The big four US carriers report results that hint at weaker sales for the iPhone 8 and iPhone 8 Plus. But the iPhone X could help compensate.
For Apple, the iPhone excitement just isn’t there.
At least, not yet.
The tech giant’s iPhone 8 and iPhone 8 Plus, both of which went on sale on Sept. 22, have done little to excite consumers, results from the big four US carriers indicate. Over the last week, the carriers have hinted at weaker interest for the phones, but expressed optimism for stronger demand for the iPhone X, which is available for preorder on Friday and arrives in stores on Nov. 3.
T-Mobile, in explaining the lower customer growth from a year ago, partly blamed “the split and shift in iPhone launch timing.”
Verizon, likewise, saw lower upgrades in the period. “Obviously, Apple is part of that, with the splitting of the new devices,” the company’s Chief Financial Officer Matt Ellis said on a conference call last week.
The early muted results mark continued new territory in a highly unorthodox iPhone season for Apple. This is the first time Apple had staggered the release of its newest phones into two waves, with its true flagship iPhone X coming later. If the carrier results are any indication, it’s the first time the reaction to a new iPhone can be summed up with a “meh.”
Sales of the latest iPhones “seem moderately weaker,” said Will Power, an analyst at Robert W. Baird, who said it was premature to call the iPhone 8 and iPhone 8 Plus a flop.
While the US carriers make up the second-largest iPhone market in the world, they illustrate just part of the global picture for Apple. It’s still unclear whether these early indicators are the start of a bigger trend, or whether the US weakness is an exception.
Apple declined to comment. The company reports earnings on Nov. 2.
Which iPhone to buy?
Ever since their debut, the staggered release of new iPhones prompted the question of which model to get.
Casual consumers and those needing an upgrade were expected to buy the less expensive iPhone 8 or iPhone 8 Plus, since it was available sooner, and presumably more readily available.
Apple suggested as much, offering financial sales guidance that indicated it believed people would readily scoop up a new iPhone 8 and iPhone 8 Plus at a level that was comparable to a year ago, when the iPhone 7 launched. The weaker numbers from the US carriers suggest that may not be the case.
For instance, T-Mobile added 595,000 phone customers in the third quarter, down from 851,000 a year ago. AT&T on Tuesday said it lost 97,000 post-paid phone customers, while Sprint reported stronger customer growth Wednesday morning — albeit on promotional activity rather than iPhone interest.
But the iPhone 8 and its larger sibling were always going to be a tough sell. The look of the phone is essentially the same as the previous three years’ models. The biggest changes are a glass back and the addition of wireless charging. CNET editor Scott Stein called it the “status quo upgrade” in his review.
In a research note, Morgan Stanley analyst Simon Flannery called the current period, “The calm before the (iPhone) SuperStorm.”
iPhone X interest still high
More customers than even Apple expected may be holding off for the iPhone X, which offers a wholly new design with a slimmer frame and a bigger display on a smaller body, and the inclusion of a facial recognition system.
All indications are that iPhone X supply will be low. It’s likely why Apple was reportedly willing to ease off on the accuracy of its facial recognition system, which it calls Face ID, to boost production of the phone.
A consumer survey taken by Raymond James in September found that there was surprising demand for the iPhone X over the iPhone 8, despite the large price gap. Still, Raymond James analyst Tavis McCourt said in a note that he doesn’t see a huge wave of sales, and he expects Apple to miss Wall Street expectations for the critical holiday quarter.
Fortunately, we don’t have to wait long to get some indication of iPhone sales. Preorders for iPhone X begin on Friday, and the company will get a chance to share details about iPhone demand when it holds its earnings conference call on Tuesday.