Analyst Says ‘Bleak’ iPhone 8, 8 Plus Launch Was Highly Exaggerated

iPhone 8 and 8 Plus sales are doing well and are in line with expectations, according to renowned Apple analyst Ming-Chi Kuo of KGI Securities.

That’s obviously contrary to the bleak picture that many analysts and media analysts painted of the iPhone 8 and 8 Plus launch weekend. News outlets said that lines were noticeably shorter on launch day, and data from engagement platform Localytics suggested that adoption of the two new devices was much slower than average. But Kuo wrote in a research note distributed to clients Tuesday that reports of underwhelming sales have largely been exaggerated and overplayed by an “excessively negative” market.

Kuo agreed that the shorter lines and seemingly slower sales were due in part to the delayed iPhone X launch, but added that Apple is likely expecting a 50/50 split in demand between the iPhone X and the iPhone 8 and 8 Plus. With the iPhone X’s launch taken into consideration, Kuo contends, sales of the other two devices are actually in line with Apple’s production plans. This lines up with consumer demand since adoption of the iPhone 8 lineup is roughly half that of the iPhone 6s and 7 launches. The other half will be made up by the iPhone X.

“At first glance, the combined first-week adoption rate for the iPhone 8 / 8 Plus might appear low (about half that of iPhone 6s / 6s Plus and iPhone 7 and 7 Plus),” Kuo wrote. “However, this is due to the fact that the iPhone X is not included, not because iPhone 8 / 8 Plus first weekend sales have been weak.”

Part of the reason for the market’s negativity, Kuo adds, is that analysts are overly reliant on sales data for unlocked and SIM-free channels, like Apple Stores, rather than sales via carriers. While Kuo indicated that lines outside of Apple retail outlets were indeed shorter, demand for the iPhone 8 and 8 Plus was much more stable from carrier and contract channels.

Part of the reason for that, Kuo said, is that the people who stand in line to purchase new devices straight from an Apple Store are “presumably hardcore Apple fans and heavy users.” Those are the type of people who are likely holding out for the premium iPhone X. That could have contributed to the perceived lack of excitement for the iPhone 8 lineup.

KGI Securities’ research also indicated that demand for the larger iPhone 8 Plus is higher than the standard-sized iPhone 8. This corroborates data from Localytics, who reported that — though sales were lower overall — the iPhone 8 Plus saw the highest first-weekend adoption rate of any Plus-model iPhone to date.

But while sales of the iPhone 8 lineup are on track with exceptions, Kuo warned that the shipment momentum could begin to slip and that sales need to be closely monitored as the iPhone X launch looms.

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