Inflation and concerns of a looming recession have impacted the smartphone market adversely. Although the new iPhone 14 is expected to perform well even in a slow market, JP Morgan analysts believe that the new Apple Watch lineup is going to take a hit.
According to rumor mills, the upcoming iPhone series will feature four new 5G smartphone models with larger displays and batteries:
- 6.1-inch iPhone 14 and iPhone 14 Pro
- 6.7-inch iPhone 14 Plus and iPhone 14 Pro Max
Macroeconomic situation to hit “discretionary purchases” like Apple Watch, not iPhone 14
In spite of alleged price increases across the series, Apple ordered 90 million units of the iPhone 14 series at the time of launch with confidence in its strong demand. Analysts at JP Morgan also agree that iPhone 14 will “sell well” because of the high demand for its premium models and the company’s purchase plans like Buy Now Pay Later, trade-in, and interest-free installment plans for Apple Card holders.
However, the market does not look promising for the new Apple Watch lineup. In its new note to investors, viewed by AppleInsider, the JP Morgan analyst wrote that Apple Watch Pro which is expected to be priced at $900 is likely to be hit by the tough economy.
JP Morgan believes that economic pressures are more likely to hurt sales of the Apple Watch Series 8 and the expected Apple Watch Pro.
“Pricing is a key watch-point in a tough macro [economy] which comprises inflationary pressures and pull back in consumer spending,” says the company, “but we believe it matters more for Wearables which are considered more discretionary purchases relative to iPhone by consumers.”
For consecutive quarters, iPhone sales have generated record revenue. Even in the slower third quarter before the launch of the new iPhone series, iPhone sales hit $40.7 billion because of strong demand for the iPhone 13 series, especially the Pro models.