This past Monday Apple released a press, um, release tallying up iPhone 5 sales through the shiny gadget’s first weekend on real and virtual shelves. Analysts pounced, noting the total was some 35% short of their forecasts.
Fanboys were next to pounce, explaining the sales deficit as an easy-to-make-up gap, based on either or both of the following:
- Apple’s admittedly (as of another company missive this morning) crap map app
- Supply chain issues (FoxConn riots notwithstanding)
We think these are the flimsiest of arguments, overlooking more significant long-term issues with these aggressive sales forecasts. In fact, this morning (Friday), a UBS analyst cut 6-million units out of his forecast not just for the current quarter, but forever.
Here are two potentially large restraints on iPhone 5 (and next year’s iPhone 6) sales that no one else is talking about.
The Tipping Point
Note that the percentage of U.S. mobile phones that are smartphones has moved past 50% (according to Nielsen). That will likely top 60% by Q1-2013, and we should reach two-thirds by the launch of iPhone 6.
Net net: the upside for smartphones is not infinite. More and more, in the U.S. at least, for iPhone sales to continue to ramp up in a straight line to the sky, existing customers will have to trade in their iPhones annually. They won’t, so the days of 45-degree-straight-line-up forecasts are gone.
Also, realize that Apple is not the market leader in international markets. It will need to steal major market share if it is going to grow as aggressively as the iPhone-5-like forecasts assume.
It’s The Economy, Stupid
As the only marketing blog that discusses the economy, we’ll remind you of what we posted earlier this year: lest the stock market fool you, the U.S. economy remains in a very sad state.
The data since our April five-part series on the economy has been as awful as we predicted. And new bad news pours in every day. For example, this week we learned that home lending is at a 16-year low. And that August pending home sales fell nearly 3% from July, just when everyone (see Jim Cramer) thought the housing market was back on a solid foundation.
The iPhone is as expensive as ever. Consumers’ ability to fit it into a worsening personal budget gets worse every day.