Despite the successful launch of the iPhone 11, iPhone sales fell in the third quarter, according to Gartner. It’s assumed the reason lay behind the iPhone pricing and the emergence of new technology, 5G.
Several other analysts at Canalys, Strategy Analytics and IHS had previously agreed that iPhone sales were down from a year earlier.
Last month, Apple announced a new financial report for the fourth fiscal quarter (the third natural quarter), which seems to contradict the decline in iPhone sales. Gartner believes that this is because Apple did not highlight the iPhone in its financial report.
‘iPhone revenue was back up above 50% of total income, at $33.36B. And Tim Cook said that iPhone 11 sales were off to “a very, very good start.’
But when explaining how the fourth-quarter revenue was so high, there was no mention of the iPhone. Gartner said it had previously estimated a 2 percent to 7 percent decline in iPhone revenue. But it put the decline in iPhone sales at more than 10 percent.
They believe Apple sold 40.8 million iPhones, down 10.7 percent from a year earlier. While Apple continues to reap the benefits of promotions and discounts, that hasn’t been enough to spur global demand. In greater China, iPhone sales continued to grow. But the year began with a double-digit decline.
The simple explanation is that the iPhone 11 is indeed selling strongly, but that hasn’t offset previous declines in iPhone sales.
Two factors are influencing Apple, Gartner said. First, consumer demand is shifting from the flagship smartphone to the mid-market – an area where Apple is under competition. Even apple’s cheapest models are far more expensive than mid-priced Android phones.
Second, consumers are waiting for 5G. Apple chose to wait until next year to offer 5G support. But this didn’t hurt the sales much. Even with a 5G phone from an Android brand, most people are putting off buying until 2020, when 5G coverage is likely to be much better than it is today, Gartner said. And a recent report suggests that 5G could easily spur demand among Apple users.
Of course, sales are related to pricing. But if Apple cuts prices, it could easily get caught up in the competition of cost performance of Chinese smartphones. This could be an even bigger disadvantage for Apple, which for now at least is staying away from the “value for money” market and maintaining high margins in its own region.