The Whole World Could Do With an Early iPhone

Opinion

August 24th, 4:15am

Tim Culpan

Tim Culpan -

On the surface, it’s just a smartphone — little more than a very slick, rather pricey, well-built gadget. But the iPhone is much more than that, and this year the world could do with having one released just a little earlier than usual. That’s because the global smartphone market is in a funk, with shipments dropping 9% in the June quarter. Xiaomi Corp., the world’s third-largest player, recently reported a 30% slump in revenue from handsets. Larger rival Samsung Electronics Co. was the only top-five name to increase sales volume during the period, but that was largely due to a particularly bad year-earlier period when Covid lockdowns hit production in Vietnam, according to Counterpoint Research. Even Apple Inc. posted a decline in unit sales for the June quarter. And the current outlook doesn’t look promising. “Geopolitical volatility and economic uncertainties” were the reasons Samsung gave recently for a very muted second-half forecast. But Apple may just save the day, at least cosmetically. The company is planning to announce the iPhone 14 on Sept. 7, the earliest launch in six years, Bloomberg’s Mark Gurman writes. There’s little evidence to suggest that timing has any influence on total sales of a given iPhone model, but the release date has a direct impact on the financial period during which revenue is recorded. Apple, in its cute, idiosyncratic way, has a unique earnings calendar with the quarter and financial year ending around a week before the end of September. It varies by a day or two each year, and for fiscal 2022 will finish on Sept. 24. Sales of the new model usually commence around 10 days after launch, which means that the earlier announcement this year will offer around an extra week of iPhone revenue, Gurman notes. One week out of 52 doesn’t seem like much, but the iPhone’s annual release cycle coupled with anticipatory excitement makes that initial sales period the most important seven-day window of Apple’s financial year. Recent data show that timing impacts what proportion of iPhone revenue occurs during that September quarter. And that week’s numbers will matter to more than just Apple and its investors. The entire industry could benefit. Hype breeds hype, so if Apple pulls out really good figures and posts high growth, news headlines will talk about the iPhone’s strong demand and rivals are likely to push their own marketing harder in order to compete. Consumers may then be enticed to make a purchase when they would not have otherwise. With early adopters driving initial demand, any weakness in sales won’t show up until weeks or months later, when a new financial period is under way. Such a possibility is real. Inflation that has spurred interest rate hikes is starting to give way to slowing economic growth, with the risk of declining spending and increased unemployment. The global economy seems poised between a sharp downturn and a soft landing. Apple signaling that its earlier supply chain woes have eased would combine well with a perception of consumer strength. In tough economic times, many customers can’t afford to buy a shiny new gadget. Yet millions of others do have the cash and simply sit on the sidelines in expectation of harder times ahead. An earlier release could juice Apple’s September-quarter numbers just enough to convince the world that the economy is fine and the smartphone market is healthier than it otherwise appears, just as the US releases inflation and jobless numbers. To the global economy, the iPhone is a symbol of consumer spending, which has stayed strong despite rate hikes. But fear and uncertainty are rising, and a bit of good news could do wonders for the whole world. Bloomberg

from Asharq AL-awsat https://english.aawsat.com/home/article/3833611/tim-culpan/whole-world-could-do-early-iphone