Analysts: Apple to continue cutting iPhone orders, services now a ‘key differentiator’





With supply chain disruptions and the war in Ukraine, Apple has reportedly reduced iPhone orders for 2022, with another drop coming in the near future. That said, services are becoming a “key differentiator” for Apple’s earnings.

Looking for Alpha highlights some analysis on the importance of iPhone orders and services. Loop Capital analyst John Donovan said in a research note that iPhone releases dropped another 9 million to 254 million. He is also wary of further cuts coming “in the not too distant future”.

Donovan thinks Apple will cut its iPhone manufacturing orders to between 245 and 250 million. For the iPhone SE, he says orders have been cut by 20 million. Analyst Ming-Chi Kuo also recently corrected his prediction on the low entry iphone shipping from 25-30M to 15-20M.

“Citing several factors such as the Ukraine-Russia war, supply chain disruptions and other usual reasons, digging deeper we uncover some additional information,” Donovan wrote in a note. to customers.

The analyst also comments on the “dismal” results of the mini iPhones, saying that Apple realized they had “limited appeal”.

“Despite this, this lack of demand is clearly surprising to AAPL and the pivot to more iPhone 13s is underway,” Donovan explained, adding that it was a “wise decision” by Apple to use the same processor. for iPhone SE with 5G and iPhone 13.

While iPhone orders may struggle a little in 2022, David Vogt of investment firm UBS thinks services like Apple Music, Apple TV+ and iCloud are increasingly becoming a “key differentiator “.

According to Seeking Alpha, it surveyed over 4,000 iPhone users from four different geographies and found that US-based upgrades and retention are still high, with the age of the iPhone handset being around 2.3 years.

Other key findings from the survey include that Music, iCloud, Arcade and Fitness rates are higher (outside China), while News is “flat” and Apple TV+ appears to have plateaued.

Users of high-end devices, such as the iPhone 12 and 13, also generate revenue from Apple services. App Store spending has “moderated” a bit following the “COVID-related force” and Apple Pay adoption continues to increase.

It’s important to remember that in early April, Apple was removed from JP Morgan’s Analyst Focus list, with the company citing “consumer spending concerns.”

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