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Analysis |
Strong early iPhone X adoption positions Apple for market leadership
In eight countries, the iPhone X already accounts for over 2 percent of the iPhone active installed base just three weeks after its first availability on November 3,, 2017, writes market researcher IHS/Markit.
The leading countries for iPhone X adoption are markets with high gross domestic product (GDP) per head such as Singapore, Denmark, Switzerland and Japan.
iPhone X does best in markets where iPhone Plus is popular
Countries where 'Plus' model iPhones have been successful in the past have a strong correlation with initial levels of iPhone X adoption. Consumers in those markets have a greater interest in larger displays and high-quality dual cameras, as well as the willingness to pay the higher price a Plus model or iPhone X costs over regular-size iPhones.
Despite production constraints, in the markets where iPhone X has launched, initial uptake is very similar to adoption of previous iPhone flagship launches in the same launch period. This indicates good demand for iPhone X and is better than the rumored supply.
In the US, iPhone X adoption after three weeks matched the adoption of iPhone 8 Plus and beat early adoption levels for both the iPhone 8 and 7 Plus. Only the iPhone 7 model had greater initial success. In Japan, initial iPhone X adoption was as good as or better than any recent iPhone launch, and matched the level of the iPhone 7.
Apple will enjoy record-breaking iPhone performance in 2018
"We expect Apple will enjoy its best ever year for iPhone. IHS Markit forecasts each of the next four quarters will see increases year-on-year in iPhone shipment volumes, compared to the same quarter a year earlier", writes Ian Fogg, senior director, mobile and telecom, IHS / Markit.
In the fourth quarter of 2017, IHS Markit forecasts Apple will ship 88.8 million iPhones — this will be the greatest number of iPhones ever shipped in one quarter.
Apple will need to ship just 31 million iPhone X units for iPhone average selling price (ASP) to exceed USD 700 for the first time in the iPhone’s 10-year history, assuming total shipments amount to 88.8 million.
iPhone X represents a shrewd strategy from Apple. In a maturing smartphone market, consumers may choose to buy replacement smartphones less often. If so, the higher price of the iPhone X means Apple could gain similar revenue levels and profits at lower shipment volumes. If Apple can increase unit shipments instead, then iPhone X will drive significantly higher iPhone profits.
