Morgan Stanley analyst believes iPhone sales will drop in 2016

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Jessica Lee Star/Digital Trends
Ever since its initial release in 2007, the iPhone has witnessed increasing sales year after year. Morgan Stanley analyst Katy Huberty, however, believes this trend will change for the worse during Apple’s 2016 financial year, reports Fortune.

According to the analyst, iPhone sales will drop by 5.7 percent during Apple’s 2016 fiscal year, which started back in October. Through the prediction, Huberty believes that Apple will sell 218 million iPhones for fiscal 2016, which would represent a decrease from the 231.1 million sold in fiscal 2015. If the forecast pans out in reality, it would mark the first time that iPhone sales would experience a year-over-year drop.

Even though Huberty acknowledged her prediction represents a worst-case scenario, Morgan Stanley’s managing director nonetheless blamed the prediction on several reasons, one of which is the already-high saturation in developed markets. In other words, the current smartphone landscape would make it difficult for Apple to sell as many iPhones as before due to people already walking around with smartphones in their pockets.

In addition, Huberty noted that the iPhone fetches a higher price tag in international markets than competing smartphones, which would theoretically make it a harder sell. Finally, Huberty based her forecast on a predicted 10 percent drop in component orders, though she believes that too much inventory and not weak demand, would be the cause of such a drop.

However, even with the weaker forecast, Huberty is still optimistic about Apple and believes that customer loyalty, research and development investment, and other revenue streams should balance out the lower iPhone sales.

Huberty’s forecast isn’t that unpopular when you consider that Kantar Worldpanel, a market research firm that keeps an eye on the smartphone market, noted that iPhone 6S sales are lower than its predecessor’s at the same point. Meanwhile, iPhone 6S Plus sales are slightly higher than its predecessor’s during the same time period, according to the firm.

Even so, Huberty’s current forecast is a stark contrast to one she made only a few weeks ago, which called for a 6.8 percent increase in iPhone sales during Apple’s 2016 fiscal year.


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