Stephen Silver
Apple could sell as many as 350 million iPhones in the 18 months following the release of its 2018 lineup, fueled in part by a massive upgrade opportunity from legacy users whose devices have run their course.
The next cycle of iPhones is going to be crucial for Apple, as the company again reaches for a "supercycle" or something like it.
An analyst research note supporting the 350-million-iPhones thesis was obtained by AppleInsider. In it, author Daniel Ives of GBH Insights believes that "the Street is now starting to fully appreciate the massive iPhone upgrade opportunity on the horizon for the next 12 to 18 months with three new smart phones slated for release."
Ives sees 350 million phones as the "window of opportunity" for upgrades, but now it's a matter of which of the models, and which price point, "strikes a chord" with buyers, as the iPhone X moves down and new models take its place.
Projecting the cycle
Going by the current iPhone average sales price of $728.30, as of the most recent quarter, 350 million iPhones would result in over $250 billion in revenue for Apple. The ASP, however, could drop based on the new lineup.
There are many variables at play as to whether the cycle can actually come close to that 350 million figure. A lot of that depends on the range of the 12-to-18-month window. This AppleInsider graph, based off of Apple data, shows the year-by-year sales of iPhones over the last six years. Apple has never sold 350 million iPhones, or even 300 million, in a single year, but has likely come close during some 18-month windows.
Whether Apple can reach that figure will also depend on the upgrade trends of iPhone users, and whether they hold. In March, a Loup Ventures survey found that 22 percent of iPhone owners plan to upgrade this year.
Also in the note, Ives predicts three new iPhone models (5.8 inch to 6.5 inch OLED designs with an LCD model) in the next three-to-six months. These new devices, he says, "will help capture the underlying demand/upgrades among customers that have decided to bypass the 8/8+/X cycle this time around, with price points and features that catalyze fence sitting iPhone customers onto their next smartphone during the course of 2018/early 2019."
The analyst says that next week's WWDC will focus on software, with an "outside" chance that the iPhone SE 2 may appear. Ives also calls Apple's reported decision to use all OLED screens beginning in 2019 "a smart strategic move." He has maintained his "Highly Attractive" rating and $200 price target for Apple.
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26 Comments
Awesome news. When you look at the stock price of Amazon stock and some others I won't mention you have to wonder what Apple's could be if perceptions could be changed.
Make sense. Next few iPhone cycles will be OLED and than microLED. Whether iPad and MACs will adopt better LCD or OLED is all based on cost.
Personally, I don't think the SE 2 will follow in the footsteps of the first model. I think Apple was a bit overwhelmed by the popularity of the smaller screened SE and have decided this time around to release a smaller flagship phone in the Fall. If an SE 2 is released it won't have the latest and greatest, it'll be the same style with internals upgraded to last year's tech and the price kept the same.
It looks to be that the user base has delayed a lot of purchases by holding on to their iPhones longer, somewhere in the neighborhood of 4 years average now. It's quite possible that average age will continue to grow, but its hard to imagine that it will grow much beyond 5 years. Belies the meme about iPhone forced obsolescence. If we add in the users of refurbished and second hand iPhones, it's quite easy to understand how and why the user base continues to expand. Conservatively, we should start seeing a small but steady growth in unit sales trrending at a rate of 3% to 5% a year for the next few years.