One of the most common narratives in the financial press regarding Apple (NASDAQ:AAPL) stock has been the rumored death of the iPhone X. There have been countless stories that Apple's flagship device, which is its most technologically advanced, is on the chopping block as a result of weak demand. Some people were citing the $1,000 price tag as the reason keeping consumers from buying the phone, others said consumers perceived the device as having less usable screen space.
Recently released smartphone shipments data for the first quarter disputes those theories, showing that the iPhone X was not only the most popular iPhone, but it continues to be the most shipped smartphone in the world.
Quashing the rumor
IHS Markit released its widely followed Smartphone Model Market Tracker for the first quarter, which breaks out total smartphone shipments by device and manufacturer. The report revealed that the iPhone X ranked as the most-shipped smartphone model for first three months of 2018. Apple also maintained the first two positions on the list -- which it has done for many years -- as well as three of the top four, and five of the top 10 models shipped.
The reports of my death...
Mirabaud analyst Neil Campling was one analyst predicting the demise of the latest iPhone. In a note to clients, Campling said, "With the declines in iPhone X orders and the inventory issue at Taiwan Semiconductor Manufacturing at record highs, which basically reflect a need to burn off inventory. Why? Because the iPhone X is dead." He went on to say that the reason consumers were "turning their backs" on the device because "the simple problem with [iPhone] X is that it is too expensive."
KGI Analyst Ming-Chi Kuo also opined that Apple's signature device would be short lived. In a missive to clients he suggested that iPhone X would see its "end of life" in mid-2018 due to slower demand for the phone among Chinese consumers. He indicated that the placement of sensors on the phone gave users in China the impression that there was less functional screen space on the device.
...have been greatly exaggerated
During the conference call to discuss the results of its most recent quarter, Apple CEO Tim Cook addressed the rumors of weak demand head on:
Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. ... This is the first cycle that we've ever had where the top of the line iPhone model has also been the most popular. ... The iPhone X is a beloved product.
Cook also addressed the reports that customers in China were giving the iPhone X a pass. "iPhone X was the most popular smartphone in all of China last quarter," Cook said. Regarding the "high" price point Cook said, "We price for the value that we're delivering, and iPhone X is the most innovative product on the market ... [it's] jam-packed with technologies that really set up the smartphone for the next decade. And so that's how we priced it."
The fine print
The report wasn't all good news. It showed that overall smartphone shipments plunged 11% year over year, and Samsung gained some market share at Apple's expense. While that certainly bears watching, it's far too early to plan a funeral for the iPhone X.