iPhone, iPad Market “Softening,” Analysts Say

Are the iPhone and iPad losing their grip on the market? At least three Citi bank analysts think so.

According to analysts Glen Yeung, Jim Suva and Walter H. Pritchard, estimates revealed that Apple will see a steady decline in the next few months over its high-demand products. And with looming concerns over the demand of the full-sized iPad and iPhone 5, the news could spell disaster for the Cupertino-based company. 

So what do they base their findings on? In a note to investors, the Citi analysts found that there is a reduction in component orders from Apple’s suppliers for the portable devices, meaning there is a decreased demand over their products.

“In conducting our regular field work with the hardware supply chain, we again find evidence of reduced demand to Apple’s suppliers for iPhone 5 related components,” Yeung said. “While production does not directly translate to sales, we suspect this is an indication of sofer demand for iPhone 5 and iPhone 4S.”

In accordance, Yeung has shrunk his initial estimate in iPhone sales, stating that Apple will sell 34 million units in the current March quarter, which is down from 35 million. In June, iPhone sales will likely drop from 32 million to a staggering 25 million.

What’s even worse? The iPad’s outlook is bleak. Between the U.S. and Japanese markets, the full-sized iPad tablet will drop 10 percent in year-over-year sales in the fourth quarter. They attribute this prediction to these ideas: tablets are still a luxury to be had, the iPad mini is cannibalizing the market and the turnover rate is less significant than that of the iPhone.

If you think about it, they’re right. People get the itch to upgrade their iPhones faster than they do for the iPad. They tend to be less phased by the incremental features of the product, while iPads still tend to be seen as laptops, only need to be updated every couple years.

So what does the future hold for Apple?

The tech giant is on the cusp of rolling out its next iPhone iteration — the iPhone 5S — in August. The new smartphone offers such features as a 4-inch display and 4G LTE networking. Unfortunately, Apple may have to rely on these sales and these sales only, considering Yeung doesn’t believe a low-cost iPhone has hit production.

“Despite much speculation amongst investors and third-party research, we find limited evidence of a low-end iPhone at this stage,” the analyst said. “As noted above, we continue to expect iPhone 5S to be launched and anticipate a large-screen iPhone in late 2013/early 2014. But clear indications of a low-end iPhone remain elusive.”

Consequently, Apple may be heading down the wrong path. And it could take more than an iPhone upgrade to get their numbers above par.


image credit: telegraph.co.uk