iPhone sales to decline in 2016 but Apple will pick up the slack in 2017 with iPhone 8, analysts say
iPhone sales to decline in 2016 but Apple will pick up the slack in 2017 with iPhone 8, analysts sayReuters

The intense competition in the premium smartphone market demands innovation in order to make a winning statement. Apple, being one of the leaders of the tech industry, has a lot to live up to with every new iPhone it launches each year. Rumours are rife about the iPhone 7, which is expected to be launched this year with incremental upgrades, but analysts are predicting 2016 to be an unfavourable year for Apple.

Analysts from KGI Securities and Barclays have shared their prediction about declining sales of iPhone this year. According to Ming-Chi Kuo, a KGI analyst, Apple could witness a drop in iPhone shipments to 190 million units this year, which would be lower than its sales in 2014 (193 million units). Even in the "best-case scenario," Apple could ship 205 million devices, which would mark a 11.6 percent year-over-year decline, 9to5Mac reported.

Kuo pointed to various reasons for the lack of consumer interest in iPhones. The company's most recent iPhone SE isn't expected to make a dent in Apple's overall performance this year, and the iPhone 7 would not be able to generate consumer interest due to the lack of redesign efforts and new features.

Barclays analyst Mark Moskowitz said in a note to investors last week that the iPhone 7 wouldn't have "any must-have form factor changes" for iPhone 6s users, according to Fortune. The new iPhone coming this year isn't going to bring major changes on the outlook, except for the removal of the 3.5mm headphone jack and a slimmer body, but it is likely to have updated components and some new features.

Moskowitz revised his estimate on iPhone sales this year, expected it to fall 1.8 percent over last year. Previously, Moskowitz had said iPhone sales would go up 2.6 percent in 2016.

Both analysts have great expectations from Apple in 2017, a year which could turn the tables for the Cupertino tech giant. Apple has some dramatic changes in mind, as Moskowitz's sources said the company might ditch the "S" series of iPhones to directly launch the iPhone 8 next year.

The iPhone 8 is expected to come with major design changes, such an OLED display, the home button to be replaced with a Force Touch-type controller, wireless charging and an all-glass design. The company is also likely to introduce a new 5.8-inch variant next year.

If the rumours are true and Apple delivers the iPhone 8 in 2017, the sales are expected to grow 10.3 percent, Moskowitz estimated. "In our view, these potential changes could drive a mega cycle," Moskowitz was quoted as saying by Fortune.