Monday was not a good day for Apple at the stock exchange. Apple shares dropped 4 percent, as reports suggest that the Cupertino based company has cut production of the iPhone XS, the iPhone XS Max and the iPhone XR owing to weaker than expected demand. It was not just Apple which had a bad day with stocks. Facebook saw stocks fall nearly 6 percent while Google’s parent company Alphabet Inc also saw stocks fall by 4 percent.
But what really happened with Apple stocks?
To be honest, this had been simmering for a while now. The expectations peaked just ahead of the big September event, which saw the launch of the iPhone XS Max, the iPhone XS and the more affordable iPhone XR. The company had just become the first ever to cross the trillion-dollar valuation mark, and expectations that are more affordable iPhone being added to the line-up will really help with sales. That has not happened however. The earnings report earlier this month perhaps indicated at the first signs of trouble.
Just yesterday, the Wall Street Journal reported that Apple was slashing production orders for the 2018 line-up of iPhones, including the iPhone XR. Last week, Austria’s sensor specialist AMS which supplies to Apple, lowered fourth-quarter revenue outlook by 15 percent, owing to the fact that Apple’s demand has reduced. Around the same time, Ming Chi-Kuo, analyst at TF International Securities suggested that the shipments for the iPhone XR have been cut from 100 million units to 70 million units during the product lifecycle. Another supplier, Lumentum Holdings has reduced its quarterly sales forecast by 17%, suggesting that Apple had cut orders for its 3-D sensing laser diode products, which is an important component in the Face ID facial recognition sensor in iPhones.
The price tags of the new iPhones are much higher than initially expected. The affordable iPhone XR prices start in the US at around $749 and around Rs75,000 in India. The iPhone XS is priced upwards of around Rs98,000 and $999 globally while the larger iPhone XS Max will cost upwards of Rs1,09,900 or $1099 globally. These prices are significantly higher than last year’s iPhones, which has had people hold off on their decision to purchase.
Apple has already confirmed that it will no longer be offering specific sales figures for the iPhone line-up, and will instead focus on the software and services side in the near future. Could this be an indication that iPhone sales may have peaked? Perhaps, but then again, Apple also doesn’t give out sales figures for many other devices such as the Apple Watch and the AirPods, both of which are leading in their respective categories.
It is hard to say at this point whether iPhone sales will see an uptake during the upcoming festive season shopping spree, but one thing is for sure—the high prices of the newest iPhones has turned off a lot of potential new consumers as well as iPhone users waiting to upgrade.
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