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Low demand for latest iPhone a concern for Apple

Analysts say the people who are likely to buy new iPhones will wait until November, when the model will go on sale

The latest signs about the new iPhone models are not encouraging for Apple Inc. As a part of an early disclosure of the selected financial data for the third quarter, Apple said the number of its mobile subscribers who had swapped the old smartphones for the newer model had gone down by 900,000 from the third quarter of 2016. This quarter included a week of US sales for Apple’s iPhone 8 models which debuted last month. 

Some analysts expect the new smartphones from Apple and other companies to push up the share of those people who upgrade to new phones after a couple of years of trending downward. The disclosure implies an upgrade rate of about 4% in the quarter, which means that the share of AT&T’s existing customers who opted to trade up for a new smartphone was restricted to only 4%. Although, it is too soon to call the iPhone a hit or a flop in the market. But this disclosure also contributes to the feeling that Apple may have gone wrong with iPhone 8. Apple released the iPhone 8 with the more expensive iPhone X, since then the investors have alternated between encouragement and worry. The initial reviews of iPhone 8 were not as expected. When compared with iPhone X, iPhone 8 seemed less capable as it did not show much improvement on the prior year’s iPhones.

Analysts suggest that people who are most likely to purchase new iPhones might wait until November or December for the iPhone X model to go on sale. There is also an optimistic take about the slow initial sales which could be a good sign for Apple, since it means more people will be interested in buying the more expensive iPhone X. It is important to note here that Apple needs the iPhone 8 to sell well too. Due to the limited supply of essential parts for the iPhone X models, the company will not be able to make enough to cover the 250 million new iPhones expected to be sold globally in 2018.

iPhone 8 needs to be a Plan B for individuals who cannot get their hands on the limited models of iPhone X due to the lack of availability and the price tag. The iPhone 8 should far outsell iPhone X. In a Morgan Stanley survey, about 34% respondents said that they planned to purchase an iPhone and would opt for iPhone X. This includes majority respondents from China which is an important market for Apple currently. Samsung also started selling a new phone in the third quarter; both the companies are persuading people to give up their old phones right now in order to ensure that the sales go up. There is an alternative for people, to either bring home a shiny new iPhone or hold on to their existing phones for a bit longer. 

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