Apple iPhone sales to continue decline, new SE model expected in 2017

Apple chief executive Tim Cook during the launch of the MacBook Pro said that the company's flagship smartphone series iPhone 7 was doing really well and has been seeing an unprecedented demand globally just after its launch in September.

But if KGI Securities' Ming-Chi Kuo, considered the best Apple analyst, is to be believed then Apple will decline in sales in the first and the second quarter of 2017 unlike its performance in the same quarters of 2016. Kuo says that the second quarter decline will come if Apple chooses not to refresh its 4-inch iPhone SE next year.

He further explains that the decision might be a result of Apple trying to focus all its efforts on the iPhone 8, the 10th-anniversary edition of iPhone, which the world expects to be an engine of innovation.

Read more: Apple's 10th anniversary iPhone 8 to come with OLED displays

"Shipment volume in 2Q16 came in higher than expected thanks to upbeat demand for the iPhone SE. However, in order to keep gross margin at a high level and to avoid cannibalisation of high-end models, we do not expect Apple to launch an upgraded iPhone SE in 2Q17. Without contribution from a new model, we forecast total iPhone shipment volume will reach 35-40mn units and fall YoY in 2Q17, lower than the 40.4mn units in 2Q16," Kuo is quoted as saying in a note to investors.

However, Kuo didn't also clarify whether the iPhone SE will see an update of the SE. The iPhone SE, which was targeted at emerging markets, didn't do well in the target markets but also helped sales in US and Middle East countries.

Read more: Apple to launch Watch 2 in next six months: Report

He also said that declining sales may force Apple to exert pressure on its suppliers to reduce costs starting this month and the decision might be forced upon due to the company's efforts to keep gross margin high on its latest iPhones.

However, the analyst also said that though Apple will see decline in sales in the first two quarters, the iPhone 8 launch is likely to make up for the losses.

Read more: Forget iPhone 7, Apple is planning an 'all glass' iPhone 8

According to Kuo, Apple is expected to redesign the iphone 8 with an all-glass enclosure instead of the ranges' famed aluminium chassis which will also be complemented by new cutting edge curved OLED display. The phone is expected to come in three variants and sport an optic fingerprint recognition technology.