Deutsche Slams Apple: The iPhone X Price Is Too Damn High

Tuesday, January 30, 2018
By Paul Martin

by Tyler Durden
Tue, 01/30/2018

In the latest Wall Street attack on Apple, one day after a report that the company is slashing its iPhone X production in half due to “surprisingly low demand”, today Deutsche Bank writes that Apple’s new IPhone models are too expensive to fuel a so-called “super cycle” and Street estimates for the March and June quarters are still too high.

In a note from Deutsche analyst Sherri Scribner, she repeats that recent datapoints on iPhone sales continue to point to weaker-than-expected demand for the new iPhone models (X, 8 and 8+), which as Scribner gleefully notes “is not a surprise to us” because “we have been arguing since last February, that iPhone demand expectations were too optimistic and that the higher price of new models would pressure unit demand. This appears to be playing out, with numerous Asian supply chain data points suggesting iPhone production plans are being cut.”

Deutsche also makes the point that the market for iPhones is now a “refresh” one, not a super cycle one as the new features in the devices aren’t enough to drive non-early adopters to buy.

Adding salt to the wounds, the German bank claims that iPhone X demand is not living up to expectations, and explains that the 10th anniversary iPhone was expected to drive a strong iPhone refresh this fall, “with July 2017 Street expectations looking for iPhone units to be up 12% Y/ Y in FY-18.”

However, after initial tight supply due to component shortages, our checks of wait times for the iPhone X showed that the phone became more easily available by the end of November and improved through December. In addition, numerous Asian supply chain commentary from Digitimes, Taiwan Economic Daily, Reuters, and Nikkei have suggested that C1Q production build plans have been cut by up to 50% over the past month. Our Asian supply chain analyst Birdy Lu has remained more cautious on build plans, expecting 52M total iPhone units to be produced in C1Q-18, 25M which are expected to be iPhone X. Recent comments from Nikkei are even lower, suggesting total C1Q-18 iPhone production could be only 50M with iPhone X accounting for 20M.

The Rest…HERE

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