iPhone 11: Apple Has Taken The Right Steps

Daniel Martins

Some interesting stats on iPhone 11 sales have come out. According to research firm Omdia, this smartphone model has been a success in the first three months of 2020.

Despite the COVID-19 crisis, Apple shipped 19.5 million units of the iPhone 11. In the comparable quarter of last year, only 13.6 million iPhone XR units (the reigning champion back then) had been sold.

Top 10 Models In Global Smartphone Shipments
Top 10 smartphones in first quarter 2020 and 2019Omdia

Director of smartphone research Jusy Hong provided an interpretation of the numbers:

Apple’s success is the result of its strategy to offer relatively few models. This has allowed the company to focus its efforts on a small number of products that appeal to a broad selection of consumers and sell in extremely high volumes.

I agree with the main message above. Until the release of the iPhone SE in April 2020, four devices had been available for sale. The cleaner model lineup probably helped consumers in the decision-making process. Check out the table below.

Apple iPhone Lineup 2020 vs 2019
iPhone lineup, 2020 vs. 2019DM Martins Research

Here are a few of my own observations:

  • Both top-of-line models in 2020 (11 Pro and 11 Pro Max) featured as best-selling smartphones. None of the top-of-line models in 2019 (XS and XS Max) did. There was no difference in pricing at launch between 2020 and 2019. Therefore, a good hypothesis is that the new device features in the 2020 versions appealed more to consumers than they had in 2019.
  • First quarter 2019 sales of the 8 and 8 Plus combined roughly equaled first quarter 2020 sales of the XR. From a revenue perspective, last year’s “sales cannibalism” between the 8 and 8 Plus was not necessarily a bad thing for Apple – think of splitting cash and putting it in two different pockets. However, offering fewer models has probably helped the company operationally. Margins could benefit.
  • At the entry level, sales in both years were comparable. Worth noting, the “dirt cheap” iPhone SE did not debut until the second calendar quarter of 2020. I expect Apple to do better at the low-end of the spectrum in the current three-month period than it did last year. If I am right, the company will have a good shot at reversing the 7% iPhone sales drop in the most recent quarter.

Apple has taken the right steps

It looks like Apple did the right thing in late 2019 by streamlining the iPhone model lineup. The missing piece of the puzzle was addressed this year, with the introduction of the more affordable iPhone SE.

The COVID-19 crisis and ensuing recession should be a headwind to tech device sales in 2020. Otherwise, Apple’s year would have probably been one of solid recovery in smartphone revenues, pending the results of the upcoming 5G super-cycle.

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