Apple poised for best quarter in China with launch of 10th anniversary iPhone, says analyst

The world’s most valuable technology company is widely expected to introduce three new models this week, led by the ‘super premium’ iPhone X

PUBLISHED : Sunday, 10 September, 2017, 6:05pm
UPDATED : Monday, 11 September, 2017, 9:08am

A successful launch of Apple’s 10th anniversary iPhone this coming Tuesday in the United States could signal a significant return to growth for the company in China’s fiercely competitive smartphone market, which is the largest worldwide.

The long anticipated “super premium” iPhone – to be introduced as “iPhone X” at launch, according to rumour – is widely expected to have a major design overhaul, various advanced new features and a price tag of more than US$1,000.

“In terms of revenue, the three-month period after the iPhone launch would certainly be the best quarter ever for Apple in China and the US,” said Neil Shah, research director at Counterpoint.

“The new iPhone 10th anniversary edition model is designed to drive Apple up further into the super premium smartphone territory. For existing iPhone users, it will be the device to upgrade to and get the best iPhone experience.”

That would augur well for Apple’s sales in its Greater China market, comprising the mainland, Hong Kong and Taiwan, where revenue in its fiscal third quarter ended July 1 fell 10 per cent year on year to about US$8 billion.

Mainland Chinese consumers account for about a third of all iPhone users globally, according to research firm Newzoo. It estimated the mainland had 243 million iPhone users as of July, 33 per cent of the worldwide total.

Of the 176 million iPhone 7 and 7 Plus models in use worldwide that same month, 27.5 million were in China – the highest volume globally, Newzoo said.

Apple’s most expensive model at present is the iPhone 7 Plus, the price of which starts at HK$6,588.

The world’s most valuable technology company, with a market capitalisation of US$819.4 billion as of last Friday, is expected to launch three new models – the iPhone 8 with a 4.7-inch liquid crystal display (LCD) touch screen, the iPhone 8 Plus with a 5.5-inch LCD screen and the iPhone X with a 5.8-inch, curved organic light-emitting diode (OLED) screen.

The names of the new models were first posted online on Friday by Irish programmer Steven Troughton-Smith based on references made within iOS 11, the next update of Apple’s mobile operating system that will soon be widely released.

The iPhone 8 and 8 Plus models will have glass casing and aluminium frame, while the iPhone X will have a glass and stainless steel frame as well as a very thin bezel on top and bottom, according to a recent report by Citi Research analyst Jim Suva.

The new iPhone 10th anniversary edition model is designed to drive Apple up further into the super premium smartphone territory
Neil Shah, research director, Counterpoint

Advanced new features include wireless charging, an invisible home button with fingerprint sensor, 3D sensing for facial and gesture recognition, enhanced waterproof capability, a faster processor, higher memory content, compatibility with the Apple Pencil input device, and augmented reality technology.

“The combination of biometrics, facial recognition and gesture-based control gives consumers more convenient options for navigation and control,” said Forrester Research vice-president Julie Ask in a statement. “The open question will not be if consumers can adjust to new means of control and navigation, but can the convenience offered by gesture-based controls, facial recognition and other features make this a ‘wow’ experience.”

Initial supplies of the iPhone X will be constrained because the OLED in-screen fingerprint sensor will be difficult to mass produce, said Suva. Rival Samsung Electronics is also Apple’s sole OLED screen supplier at present.

In terms of shipment volume, the major Chinese Android smartphone suppliers will continue to outpace Apple, according to Counterpoint’s Shah. “In China, just like in India, we believe Oppo, Huawei and Xiaomi are well positioned to remain the major volume drivers in the fourth quarter,” Shah said. “In the North American market, we estimate Apple will see between a three to four per cent growth in terms of shipment volume in the same period.”

Counterpoint recently reported that Shenzhen-based Huawei Technologies had unseated Apple as the world’s second-largest smartphone brand, selling more handsets than the US company for the first time in June and July.