An absolutely gorgeous device when it debuted, Apple’s iPhone X did not quite live up to sales expectations and it has analysts asking larger questions about the device market. After all, it is their job to speculate, and the recent news from Apple has many forecasting a dimmer immediate future for smartphone sales. The sales disappointment for the iPhone X has placed plans for more iterations on a slower pace according to many analysts who watch Apple’s every move. It seems the market for expensive handsets just isn’t quite what Apple anticipated it to be with the launch of the iPhone X, its most expensive smartphone device to date.
The low sales over the holiday period and Apple’s own forecast of a downturn in the average selling price of iPhones in the future also point to the more expensive models not being as popular on the market as was anticipated.
Strategy Analytics reports a broader dip in the smartphone market with total shipments at 9% lower than last year for fourth quarter 2017 and slide that represents the steepest in the segment’s history. Apple’s stock took a beating as a result of this report, declining 4.1% on the reports of lower-than-expected iPhone X sales. Currently Apple is trading around a six-month low of $160.88.
On a larger scale, the smartphone market in general has cooled off and everyone from service providers to components manufacturers is feeling it. Verizon Wireless for its part is offering unlimited data plans again. The competition for customers in the United States has become increasingly difficult. The segment’s largest chipmaker, Qualcomm, is reporting lower than anticipated shipments of the chips put in smartphones, causing the manufacturer to begin exploring new markets.
Services are becoming a focus for Apple with the iPhones a natural conduit for the App Store and things like Apple Music. Further, Apple will offer more devices to businesses. A niche that is growing rapidly for the company.
The company reported that is now had 1.3 billion devices out in the wild. A 30% increase over two years ago according to statements from Apple’s CEO Tim Cook. Cook resisted analysis that the Apple iPhone’s upgrade cycle is slowing down and said it was more important to look at longer-term trends rather than 90-day sales.
“The far bigger thing is to look over a longer period of time and customer satisfaction and engagement and number of active devices are all a part of that.”
Smartphone sales may be flat, but the Apple Watch and AirPod division is up 36% according to The Star.
And though services may be a new focus for the company, the money Apple makes from its services compared to its iPhone is not nearly as tempting from a financial standpoint. But if trends on a larger scale are for a longer upgrade cycle and attendant flat sales of devices, then it is a smart business move on Apple’s part to invest more heavily in monetizing its current base of customers.