Analyst says success of Apple iPhone X could mean lower iPhone revenue in 2019 and 2020

Could the success of the Apple iPhone X actually lead to fewer iPhone upgrades in 2019 and 2020? Pierre Ferragu, an analyst with New Street Research thinks so. He said today on CNBC that so many iPhone users upgraded to the iPhone X in 2018 that "We expect a material disappointment in 2019." He adds that even the introduction of a lower priced 6.1-inch LCD screened iPhone model won't make up for the shortfall in sales that he expects.

Ferragu forecasts that Apple's 2019 iPhone revenue will come in 10% under Wall Street expectations. And the analyst points out that when iPhone revenue fails to meet the Street's consensus, the stock usually tanks. As a result, Ferragu is recommending that clients sell the stock, which earlier this month became the first U.S. public company to be valued at $1 trillion.


The analyst says that iPhone shipments are in a downtrend with small bumps in that trend seen in 2016 and again this year. But he sees the downtrend resuming next year and carrying into 2020. Ferragu says that Apple will sell 65 million iPhone X units and another 30 million+ iPhone 8 Plus handsets this year. He compares this with the 69 million iPhone 6 Plus units sold in 2015. As a result, he says that we are still in a supercycle as far as the iPhone is concerned, but he says that the underlying demand for the device is declining. He blames this on the expanding replacement cycle as iPhone buyers are holding on to their phone for a longer time before upgrading to a new model.

Next month, Apple is expected to unveil three new models including a 5.8-inch Apple iPhone X sequel, a 6.5-inch iPhone Xs Plus and a 6.1-inch iPhone 9. The latter will be the lowest priced of the 2018 iPhone models, and will carry an LCD screen. The other two units will feature OLED panels. All three phones will be powered by the A12 SoC and be equipped with the TrueDepth Camera and Face ID.