Spring iPhone sales are looking extremely weak
Apple is basically facing a triple whammy for iPhone sales this spring. The overall smartphone market is currently going through a notable slowdown in sales growth and will go from nearly 40% growth in 2013 to under 20% growth in 2014, according to IDC. The China Mobile sales of TD-LTE phones as of February came in at weaker-than-expected 1.3 million units, translating to just 1 million iPhone units. And now it is looking as though the iPhone 6 won’t launch until September or so, meaning that Apple will be stuck selling the less than thrilling iPhone 5, iPhone 5c and iPhone 5s models all through the June quarter.
The combination of slowing global growth of high-end phones and weaker than expected Chinese demand has already led to some analysts penciling in a steep, -21% sales decline for iPhones from a seasonally strong Christmas quarter to a seasonally weak March quarter. The March quarter is always soft, but it may be spectacularly weak for Apple considering that the company already missed its December quarter iPhone volume expectations by nearly 5 million units. A particular problem for Apple is that its new China distribution drive raised expectations for strong 2014 volumes but smartphone sales growth in urban China started slowing down with startling speed over this winter.
The real trouble may come in June quarter. Unless the Chinese demand for iPhones starts growing rapidly, Apple will be wrestling with a powerful negative impact from rapidly escalating speculation over the iPhone 6 launch. The selling power of the iPhone 5s and 5c turned out to be weak during the Christmas period because these models were widely regarded as offering only minor tweaks on the iPhone 5.
But the iPhone 6 is already looming large in the public imagination, with rumors about sapphire screens and new display sizes creating expectations for a substantially improved device. The relative disappointment over the iPhone 5s and 5c will likely shorten their life spans, while heated advance publicity and raised expectations over the iPhone 6 will push consumers into delaying purchasing decisions. This is going to become a particularly acute issue in the May/June period as iPhone 6 leaks will turn into a daily staple of tech and business publications.
Will Apple get the typical spring smartphone volume bounce at all for the June quarter? Or will the combination of weak global trends plus hot iPhone 6 buzz create one of those air pocket quarters that used to plague companies like Motorola and Nokia half a decade ago? The 40%-plus global smartphone growth used to insulate Apple and Samsung and prevented them from ever delivering genuinely awful quarterly numbers. But that insulation is now gone and leading smartphone vendors may now face truly weak quarters ahead of major product launches.
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This article was originally published on BGR.com
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