KGI Securities analyst Ming-Chi Kuo sent a note to investors on Monday, saying demand for Apple’s flagship iPhone X appears to be cannibalizing iPhone 8 and iPhone 8 Plus preorders. He also notes sales of the Apple Watch Series 3 are “significantly stronger” than expected.
While preorders of new iPhones traditionally sell out soon after preorders kickoff, many models of the iPhone 8 and iPhone 8 Plus were available for delivery on launch day, and many models are still showing availability for launch day pickup in Apple retail stores.
Kuo believes iPhone 8 sales are suffering because many customers are waiting for the release of the iPhone X, later this fall. Demand for the new flagship phone, due to launch in November is expected to be strong.
Historically, it takes 3-6 weeks or more to ship new iPhone models after they are available for preorder, due to initial tight supply and robust demand. However, our latest review indicates it will take less than 1-2 weeks for the iPhone 8. We believe this is because there is a strong likelihood that iPhone X demand will cannibalize iPhone 8 pre-orders.
Kuo also told investors that sales of the LTE version of the Apple Watch Series 3 was “significantly stronger” than expected, perhaps due to the fact the model goes for only $70 more than the Wi-Fi-only version of the watch.
Before the media event, we forecasted the production weighting of the GPS + Cellular version would be 30-40%. However, the pre-order website shows shipments of this version are taking much longer than those of the GPS version (3-4 weeks, from shipments launch day of September 22). We estimate the preorder weighting of the GPS + Cellular version is 80-90%.
Supplies of the Apple Watch Series 3 with LTE models began selling out within 15 minutes of when preorders began on Friday, September 15 at 12:01a.m. Delivery estimates now show three to four weeks, and no in-store pickup is currently available.
