Steven Milunovich & co said in a note that the iPhone super-cycle – when many customers would update their handsets every September as Apple released their latest model – is dead.
Q1 iPhone sales missed targets
The tech giant sold 77.3mln iPhones in the final three months of 2017, well short of analysts’ expectations of 80mln and even below last year’s figure of 78.3mln.
In the same earnings report, Apple showed why, even as the iPhone matures, the company as a whole will be just fine though.
“Near-term average selling price increases [thanks to the US$1,000 iPhone X] and longer-term potential in new product categories should allow Apple to grow at least in-line with consumer technology spend,” wrote Milunovich.
“A mature iPhone means that other categories, especially services and other products, will become material to growth.”
But revenues and profits still beat expectations…
Apple already appears one step ahead of the game, having blown past expectations for fiscal first-quarter revenues and profits despite the slowdown in phone sales.
Its software and services division saw revenue rise 18% year-on-year to US$8.5bn, while sales of other products such as its AirPods earphones and Apple Watch jumped by 50%.
The Silicon Valley firm has also been working hard to squeeze money out of its existing customers, with the App Store, Apple Music, iCloud and Apple Pay all enjoying their biggest quarters ever.
Making money from existing users
“The narrative is changing even faster than we anticipated from iPhone growth to monetizing the installed base [existing users] with additional hardware and software,” the analysts added.
“The installed device bases are growing, loyalty is high, the iPhone is gaining share, and Apple is far ahead in wearables.”
UBS reckons the stock is still “undervalued”, especially if it launches a share buyback programme. The Swiss bank has a price target on the stock of US$190 – some 20% or so above the current share price of US$156.49.