Is the iPhone Cycle Off to a Strong Start According to Gene Munster?

Apple Inc. is witnessing a promising start to its iPhone 17 launch, with pre-orders in China exceeding those for the previous year's iPhone 16, signalling strong consumer interest. Despite the delayed release of the iPhone Air in China due to regulatory issues, the iPhone 17's base model is attracting attention for its affordability and significant upgrades.

Last updated: 21 October 2023 (BST)

Key Takeaways

• Pre-orders for the iPhone 17 in China have surpassed last year's iPhone 16 levels.
• The base model offers significant upgrades while maintaining the same starting price of $799.
• Delays in the iPhone Air's release in China may temporarily impact Apple's momentum.
• Analysts remain divided on the potential for a "supercycle" in iPhone sales.
• Apple continues to dominate the global smartphone market share.

Strong Early Demand in China

The iPhone 17 launch appears to be off to a solid start, particularly in China, where pre-orders have already eclipsed those of the iPhone 16 on JD.com, a major online retailer. Gene Munster, managing partner at Deepwater Asset Management, highlighted this positive trend on X, formerly known as Twitter. He noted that the early data point suggests a robust demand for Apple's latest flagship model.

Reports indicate that the iPhone 17's 256GB configuration is leading the pre-order volume, making it the top-selling model on JD.com since orders opened on Friday. This strong interest may reflect consumers' eagerness to upgrade to the latest technology as Apple continues to innovate its product line.

Value-Driven Base Model

A significant factor in the iPhone 17's early success is its base model, which combines affordability with enhanced features. Priced at $799, the same as its predecessor, the iPhone 17 offers a larger 6.3-inch display with slimmer bezels and includes 120Hz ProMotion support, which was previously exclusive to the Pro models. Additionally, the base model now comes with double the storage at 256GB, providing consumers with greater value for their investment.

These upgrades help bridge the gap between the standard and professional-tier models, making the iPhone 17 an attractive option for many buyers who may have previously opted for more expensive devices. By maintaining competitive pricing while enhancing features, Apple is positioning the iPhone 17 as an appealing choice in a crowded smartphone market.

iPhone Air Faces Regulatory Delay in China

Despite the excitement surrounding the iPhone 17, Apple faces challenges with the delayed launch of the iPhone Air in China. Pre-orders for this model have been postponed due to regulatory issues related to eSIM technology, as reported by the South China Morning Post. This delay could dampen Apple's momentum in one of its most crucial markets, where competition is fierce and consumer expectations are high.

While U.S. customers are set to receive the iPhone Air by its scheduled launch date on September 19, the situation in China remains uncertain. Industry analysts are closely monitoring this development, as the regulatory hurdles could impact Apple's overall sales strategy and market performance in the region.

Analysts Split on Long-Term Momentum

While early pre-order numbers are promising, there is a degree of scepticism among analysts regarding Apple's ability to initiate another "supercycle" of iPhone sales. AT&T CEO John Stankey expressed doubt about the sustainability of such cycles, suggesting that the dynamics around iPhone sales might not support another significant surge in demand.

Wall Street analysts echoed similar sentiments, praising Apple's efforts in design, camera enhancements, and battery life improvements. However, they also pointed out limitations, particularly concerning the delayed rollout of anticipated AI features. These factors could hinder Apple's ability to maintain a competitive edge in the rapidly evolving smartphone market.

Market Context and Stock Performance

Apple continues to lead the global smartphone market with a significant 25.71% share, well ahead of Samsung's 20.96%. In the U.S. market, Apple’s dominance is even more pronounced, capturing 57.24% of the market compared to Samsung’s 22.25%. This strong market presence underscores the importance of the iPhone to Apple's overall growth and profitability.

In the third quarter, Apple's iPhone revenue climbed to £44.58 billion, a notable increase from £39.3 billion during the same period last year. This growth highlights the critical role that iPhone sales play in Apple's financial performance, making the launch of the iPhone 17 particularly significant.

Despite these positive indicators, shares of Apple have seen a decline of 2.26% over the past five days, with an overall drop of 4.01% year-to-date according to Benzinga Pro. However, Benzinga's Edge Stock Rankings indicate that AAPL maintains a positive trend over the short, medium, and long term, providing a glimmer of hope for investors.

What Happens Next?

As Apple navigates the immediate aftermath of the iPhone 17 launch, the company's performance will hinge on several factors. These include the resolution of regulatory issues surrounding the iPhone Air in China, the ability to sustain early momentum in sales, and the timely introduction of new features that meet consumer expectations.

Investors and analysts will be closely watching how these elements play out in the coming weeks and months. Will the iPhone 17 maintain its strong sales trajectory, or will external factors dampen its success? As the smartphone landscape continues to evolve, Apple’s strategies and innovations will be paramount in determining its future position in the market.

In an industry characterised by rapid technological advancements and shifting consumer preferences, Apple must remain agile and responsive to maintain its leadership status. As we look ahead, the question remains: can Apple leverage the iPhone 17 to catalyse a new cycle of growth, or will it face headwinds that challenge its ongoing success? #Apple #iPhone17 #SmartphoneMarket

FAQs

What are the key features of the iPhone 17?

The iPhone 17 features a 6.3-inch display, 120Hz ProMotion support, and comes with a base storage of 256GB. It is priced at £799, the same as the previous iPhone 16.

Why is the iPhone Air delayed in China?

The iPhone Air's pre-orders have been postponed in China due to regulatory approval issues related to eSIM technology, affecting its launch timeline.

How does the iPhone 17 compare to the iPhone 16?

The iPhone 17 offers significant upgrades, including a larger display, enhanced refresh rate, and increased storage, while maintaining the same price point as the iPhone 16.

What is the current market share of Apple in the smartphone industry?

Apple holds a 25.71% share of the global smartphone market, significantly leading over competitors like Samsung, which has a 20.96% share.

What are analysts saying about the future of iPhone sales?

While early pre-order data is strong, some analysts are sceptical about the potential for another "supercycle" in iPhone sales, citing limitations in new features and market dynamics.