Widely respected analyst Ming-Chi Kuo writes that sales of Apple’s new iPhone XR are slightly below expectations, corroborating a handful of previous reports we’ve seen over the past few days. In a new investor note obtained by MacRumors, Kuo lowered his estimate for iPhone XR sales by upwards of 20% for the current holiday quarter.

Now is this reason to panic? Not necessarily. To this point, Kuo articulates that lower demand for the iPhone XR may be offset — in a financial sense — by sales of Apple’s pricier iPhone XS models. Indeed, Apple’s most recent quarterly report illustrates that Apple — with more margin friendly devices in the mix — can easily generate more revenue even in the face of stagnating iPhone sales.

Specifically, iPhone sales last quarter remained stagnant while revenue from iPhone sales jumped by a whopping 29%. In other words, whether or not iPhone XR sales are above or below projections is arguably irrelevant as long as Apple keeps finding ways to boost revenue, which is clearly more important than how any one specific iPhone model is doing in the marketplace.

All told, Kuo believes cumulative iPhone sales for the quarter will remain steady, albeit with a different mix of iPhone XR and XS sales as initially anticipated. To this end, revenue may ultimately check in a tad higher when all is said and done.

Kuo’s note reads in part:

We have reduced our iPhone XR shipment estimation from 100mn units to 70mn during the new product lifecycle (4Q18–3Q19) for the following reasons: 1) Negative impacts on consumer confidence from the trade war, especially in the Chinese market, 2) expectations from more users for more affordable XR or the dual-camera and narrower bezel design to be provided at the current price level, and 3) competition from Huawei’s Mate 20 series.

While Kuo may be right about a lull in iPhone XR sales, his explanation seems a bit off. I can’t really imagine many prospective iPhone XR buyers being hesitant to pull the trigger because the device lacks a dual-camera and sports slightly larger bezels. One factor that hasn’t been discussed widely is that Apple’s advertising campaign for the iPhone XR practically seems non-existent. With November already in full swing, it will be interesting to see if Apple embarks on a huge iPhone XR marketing push over the coming weeks.

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