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Apple: Early Demand Indicators Show No Signs of An iPhone Super Cycle

Key Takeaways

Early Read Says No Super Cycle for New iPhones

 Eagle Alpha’s indicators of iPhone 8 and iPhone X demand do not show much enthusiasm for the new phones. Our Google search index based on terms around the launch of the phones shows that the company’s latest iterations of the iPhone are showing interest levels below new product cycles of the 6 and 7, but above the “s” cycles (Fig 1). Surprisingly, analysis shows that the new phones are only generating the same interest in the US as the 5s cycle (Fig 3). When benchmarked against the 7, search results are very poor (Fig 5).

 Examining sentiment on Twitter is also proving to be rather muted, with combined total net sentiment for the 8 and X below that of the 7 (Fig 7). Breaking out Twitter sentiment on the new features of the X also reveals rather negative views during the week of the launch (Fig 8). Pricing is driving most Twitter conversations for the X, followed by Face ID (Fig 2). Net sentiment around pricing for the X is hovering close to neutral. Sentiment around face ID and the “notch” are negative.

 Potential Implication

While the iPhone X has yet to be released for pre-orders, early online search interest and consumer sentiment around both the 8 and X is very subdued. The subdued interest is in contrast with high expectations for unit sales and much market chatter around a “super cycle” for the new phones. We view the early read on market acceptance in a negative light for phone sales in coming quarters, when compared to elevated expectations. Based on search interest for previous phones, a unit sales estimate similar to the 6s and 7 seems reasonable (Fig 6).