By all accounts,
is expected to have another dud year of iPhone sales. Ironically, that may work out well for the company as its three new phones hit stores on Friday.
The new iPhone 11 models launch in the tail end of Apple’s fiscal year, which closes on Sept. 28. That largely hews to the company’s normal pattern, though Apple has tweaked that slightly over the past two years by launching one of its new phones a bit later in the fall season. Regardless, Apple’s fiscal calendar generally lines up well with its biggest product, meaning the new iPhones will anchor the company’s performance for the 2020 fiscal year.
Wall Street’s targets for that year are modest—to say the least. Revenue from iPhones is expected to fall by 1.5% from the $141.5 billion projected for the current year, according to FactSet. And the current year’s estimates represent a drop of 15.1% from last year. Those official estimates haven’t budged since Apple unveiled the new phones last week, which makes for an unprecedented slump for the iconic smartphone; iPhone revenues haven’t fallen two years in a row since the device first hit the market 12 years ago.
Set against such lowball targets, though, the new iPhones may pack a small surprise. Demand in the company’s pre-sale window over the past week appears strong, as evidenced by shipment times on several models that have already been pushed out to the middle of next month. Jeff Kvaal of Nomura Instinet notes that pre-sale data for the iPhone 11 models is tracking ahead of last year’s launches. The new models have drawn strong reviews, particularly for their extended battery life and the Pro version’s triple-camera setup.
The fact that iPhone users are holding on to their phones for longer periods may also work in Apple’s favor this time. The latest version of the company’s iOS mobile operating system, also released this week, is the first that won’t work on the iPhone 6. That blockbuster device launched five years ago and sparked Apple’s largest sales cycle to date, with iPhone shipments surging 37% in fiscal 2015 to more than 231 million units. Many of those buyers have likely already upgraded, but the large initial base has also likely left a sizable number of stragglers that will now have little choice but to upgrade or stick with outdated software.
Most of Wall Street expects the iPhone 11 to largely act as a placeholder for the business until Apple can launch a revved-up 5G device next year. Apple has been burned by “supercycle” hopes before, though. By contrast, the newest phones seem to have a bar that is easy to clear.
Write to Dan Gallagher at email@example.com
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8