysts from Deutsche Bank predict Wall Street's expectations for Apple are far too high, with the iPhone 8 tipped to fall short of previous supercycle sale records.
"We believe investors will be disappointed by iPhone growth in FY-18 and FY-19," the investor note read, reported Business Insider.
The analysts believe saturation of the market, longer refresh cycles and increased competition in China will make it difficult to surpass the 2015 sales records when "everything went right for the iPhone 6".
Deutsche Bank suggested Apple's record breaking 2015 supercycle was so successful because a bigger display and the addition of China Mobile as a new carrier.
"That cycle saw peak iPhone shipments of 231M in FY-15, a shipment level the company has not been able to repeat," the report read.
"Given most smartphones are now refreshed on a roughly 2.7 year cycle, we think FY-18 should be measured against FY-15."
While some analysts are predicting shipments of 244M units, Deutsche Bank suggested this will not be the case given 65 per cent of smartphone shipments are now for devices under $A380 - the iPhone 8 is tipped expected to be priced over the $1000 mark.
"Generally, when prices go up, demand goes down," the note explained. "A scenario where prices go up and demand goes up seems highly unlikely in our view."
In saying this, Deutsche Bank still think the iPhone 8 "could ship about 230M iPhones in FY-18", which would be a good effort given the obstacles the company now faces.
Pacific Crest analyst Andy Hargreaves echoed the sentiments in his own note to investors.
"[The iPhone 6] benefited from massive pent-up demand for a larger-screen iPhone that no longer exists," he wrote, reported Barrons.
"In addition to a likely lack of pent-up demand among Android owners, the base of first time smartphone buyers that is willing to spend over $800 for a phone is now likely near zero, a contrast from the iPhone 6 cycle."
He added that Apple will be largely reliant on current users upgrading their old handsets, but believes this wont be enough to beat iPhone 6 sales.
The doubts of the supercycle come as Barclays analysts suggests that a new bezel-less OLED display won't be enough to convince users to upgrade to the iPhone 8.
"With OLED, we struggle to see the incremental benefits visually that would inspire a customer to replace an adequately-performing device. While battery life could improve with OLED, our conversations with industry participants suggest that most consumers will not notice any major "must have" experience changes because of new OLED displays versus LCD," the note read, reports 9to5Mac.
"We think that this dynamic, if sustained, could limit the upside potential related to new OLED-based devices that likely sell for a premium, which could keep average selling prices from moving much higher."
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