Claims suggesting weak iPhone 14 demand probably exaggerated

Apple consumers are aiming high while the market dips low

Reports suggesting some weakness in demand on iPhone 14 smartphones are almost certainly over-exaggerated. That’s according to the latest note from Morgan Stanley analyst, Erik Woodring. He thinks Apple is experiencing a stronger than expected sales cycle, with purchasers choosing the high end iPhone Pro devices.

Over a million iPhone 14 Pro sold in China

In a note to clients, the analyst cites his firm’s own data. This suggests iPhone 14 demand remains resilient, despite the many uncertainties we face, from war to energy to recession.

The Morgan Stanley analyst says, the lead time on the high end iPhone 14 Pro Max is tracking at the longest wait for any model introduced in the last six years at this point in the cycle. The iPhone 14 Pro is tracking as the third longest in the same time frame.

He notes Apple’s resilience, echoing comments from Apple CEO Tim Cook during the last fiscal call. Cook reflected on “unceasing” demand.

Apple seems to have tweaked perception

What this suggests is that consumers are continuing to invest in the best available models. That probably means Apple’s strategy to pop high end processors in its most expensive phones, along with attractive UI changes such as Dynamic Island, have worked.

It also indicates Apple’s going to generate higher average sales prices for iPhones across the next year.

“Collectively, these early cycle data points are helping to dispel fears of material iPhone weakness, aligning with our view that the iPhone is a more “staples-like” product more resilient to macro shocks (although we caution that it’s still very early in the cycle),” the analyst wrote.

Big demand in China, US, possibly India

Morgan Stanley sees similar patterns across the US and in China.

Woodring notes a recent report from the South China Morning Post, which claimed that on launch day September 9 Chinese shoppers pre-ordered over two million iPhone 14 devices on JD.com, which matches the two million they purchased last year. Interest was so high Apple’s website stalled, he said.

It appears over a million iPhone 14 Pro and nearly 800,000 iPhone 14 Pro Max orders were made, which suggests the scale to which consumers are aiming high, maintaining the level of interest they had in iPhone 13.

There’s a slight cloud. He estimates the lower end devices, iPhone 14 took around 10% of orders and iPhone 14 Plus grabbed less than 5%.

The analyst observes similar patterns in India, but notes that we don’t yet know who well Apple’s device has performed in Europe and Japan, all areas in which the company was forced to raise the overall selling price of its smartphones.

The inescapable conclusion?

Apple’s iPhone range continues to defy orthodoxy. And it seems when given a little encouragement, consumers will aim high even while the broader market sinks low.

We’ll find out more along the line, I suppose.

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