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Report: Top Apple Inc. Analyst Predicts Lackluster iPhone 7 Sales

By Ashraf Eassa - Apr 4, 2016 at 8:30PM

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A look at what this well-connected Apple analyst has to say about the iDevice maker's next big thing.

Image source: Apple. 

KGI Securities analyst Ming-Chi Kuo, who is quite well plugged in to Apple's (AAPL 3.19%) supply chain, released a new research note (via MacRumors) in which he puts out some predictions around the iPhone 7 series.

First of all, he claims that the iPhone 7 series will feature a "similar form factor as iPhone 6s & 6s Plus," suggesting that the iDevice maker won't make significant changes to the appearance and usability of the device.

Next, he claims that the most significant change to the new device will be the inclusion of dual cameras, though this feature -- as he reported previously -- will be exclusive to the larger 5.5-inch.

Kuo warns, though, that because Apple's competition will beat the iDevice maker to the introduction of dual cameras in their respective flagships, the feature may not have the wow factor when it is introduced.

All told, the well-connected analyst thinks that for 2016 iPhone shipments will fall within 190 million to 210 million units, with sales likely falling below the 200 million-unit mark. He also believes that iPhone 7 series sales will trail those for the already disappointing iPhone 6s/6s Plus series. 

If true, that's bad news for Apple
The relative failure of the iPhone 6s/6s Plus in the marketplace was largely believed to be due to the fact that, although Apple introduced significant internal/performance enhancements, it didn't do much to make the phones look better. The industrial design remained largely the same and the display panels remained unchanged.

Many investors and industry observers have expected and/or hoped that Apple would bring more substantial changes with the iPhone 7 series devices in order to spur upgrades. However, if the iPhone 7/7 Plus is largely similar to the iPhone 6s/6s Plus but with a headline feature that's exclusive to the iPhone 7 Plus, then that doesn't bode well for the iDevice maker's business prospects and ultimately stock price over the next year.

The problem with once-per-year flagship launches
I think that the iPhone 6s/6s Plus exposed a fundamental flaw in Apple's product release strategy. If the company's annual product release is a big hit, then it can easily reap the rewards of that product for the entire fiscal year.

However, if its "next big thing" turns out to be a dud (as in the case of the iPhone 6s/6s Plus), shareholders are forced to spend at least a year in proverbial purgatory, waiting for the next product cycle to potentially drive gains.

One could, of course, point to the fact that Apple launched the iPhone SE to try to help things along a bit, and the product is quite interesting, but it's not going to sell in the kinds of volumes to ultimately make up for a lackluster pair of flagship devices.

Wait for additional iPhone 7 specs to hit
Although Kuo is well respected, I think it's important for investors to wait for additional information about the specifications of the iPhone 7 to come out. As I noted in a prior article, there are a number of avenues of improvement that Apple can pursue that, in aggregate, could make for a substantially better phone that could help fuel upgrades and ultimately demand.

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