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iPhone shipments are going to drop by 20-25% this year despite the launch of a new budget iPhone SE. Such a situation could change the way Apple is doing business. AAPL stock price lost 3% yesterday.
iPhone shipments are going to drop by 20-25%. Sources say that top Apple Inc (NASDAQ: AAPL) analyst Ming-Chi Kuo has indicated that it will be a tough run for the technology giant to be at par with its projections. The TF Securities analyst also said in a research note that the new low-cost iPhone SE is doing well in the markets. This was based on the analysis of shipping times. And we all know that logistics analysis is rarely wrong.
Meanwhile, yesterday, Apple (AAPL) stock price was $268.37 (-3.09%). In the pre-market today, teh stock started to rise. Now it is at $272.94 (+1.70%).
iPhone Shipments Will Drop This Year
Kuo has predicted that the iPhone shipments are coming as demand drops across the board due to the movement restrictions.
Apple had already indicated its inability to meet its profit targets for March. This warning was made before COVID-19 spread globally. The whole world now will be down until the pandemic abates.
Apple made a daring and innovative move recently. It introduced a low-cost iPhone. The iPhone SE was also launched without any fanfare. The situation at hand, of course, calls for this.
New iPhone SE from Apple Is Highly-Demanded Now
The new iPhone uses a design that was launched first in 2014. Priced at $399, the iPhone may go head-to-head with other low-budget phones. This comes at a time when Google’s Android operating system is the King of the hill.
Kuo has indicated that the welcome given to the iPhone SE is a reflection of this. He also thinks that more consumers will be using cheaper phones at this time.
“The most difficult challenge from COVID-19 for smartphone brands is the negative impact on consumer confidence or purchasing power after the pandemic outbreak, resulting in consumers preferring to choose lower price/spec models or to stop purchasing smartphones,”
Kuo goes further to talk about his expectations for iPhone shipments.
“We cut 2Q20 iPhone shipment estimation by 30% to 35–37 million units due to negative impacts from COVID-19. But it may have further downside risk,” said he.
Apple Needs to Shift Its Focus
Kuo also urged investors and its supply chain partners would focus on the needs of consumers according to demand. He noted that this demand is going to be affected by the COVID-19 situation.
The analyst was also certain about the introduction of new iPhone models to the market this year.
Apple has reportedly completed most of its intellectual property work. Its Asian manufacturing partners are expected to complete the other processes. Kuo also indicated that mass production of the iPhone is expected to start based on design complexities and 5G support.
While people may not agree with Apple’s approach in the past, they just might be getting it right this time. The trillion-dollar company has made profits from selling expensive products. It will make even more money by selling cheap products.
It is from unique innovations in its business model that may produce Apple’s next trillion dollars. Who knows?