The consensus of analysts is that Apple will ship between 210 to 230 million iPhone units in fiscal 2016. However, Kuo sees a worst case scenario of iPhone shipments reaching just 190 million units, an 18% reduction in shipment growth and 3 million fewer iPhones than the company sold in 2014.
Best case scenario, Kuo says Apple would sell 205 million units, 5 million less than other analysts are predicting and an 11.6% reduction in growth.
Given the fact that shipments fell YoY for the first time in 1Q16, we don't think large-screen replacement demand will contribute much to growth. To sustain growth, the iPhone needs to come up with more innovative features to revitalize the user experience, for example in form factor design, software and hardware specs. We don't see many attractive selling points for iPhone 7 in 2H16 and are conservative on 2H16F shipments. While we revise up 2016F iPhone SE shipments from 12mn to 18mn units, this won't offset overall iPhone shipments decline.
Regardless of shipments, Apple is predicted to under perform the industry and become the only global top five smartphone maker to see shipments decline.
While we believe the high-end smartphone market still has room for growth, the development of a newer, more innovative user experience is a prerequisite for growth," asserted Kuo. "We believe only iPhone will see shipments fall YoY in 2016, for three reasons: (1) intensification of market competition; (2) time needed for commercialization of new user experience technologies; and (3) iPhone needs a makeover (e.g. form factor design) to keep attracting consumers.
Notably, Kuo has previously predicted that Apple will introduce a new all glass iPhone design with an AMOLED display in 2017. You can read more about that here.
The new iPhone 7 is said to feature a dual lens camera (Plus model only), simplified antenna bands, no headphones jack, and possibly a Smart Connector. Please follow iClarified on Twitter, Facebook, Google+, or RSS for updates.