Sales of iPhone X begin: Can Apple live up to the hype?

SAN FRANCISCO — Apple’s iPhone X went on sale Friday, as the company scrambles to meet demand for a marquee device that sports a lush screen, facial-recognition skills and a $1,000 price tag .

Most analysts have predicted Apple won’t be able to catch up with demand until early next year.

But the company is optimistic. “As we approach the holiday season, we expect it to be our biggest quarter ever,” CEO Tim Cook told Wall Street analysts Thursday. He added that the company is increasing its iPhone X production capacity every week.

Apple is now giving delivery times of three to four weeks, down from five to six weeks, for those ordering online. Lines formed outside stores in New York, Chicago, Hong Kong, Milan, Italy, and Dubai, United Arab Emirates, among others, as customers came to pick up orders or to grab one of the limited numbers available for same-day sales Friday.

Shares rose 2.8 per cent to $172.89 in midday trading Friday.

Apple had said Thursday that iPhone sales rose 3 per cent, to 46.7 million, in the July-September quarter, a period that saw the iPhone 8 and 8 Plus come out in the final weeks. Sales could have been higher if many customers hadn’t been waiting for the iPhone X.

As with recent quarters, one of the main sources of Apple’s growth is coming from its services, which are anchored by an app store that feeds the iPhone and other devices.

Revenue in that division surged 34 per cent to $8.5 billion during the July-September period. All told, Apple earned $10.7 billion on revenue of $52.6 billion, compared with a $9 billion profit on revenue of $46.9 billion a year earlier.

Nonetheless, the just-ended quarter largely became an afterthought once Apple decided to release the iPhone X six weeks after the iPhone 8.

“The Super Bowl for Apple is the iPhone X,” GBH analyst Daniel Ives said. “That is the potential game changer.”

But it also brings a potential stumbling block. While conspiracy theorists might suspect that Apple is artificially reducing supply to generate buzz, analysts say the real reason is that Apple’s suppliers so far haven’t been able to manufacture the iPhone X quickly enough.

Making the iPhone X is proving to be a challenge because it boasts a colour-popping OLED screen, which isn’t as readily available as standard LCD displays in other iPhone models. The new iPhone also requires more sophisticated components to power the facial-recognition technology for unlocking the device.

Even with the iPhone X’s delayed release, Apple is still struggling to catch up.

Apple is counting on the iPhone X to drive even higher-than-usual sales during the first nine months of next year — a scenario that might not play out if production problems persist and impatient consumers turn instead to phones from Google or Samsung.

“What Apple needs to do is manage consumer expectations so they don’t get frustrated having to wait for so long for a new phone,” Ives said.

Analysts believe Apple can pull off the juggling act.

Forrester’s Julie Ask said would-be buyers aren’t likely to switch to Android just because they can’t get an iPhone X right away. At most, Ask said, it will delay when Apple gets revenue.

They are expecting the company to sell 242 million iPhones in the fiscal year ending in September 2018 — the most in the product’s history. The previous record was set in 2015 when Apple shipped 231 million iPhones, thanks to larger models introduced just before the fiscal year began. By comparison, Apple shipped nearly 217 million iPhones in its just-completed fiscal 2017.

If Apple falters, investors are likely to dump its stock after driving the shares up by 45 per cent this year on the expectation that the iPhone X will be the company’s biggest hit yet.

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Tali Arbel reported from New York. Jon Gambrell in Dubai contributed to this story.

Michael Liedtke And Tali Arbel, The Associated Press