Decline in iPhone Shipments Could Make Apple Worst-Performing Top Five Smartphone Brand of 2016

Apple's global iPhone shipments will fall short of analysts' consensus estimates of 210 to 230 million units in the 2016 fiscal year, according to a new research note issued by respected KGI Securities analyst Ming-Chi Kuo. In a worst case scenario, iPhone shipments in 2016 are expected to reach just 190 million units, which is an 18% reduction in shipment growth and 3 million fewer iPhones than Apple sold in 2014.

Even in a best case scenario, said Kuo, Apple is expected to sell 205 million units, 5 million short of the lower end of analysts' estimate range and amounting to a 11.6% reduction in growth. Regardless of the best or worst case scenario, Kuo predicts Apple will underperform the industry and become the only global top-five smartphone brand to see shipments decline in 2016.

iphone_7_render_mr

Mockup of iPhone 7 case.

The analyst described slowing market demand for large-screen handset replacements and limited iPhone 7 selling points as key factors behind the expected decline, noting that the contribution of revised-up iPhone SE shipments in the 2016 fiscal year will remain "insignificant".

Given the fact that shipments fell YoY for the first time in 1Q16, we don't think large-screen replacement demand will contribute much to growth. To sustain growth, the iPhone needs to come up with more innovative features to revitalize the user experience, for example in form factor design, software and hardware specs. We don't see many attractive selling points for iPhone 7 in 2H16 and are conservative on 2H16F shipments. While we revise up 2016F iPhone SE shipments from 12mn to 18mn units, this won't offset overall iPhone shipments decline.

Kuo's note predicts that out of Samsung, Apple, Huawei, Oppo, and Vivo, only Apple will see shipments fall year-on-year, which suggests to KGI Securities that the decline in iPhone sales can't be solely blamed on industry structure.

"While we believe the high-end smartphone market still has room for growth, the development of a newer, more innovative user experience is a prerequisite for growth," said Kuo. "We believe only iPhone will see shipments fall YoY in 2016, for three reasons: (1) intensification of market competition; (2) time needed for commercialization of new user experience technologies; and (3) iPhone needs a makeover (e.g. form factor design) to keep attracting consumers."

As far as a handset makeover is concerned, rumors indicate the iPhone 7 will share a design similar to the iPhone 6s, but may be slightly thinner, perhaps through the removal of the 3.5mm headphone jack and the implementation of a thinner Lightning port. Antenna bands across the back of the device may be removed, but are expected to remain at the top, bottom, and sides of the iPhone, while the rear camera may be flush with the case.

Other rumors suggest Apple may be planning to introduce two versions of the iPhone 7 Plus – one with a single lens and a second with a dual-lens camera system that offers DSLR-like image quality with 2-3x optical zoom and improved performance in low light conditions. Whatever form the iPhone 7 takes, Apple will be hopeful of exciting consumers in ways that perhaps the iPhone SE could not, as the company strives to overcome what some commentators have called "peak iPhone".

Apple's earnings announcement for the second fiscal quarter (first calendar quarter) of 2016 takes place on Tuesday, April 26, and will provide a look at sales of the iPhone 6s, 6s Plus, and SE following Apple's record first quarter, which saw the company announce 74.8 million iPhone sales and $18.4 billion profit on $75.9 billion in revenue.

Apple has warned that iPhone sales will decline in the March quarter and has provided Q2 2016 guidance of $50 to $53 billion in revenue and gross margin between 39 and 39.5 percent. Should Apple only take in $50 to $53 billion, the company will see its first year-over-year revenue drop in 13 years.

Related Forum: iPhone

Popular Stories

iPhone 17 Pro Blue Feature Tighter Crop

iPhone 17 Pro Launching in Three Months With These 12 New Features

Saturday June 14, 2025 5:45 pm PDT by
The iPhone 17 Pro and iPhone 17 Pro Max are three months away, and there are plenty of rumors about the devices. Below, we recap key changes rumored for the iPhone 17 Pro models as of June 2025:Aluminum frame: iPhone 17 Pro models are rumored to have an aluminum frame, whereas the iPhone 15 Pro and iPhone 16 Pro models have a titanium frame, and the iPhone X through iPhone 14 Pro have a...
apple watch ultra 2 new black

Apple Watch Ultra 3 Finally Coming After Two-Year Hiatus

Monday June 16, 2025 8:45 am PDT by
Apple will finally deliver the Apple Watch Ultra 3 sometime this year, according to analyst Jeff Pu of GF Securities Hong Kong (via @jukanlosreve). The analyst expects both the Apple Watch Series 11 and Apple Watch Ultra 3 to arrive this year (likely alongside the new iPhone 17 lineup, if previous launches are anything to go by), according to his latest product roadmap shared with...
apple watch ultra snow

6 Features Coming to the Apple Watch Ultra 3

Tuesday February 25, 2025 9:00 am PST by
The Apple Watch Ultra 3 is expected to launch later this year, arriving two years after the previous model with a series of improvements. While no noticeable design changes are expected for the third generation since the company tends to stick with the same Apple Watch design through three generations before changing it, there are a series of internal upgrades on the way. By the time the ...
terminal macos tahoe

Apple's Terminal App Gets Colorful Redesign in macOS Tahoe

Monday June 16, 2025 4:12 am PDT by
Apple's Terminal app is getting a visual refresh in macOS Tahoe, and it's the first notable design update since the command-line tool debuted. The updated Terminal will support 24-bit color and Powerline fonts, according to Apple's State of the Platforms presentation at WWDC25. The app will also adopt the new Liquid Glass aesthetic with redesigned themes that align with macOS 26's broader...
iOS 26 on Three iPhones

Apple Says iOS 26 Won't Be Available on These iPhone Models

Tuesday June 10, 2025 6:58 am PDT by
Apple this week revealed that iOS 26 is compatible with the iPhone 11 series and newer. That means that iOS 18 is the end of the road for the iPhone XS, iPhone XS Max, and iPhone XR, which were all released in 2018. However, those devices will continue to receive security updates for at least a few more years. iOS 26 is compatible with the following iPhone models: iPhone 16e iPhone...
new iphone lockscreen ios 26

iOS 26: Five Changes Coming to Your iPhone Lock Screen

Tuesday June 17, 2025 8:46 am PDT by
With iOS 26, Apple has made some additions to the iPhone Lock Screen that aim to make it more customizable than ever. Of course, things can always change before the software makes its way to the general iPhone-owning public, but here are five new things iOS 26 can do on the Lock Screen as of the current developer beta. Widgets Top or Bottom In iOS 18, the row of widgets on your Lock...
iOS 18

Apple Releases iOS 18.6 Public Beta

Wednesday June 18, 2025 10:24 am PDT by
Apple today seeded the first betas of upcoming iOS 18.6 and iPadOS 18.6 updates to public beta testers, with the betas coming just a few days after Apple provided the betas to developers. Testers who have signed up for beta updates through Apple's beta site can download iOS 18.6 and iPadOS 18.6 from the Settings app on a compatible device by going to General > Software Update. When the...

Top Rated Comments

ToroidalZeus Avatar
120 months ago
Apple needs to drop the price if they want to keep sales up. 650 USD for a 16GB base model is ridiculous.
Score: 134 Votes (Like | Disagree)
MattXDA Avatar
120 months ago
The Galaxy S7 Edge would definitely tempt me over an iPhone 6s Plus if I didn't already own the iPhone. Curved screen, OLED display, better camera, waterproofing etc.
Score: 62 Votes (Like | Disagree)
WarHeadz Avatar
120 months ago
If Apple is under the impression that they can release a minorly updated 6S in late 2016 and make it a huge seller, they're sadly mistaken. If that's the case, I won't be upgrading from my 6 Plus anytime soon.

See, Apple has a tendency of being late to the party with new features, but when they finally arrive they're awesome. At least that's how it used to be. At this point Apple is moving from "fashionably late" territory to just plain rudely late to the party.
Score: 56 Votes (Like | Disagree)
Crosscreek Avatar
120 months ago
Market saturation sucks. It happened to tablets and PCs. :apple: Need a new signature product and the :apple:Watch didn't do it.
Score: 32 Votes (Like | Disagree)
PJWilkin Avatar
120 months ago
Ming-Chi Kuo .... Enough said
What a load of .........

I do wish people would stop quoting him
Score: 31 Votes (Like | Disagree)
sprezz Avatar
120 months ago
"Can't innovate, my ass!"

Oh wait...
Score: 31 Votes (Like | Disagree)