The iPhone 8 Could Be a Dud as Customers Wait for iPhone X

2 minute read
| Analysis

Launching a modest iPhone 8 upgrade on time and delaying the very attractive iPhone X must be a cause of concern for Apple.

iPhone X

iPhone X. Image credit: Apple

If Apple had a choice, the company would have liked to take orders and ship all three phones, iPhone 8, iPhone 8 Plus and iPhone X at the same time. That way, customers could readily balance features against cost. There would be a spectrum of users, especially those holding an iPhone 6.

This chart from Business Insider shows that the iPhone 6 is the most active iPhone as of April 2017. The 6s is next. The iPhone 6 shipped in 2014. And so, with an expected upgrade cycle of 2 or 3 years, one would expect that those who passed on the iPhone 7 are really quite ready for a new iPhone this fall. And the prices are more conventional: $699 for the base model iPhone 8.

That effect, the upgrade cycle and the iPhone 8 pricing may well save Apple amidst the excitement over the iPhone X. But….

A Bad Scenario

On the other hand, the iPhone 8 (family) doesn’t have significant advances over the iPhone 7 (family). Both have the same size and resolution display. Both have equivalent cameras. Both are IP67 water resistant. The iPhone 8, however, has a glass back for wireless charging and the A11 Bionic chip is faster than the A10 Fusion in the iPhone 7.

Is this enough to stir the souls of customers who’ve been hearing about the iPhone X? Will customers who’ve recently spent about a thousand dollars on an iPad Pro consider that also the going price for an awesome iPhone X with a Super Retina 2436 x 1125 OLED display?

And then there’s the success of Apple’s marketing machine which will create demand for a terrific iPhone X which, by all accounts, will be in short supply on November 3rd. Will customers end up being frustrated by Apple’s ability to ship promptly? That, in turn, could affect Apple’s sales numbers for the fiscal first quarter (Oct – Dec). By that, I mean how many customers will wait, bypassing the iPhone 8, and then order an iPhone X—which could be delayed?

Apple gave themselves an extra five or six weeks to build up inventory for the iPhone X. That appears to be a judgment call, balancing expected inventory against a reasonable calendar delay. Will Apple be able to meet demand? In the past, demand for very popular new iPhones have exceeded supply for months, and nothing has been more exciting than this iPhone X.

I doubt that Apple was able to foresee these issues when the 2017 product line was sketched out. It seems, now, as if Apple is doing the best it can to cope. Back when the iPhone X was dubbed the iPhone 8, our Jeff Gamet summarized the issues which have come to realization.

The latest report comes from KGI analyst Ming-Chi Kuo who says OLED production issues will keep the iPhone 8 from shipping until October or November. [Spot on.]

In a report to investors he said design issues with the OLED display and necessary changes to the cameras and sensors are slowing down the process. He also said the Apple-designed A11 processor running the iPhone 8 will use a new 10 nanometer design that’s leading to more potential production delays. [Well called.]

Coping With Customer Zeal

My surmise is that Apple would have preferred to roll out all three iPhones at the same time. Because that’s not possible, Apple will be watching closely to see how iPhone 8/Plus orders go.

One piece of non-scientific evidence comes from 9to5Mac readers. (Non-scientific because those eager to acquire an iPhone X opted in. That’s in contrast to a random sample from the population.) In this poll, the preference for iPhone X is about 9 times that of the iPhone 8.

Whether that’s true of the customer population as a whole will likely mean the difference between a normal iPhone Apple quarter and a disappointing one.

18 Comments Add a comment

  1. Lee Dronick

    The price difference between the X and the 8 is a factor for many people. Hell the price difference between a Walmart smartphone and an iPhone SE is a factor for many people

  2. John Martellaro

    Lee: And therein lies the rub. Will customers, by the millions, who need a new iPhone decide that the iPhone X is just too expensive? And settle? Or will they splurge a little? The mix of these two different approaches will be interesting … and critical.

    • Lee Dronick

      For me I am thinking that the extra $300 for the X is worth it, but probably wouldn’t opt for the Apple Watch Cellular.

  3. shameermulji

    The price between the iPhone 8 & iPhone X may be a factor but not between the 8 Plus & X. If anything, I think the 8 Plus will be hurt more by the iPhone X and the iPhone 8 being hurt more by a now $100 cheaper iPhone 7.

    “If Apple had a choice, the company would have liked to take orders and ship all three phones, iPhone 8, iPhone 8 Plus and iPhone X at the same time.”

    Actually, in an ideal situation, I think Apple would’ve liked to have released two models of the iPhone X: 5.8″ and 6.5″, and NOT have to release the iPhone 8 series. That way those who want to splurge will always get the best iPhone and those don’t can buy an iPhone 7 series or older at reduced prices. The iPhone 8 is Apple hedging its bets.

    • JBSlough

      I’m thinking that too. It’s the Plus that’s going to take a hit. On a side note, I wonder if it wasn’t going to be in such a short supply this X could of been the new Plus. Almost all my coworkers with iPhones have said they’re going with the X. Price doesn’t seem to matter.

  4. skipaq

    As a 6 user I am in the category due to upgrade. I find the thousand dollar entry price to be a bit much for a phone. I’m not going for the X. On the other hand there isn’t anything in the 8 that screams time to upgrade. On the third hand I am not interested in a plus sized phone. That probably leaves me with the fourth hand choice: wait for some goodies to filter down to the next upgrade labeled 8s or 9.

    • RickA

      I have a 6 that need replacing but do not want a Plus because of its size. A used or refurbished iPhone 7 would be a low cost solution.

  5. bigPaise

    If it becomes necessary to spur iPhone8 sales Apple could offer an Iphone8/AppleWatch bundle for the price of iPhoneX … a savings of $100. I don’t think it has been in their nature to do such a thing but it would probably help if iPhone8 sales suffer.

  6. MacTechFreak

    The Overall cost of an iPhone X is NOT worth it! To get the quick charge you need to buy a new cable, to use wireless charging you need a charging mat, and now you need a new case as I’m certain only certain cases will allow it to charge wirelessly. The oled screen has been report led to be overpriced by Samsung to take advantage of us in the upgrade hampster wheel. Yeah not falling for a lot of old tricks in a new shiner pony that is waaaay overpriced.
    PS – money isn’t an issue for me as I make $130,000 a year but refuse to spend it foolishly.

  7. wab95

    John et al:

    What I see here is an abundance of good choices. For the first time, my household is hesitant, by person, on which choice to make (I’ve already ruled out the X for my son – when the kid starts working, he buy his own, end of story). My daughter recently got her 7, didn’t want to wait for the new series; my son will get an 8 and my wife is undecided between the 7 and the 8, but really does not care which, having seen our daughter’s iPhone 7. I’ve told no one, but they all suspect, that I’m getting the X. Because. In truth, I’m going to hold with my 6 Plus for awhile longer until I get the family sorted. Oh yes, and get the Series 3 Apple Watch. Staggering our purchases will lessen the pain. Besides, I expect a wait on the iPhone X when it first comes out. It’s going to sell, especially when the Asian markets get hold of it.

    Whichever of these models you buy, you’re going to have an outstanding device that will not disappoint. There are no downsides to any of these choices. Affordability informing choice is not unique to the iPhone or anything else Apple. Cost effectiveness, durability and years of high functional service per unit of cost, makes the 7 or 8 great choices for those with competing needs.

  8. aardman

    $1K is a big psychological barrier that a lot of people, especially parents buying phones for their kids, will probably be unwilling to cross. iPhone 8 will be fine.

    Along with iPhone X prices, axing the $799 price point for the 8 will have most people moving up to 256GB not down to 64GB. iPhone ASPs are going to rise again.

  9. mrboba1

    I for one won’t be getting an X this year, and probably won’t bother with the 8 either. But I have a 7.

    I think they could have caught me if the X was $899, but now I will just wait until next year and see what the landscape is.

    Apple has said the X phone is the future, and I’m going to guess there will be a 9 and another new X model. Will the new X have a lower price point? I think they may have priced this one high to limit demand while they have smaller yields, and will lower the price once they have enough supply sources for the screens. I don’t know if that would be next year or not.

    It may be that the following year phases out the LCD phones, going all OLED by then, and with a lower starting price (Maybe as high as 799 or 899). They’ve upped the 8 by $50 to $699 – probably to “ease us in” to a new price point for when they have an all OLED line.

    I think 8 will sell well because the X will be too hard to get quickly enough.

  10. eolake

    “iPhone 8 (family) doesn’t have significant advances over the iPhone 7 (family”

    Thank you! Another article on this site stated that the 8 is much more than an upgraded 7. To me it feels like a barely upgraded 7. So you can put it on a pad instead of sticking in a charging cable, not a big deal to me, especially since I like to have my phone in a stand as a clock.
    And it seems that the longer camera still does not have stabilization, disappointing.

    • shameermulji

      The iPhone 8 series is, for all intents and purpose, the “7S / 7S Plus”. The big story with the iPhone 8 is 1) Wireless charging and 2) AR (due to the A11 Bionic SoC and its built-in Neural Engine).

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