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With iPhone hype reaching its peak, Apple needs a reality check

The changing order trends at Apple’s (AAPL) component suppliers often trigger speculations about the health of the tech giant’s product shipments. With newer versions of the iconic iPhone hitting the market in short intervals, the sales numbers for each variant fluctuate according to customer preferences.

Maybe there are too many iPhone models out there, the demand for certain versions, particularly the latest ones, is cooling off. Reflecting the bearish outlook for its flagship product, Apple’s stock opened down 5% this week.  Maybe it is the first time iPhone is drawing so much of negative opinion. The ongoing demand crisis is forecast to continue in the remainder of the year and beyond.

Market watchers blame iPhone XR for the weak sentiment this time. Customers were not as excited about the new model as the company had expected, and the feedbacks indicate that many feel the XR package is not worth its price. Addition to the woes, some reports suggest that performance-wise XR is not up to the mark. Earlier, iPhone X had met a similar fate after it failed to live up to customers’ expectations.

Customers were not as excited about the new model as expected, and the feedbacks indicate that many feel the XR package is not worth its price

The slowdown, an issue faced by most of the latest iPhone models, can be an inspiration for Apple to retrospect because, unlike in the initial years of iPhone, now customers have several cheaper alternatives that offer almost the same features as the iPhones do. This is true particularly for the Asian market where Chinese smartphone makers give the toughest competition to Apple.

All this and the falling prices of rival smartphone brands suggest that Apple may not be able to keep selling its ‘new’ iPhone models at a premium after tweaking the existing designs. Curiously, older models like iPhone 8 and 8 Plus are expected to witness stable demand across all markets in the coming quarters, offsetting the 20-30% fall projected in the shipment of XR and XS Max.

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It is likely that the management’s recent decision to stop sharing iPhone’s sales figures with investors and the unimpressive guidance for the holiday season fuelled skepticism among the analysts.

Apple’s stock hit an all-time in early October and hovered near the peak for about a month before retreating to a three-month low. Continuing the losing streak, the stock traded lower in the early trading hours Tuesday after closing the previous session down 5%.

 

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