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Is Apple’s iPhone bubble about to burst?

Is Apple’s iPhone bubble about to burst?

On the face of it, it seems ludicrous to suggest Apple’s iPhone bubble is about to burst. Its last year has been nothing short of extraordinary when you look at the numbers.

13 million units were sold on opening weekend. That was followed by a constant boom in sales during the traditionally slow summer months, with a 22% year on year growth.

All of which has led many to predict Apple will announce world–beating sales figures in the next few weeks.

But something is afoot. A report from Japan’s trusted Nikkei claims that Apple is slashing production of the iPhone 6s and iPhone 6s Plus by a massive 30% until March.

iphone 6s forcetouch

The reason? It seems that unsold stock is mounting at retailers, as demand for the phones tapers.

That situation is being exacerbated by customers in emerging markets being asked to pay higher prices for iPhones as the dollar rate fluctuates.

Apple is said to be returning to normal production in April.

But having decided to launch its latest iPhones in China at the same as the US and Europe, it appears Apple may have enjoyed an early sales boom that is set to dissipate massively in 2016.

Many analysts predicted that this would happen, and although we won’t know for sure it has until Apple reveals its January to March results, some time in April, it shouldn’t come as a surprise.

Apple logo with man talking on iPhone

Usually, ‘s’ years see sales dipping as anticipation mounts for a new look iPhone with impressive features and a tweaked design.

This year, talk about the next iPhone is rampant already.

Rumours about what to expect are emerging far earlier than usual, meaning consumers looking to buy an iPhone are likely to hold fire and wait a few months instead of buying a phone which will look and feel dated come autumn.

For its part, Apple will say it is prioritising China over other territories, as it looks to capitalise on that country’s growing middle class and the money they have to spend.

apple store china

However, a dip in iPhone sales could hit Apple’s share price, not to mention its bottom line.

Not critically, but enough to shed light on just how reliant it is on its flagship product.

Of the $51.5 billion in revenue Apple made in July to September 2015, $32.2 billion came from the iPhone.

Whether that is sustainable remains to be seen, but Apple’s attempts to diversify its product line are meeting with limited success.

The Apple Watch is still a niche offering and Macs, while excellent, account for a negligible amount of money compared with the iPhone.

apple watch big blue

How Apple manages this now is critical. It needs the iPhone more than ever.

But at a time when devices are lasting longer and simply need new software to stay up to date, sales are likely to follow a boom around launch followed by a slight decline over the next few months.

Apple could be about to experience the same struggles as rivals such as Samsung and LG.

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