During the fourth quarter of 2016, the iPhone 7 and iPhone 7 Plus were responsible for 72 percent of total iPhone sales, according to the Consumer Intelligence Research Partners (CIRP) report. Most of these buyers were loyal iPhone users. Only about 15 percent had made the switch from Android use.
This could account for such a surge in sales when the Apple pair were first released last October. CIRP Partner and Co-Founder Josh Lowitz advised,
“The shift to newer more expensive phones suggests that Apple could see an uptick in average selling price for iPhones, at least based on U.S. market dynamics.”
The CIRP surveyed 500 U.S. Apple customers that bought an iPhone, iPad, or Mac from October through December 2016.
Apple and interested entities, including Wall Street, were expecting increasing sales to continue or to average out. None of them expected sales to decline altogether. According to the Apple Insider, sales of the iPhone 7 and 7 Plus were initially high. Since their introduction, however, they have “sold more sluggishly than expected.”
This new report advised Apple has cut orders for the phones by 10 percent for early 2017. The news does not get much better as Morgan Stanley reported “weaker iPhone 7 demand” to be seen in coming months. This decline in sales is reflective of iPhone users who do not buy a new phone every year.
Instead, there is a buying strategy known as the Supercycle, a phenomenon widely discussed by Wall Street analysts. The Supercycle is a cycle in which iPhone buyers upgrade to a new phone not annually, but every two or three years. So these customers may be waiting to purchase the newest upgrade in order to get the most out of their buying dollars.
While the iPhone may still be viewed by many as a symbol of status and prestige due to its hefty price, smart customers are choosing to wait before upgrading. Katy Hubert, a Morgan Stanley analyst, believes that sales of the iPhone 7 may be hampered in anticipation of the iPhone 8 in 2018. Experts also believe iPhone 8 sales will more than make up for the lackluster iPhone 7 sales.
While the iPhone 7 is faring well in other countries such as Japan where the Apple Pay feature is popular, it is not doing as well as it was when it first came on the scene. Yet, iPhone customers tend to be loyal whether they choose to stay with their current model, or look forward to an upgrade in the future.
Have you upgraded to the iPhone 7? Let’s discuss here or on Twitter: @lcarterwriter.