Apple Expected to Cut Production of iPhone, Peak Popularity of iPhone May Be Over

Analysts Project Decline in Apple iPhone Sales Going Forward

by Anton Shilov
11/03/2008 | 03:58 PM

The days of exceptional popularity of Apple iPhones may be over as the company is expected to reduce production levels of the highly-discussed device, some analysts claim. On the other hand, there are holiday sales ahead and Apple may enjoy at least another quarter of unprecedented success, other industry watchers believe.

Production of Apple iPhone to Drop by 40% in Q4 – Analysts


“Previous checks indicated that iPhone production would fall about 10% sequentially in calendar Q4, but our new checks indicate that iPhone production could fall more than 40% sequentially in Q4,” said Craig Berger, an analyst with FBR Capital Markets, in a note to clients, reports Reuters news-agency.

Apple sold 6.9 million of iPhone smartphones in Q3 2008 thanks to expansion of Apple iPhone 3G into 51 countries, but the question is whether the company can be as successful going forward selling its handsets at price-points (the final price end-users have to pay according to the terms of contracts) that well exceed even the premium-class mobile phones by companies like Nokia.

In Q4 2008 there will be holiday selling season as well as expansion of Apple iPhone 3G into 15 other markets. But carriers have about 2 million of iPhone devices in inventories and the initial rush for the products is over, claims Needham analyst Charlie Wolf, reports Barron’s Online. That fact “suggests that iPhone sales might decline in the December quarter”, even though the expansion into new markets could provide some offset.

Still, Mr. Wolf believes that the “iPhone could effectively take over the smartphone market” if Apple lowers pricing of its device that is presently adopted by fans or gadget lovers.

Sales of Apple iPhone Could Hit 8 Million in Q4

There are also those who believe that actual sell-through figures of Apple iPhone in Q4 2008 may exceed those in Q3 2008, although such claims hardly look realistic in current market conditions.

Rethink Research suggests that back in the third quarter Apple and AT&T sold about 2.4 million iPhones, whereas 2.5 million were sold through by Apple’s partners outside the U.S. The market tracking firm also believes that approximately 2 million were still in stock across the world in late Q3 2008. While Rethink admits that sales of Apple iPhones in the USA will drop because of economic downturn, it believes that there will be no impacts of financial crisis in countries like Argentina, Brazil, Greece, Hungary, India, the Philippines, Poland, Russia, South Africa and Turkey for Apple, which will result in double the sales of the iPhone gadgets.

“If only 2.5 million actually shipped last quarter to customers outside the U.S. then the chances are that even without Christmas coming (it is not celebrated in all of these countries), this would still double, as advertising begins to bite in each of these countries. So make that 5 million, plus another million for stacking the retail channels. Under those conditions, even if AT&T only sells half the number as the recession bites harder there, the last quarter of the year will still outstrip the September quarter with well over 7 million iPhones. A more reasonable number would be closer to 8 million,” a report by Rethink suggests.

Still, even the optimistic Rethink Research claims that in Q1 2009 iPhone sales will, perhaps, collapse, falling back to 3.5 – 4 million units per quarter, which is inline with predictions by FBR and Needham.