Verizon is anticipating a big pick up in sales for the iPhone X even though sales of the new iPhone 8 models seem to be slower than expected. The iPhone X will be available for pre-order starting next week.
On Thursday, as part of its financial report, the carrier said that in the third quarter of the year when the iPhone 8 initially went on sale, only 5.5 percent of the customers of Verizon upgraded their phones, down from a 6.3 percent upgrade rate in 2016 when Apple released the iPhone 7. The data point arrives as across the wireless industry, various carriers are observing slower sales of the iPhone 8 as compared to the iPhone 7. Possibly, numerous consumers are waiting for the $999 iPhone X model, and this year, the carriers also offered promotions for consumers buying the iPhone 8 that were less lucrative than those that were offered in 2016.
However, Matt Ellis, the Verizon CFO, sounded confident that as the iPhone X goes on sale, the upgrade rate would improve.
“I think what you’re seeing there is a difference in timing with some of the new devices coming out versus what we’ve historically seen,” said Ellis during a call with some analysts. “Obviously Apple is part of that with splitting the new devices between the 8, which came out in 3Q and the ten, which comes out in 4Q. But also on the Android OS side of the house, we’ve had the new Google device coming out this month as well.”
He said that the end result would be some of the common third-quarter smartphone upgrading activity will be driven into the fourth quarter.
“As we get into the holiday season, some of those new devices come out, we think we’ll see strong demand,” Ellis said. “And look if you’re paying $1,000 for a new handset you’re going to want that to be on a good network so we’re very confident that we’ll get more than our fair share of that activity when it comes through in the fourth quarter.”
Analysts have stated that the deferred demand might also have deferred some of the fierce competition in the wireless market that appeared to fade in the third quarter. They predicted that battling for customers who want to purchase an iPhone X could bring back some of the sweeter deals and deeper discounts of 2016, especially from smaller carriers T-Mobile and Sprint.
“We expect switcihing activity to escalate and the challengers to resume more aggressive share gains following the iPhone X launch,” wrote Jonathan Chaplin on Thursday at New Street Research.
Earlier, Verizon revealed that the company’s revenue grew by nearly 3% to $31.7 billion, better than the $31.4 billion that was anticipated by analysts. Adjusted earnings per share of 98 cents resembled analysts forecasts and were just below 2016’s $1.01 for the same quarter. The wireless service provider added 274,000 postpaid, or regular monthly, phone customers, around 60% more than what analysts expected.
In morning trading on Thursday, shares of Verizon increased 3%, thanks to the stronger than expected growth of revenue and phone customer. Part of the sales growth was because of the acquisition of Yahoo, which closed in June. However, the wireless service revenue of the carrier also slipped less than expected, shrinking 5% instead of the nearly 7% decline that was seen in the second quarter.
Shares of Apple have been under pressure because of the weak sales indications of the iPhone 8. On Thursday, the stock lost nearly 3% amid rumours that the company asked its iPhone suppliers to cut back on production of the iPhone 8 models.