Lower Prices and Aging Models Fueling Higher-Than-Expected iPhone Demand Cycle: Report
According to a new report from Bloomberg, lower prices and the natural aging of older models in customers’ hands are contributing factors the the higher-than-expected iPhone demand Apple is seeing this cycle.
Citing sources, the report says that Apple had asked its suppliers to produce 70-75 million units of the iPhone 11 and iPhone 11 Pro series for 2019:
Sales of Apple’s iPhone 11 have been slightly higher than expected, according to people familiar with the matter. Earlier this year, Apple asked suppliers to produce 70 to 75 million total iPhone units for 2019. Now suppliers have been told to target the high end of that range, said the people, who asked not to be identified discussing private plans.
The iPhone 11 Pro has done exceedingly well and continues to be sold out in many parts of the world, with some orders not arriving until November. The new iPhones are also surprisingly a hit in China despite the ongoing trade war between U.S. and China and the pro-China sentiment among consumers in that country.
One of the primary reasons fueling this demand cycle is the fact that millions of iPhone 6 and 6S users are now coming around to upgrading their device. Apple sold a record number of those models in 2014-2015, notes Bloomberg, and the average iPhone user upgrades their device every four years. With iOS 13 dropping support for those aging models, many users who were hanging on to their device are now looking for a new iPhone.
That fact compounded with the slightly lower price tag of the iPhone 11 compared to last year’s iPhone XR are the primary factors for the strong iPhone 11 demand worldwide. Additionally, with the iPhone 11 offering almost the same experience as the more expensive iPhone 11 Pro (short one camera), many consumers seem to be upgrading to the newest generation faster.
“The company is scheduled to report fiscal fourth-quarter results on Oct. 30 and analysts expect revenue of $62.9 billion, about the same as last year,” concludes the report. “Apple will ship 40.9 million iPhones in the period, down 13% from a year earlier, according to Sacconaghi’s estimates from September. That quarter includes less than two weeks when the new handsets were available to buy.”