Apple has deemed not to share first weekend sales numbers for the iPhone SE. However, estimates from a few camps – including the usually reliable Ming-Chi Kuo of KGI Securities – indicate the new 4-inch handset was off to a less than spectacular start.
In a research note issued earlier today, Kuo (via MacRumors) indicated that demand for the SE was “significantly lower than that of past new models” since its March 31 launch, and questioned a CNBC report from last week that claimed iPhone SE orders had topped 3.4 million in China.
Lackluster iPhone SE demand supports our view. Although there exists a market survey that indicates iPhone SE preorders top 3.4mn units in China, we couldn’t find more evidence to support this. However, judging by the delivery time for iPhone SE preorders, we believe initial demand for the iPhone SE following the announcement has been significantly lower than that of past new models. We believe this is due in part to lackluster demand for smaller-size smartphones and, more importantly, that the product itself offers no significant upgrades to form factor or hardware specs.
Another camp heard from was analytics firm Localytics, who backed up Kuo’s claim of lackluster response to the new device, noting its research shows the iPhone SE managed to grab only 0.1% of the iPhone market in its first weekend of availability. That is a much lower adoption rate than the iPhone 5S, which it replaced in the iPhone lineup, and any of the iPhone 6/6s models.
…While the 5S, 5 and 5C all lost market share compared to two weeks ago (by 1 percentage point each), the 6, 6S and 6S Plus all gained share (by 1 percentage point for the 6 and 6S Plus and 3 percentage points for the 6S). The increase in share for the larger screen phones could be due to the deals many retailers, including Walmart, are having this month.
As for Kuo, he expects overall iPhone shipments will likely fall below 200 million units in 2016, and will be unable to overcome the much-feared “peak iPhone” until next year or later.
We forecast 1H16 and 2H16 iPhone shipments of 85-95mn units and 105-115mn units, respectively, implying full-year shipments of 190-210mn units (vs. 232mn in 2015), below market consensus of 210-230mn units.
In light of market feedback for iPhone 6s, 6s Plus and SE, we believe growth on replacement demand for larger display is slowing. We are therefore conservative about shipments of current iPhone models in 1Q-3Q16.
It really doesn’t come as a big surprise that iPhone SE sales haven’t exactly set the world afire. The new 4-inch handset is a slightly redesigned iPhone 5s shell, with inner components that come close to the flagship iPhone 6s lineup. While the new, smaller handset will appeal to upgraders who are not in the market for a larger handset, such as the iPhone 6s or iPhone 6s Plus, many consumers may be holding off until September, when Apple is due to debut the “iPhone 7.”
Personally, we will hold off on any judgement as to the popularity of the SE until emerging markets such as China, India, and other countries are heard from. The lower price of the new handset may prove to be an attractive draw to those consumers.
