Slow iPhone 8 sales tipped to bite into Apple's earnings

The new iPhone X. Photo / AP

Weak demand for Apple's second-rank new handset, the iPhone 8, is tipped to weigh on the tech giant's profits this week.

The flagship iPhone X features an overhauled design and costs up to $2099 but does not go on sale until Friday in limited supply.

The cheaper iPhone 8 hit shops on schedule in September and its first few days on sale will be included in Apple's quarterly report on Friday.

Analysts and mobile industry sources report slow sales for the smartphone. Its design is the same as its predecessor, with a handful of technical upgrades, and some Apple fans are thought to be awaiting the arrival of the top-of-the-range iPhone X.

Market research suggests demand for the iPhone has been lower than for previous new models. Only 16 per cent of US iPhone buyers in the last quarter opted for the iPhone 8, according to Consumer Intelligence Research Partners, compared to 43 per cent who bought the ­iPhone 7 in the same period a year ago.

Last week, the mobile network AT&T reported subdued demand for upgrades. UBS expects iPhone sales to be around 45 million in the quarter, flat on last year, although it believes revenues and profits will grow, helped by rising iPad sales and demand for more expensive plus-sized iPhones.

Analysts will grill Tim Cook, Apple's chief executive, on whether slow iPhone 8 sales are a sign that shoppers are waiting for the more expensive ­iPhone X model or merely buying fewer handsets.

"The weakness in the iPhone 8 probably is more due to strong demand for the X than a disappointing cycle," UBS said.

The iPhone X sold out almost immediately when pre-orders opened, with some shoppers told to wait several weeks for the phone to be delivered. It suggests that even if there is demand for the high-end device, Apple is struggling to make enough of them.

The iPhone X's new design and complicated 3D sensor system have led to widely-reported production hiccups. It is going on sale two months after its r­elease and supply is unlikely to catch up with demand for months.

Last week Apple was forced to deny a report that it had lowered production standards to boost supply.

Apple's last experiment with releasing two different versions of the iPhone was in 2013, when it unveiled the 5s and a cheaper iPhone 5c.

The latter sold in disappointing quantities and Cook admitted the company had overestimated demand for it.

Apple shares are trading at close to all-time highs, suggesting investors ­remain confident about the company's future. Its guidance for the current quarter, typically Apple's most profitable period of the year, will also be ­eagerly awaited this week.

For the next quarter, it is expected to report record iPhone sales and profits.