While Apple is having a
"tough compare" year with the iPhone 6s -- sales are healthy and even grew in the holiday quarter, but pent-up demand for larger-screened iPhones created a sales surge in 2015 that the 6s line has not matched in 2016 -- the 2017 fiscal iPhone sales year (which starts on October 1 of this year) looks bright and
may well set records, according to BMO Capital Markets analyst Tim Long.
Contradicting
some "doom" claims because current rumors predict the "iPhone 7" and "iPhone 7 Plus" to be largely (at least externally) similar to the existing iPhone 6s -- essentially another "tock" cycle before a rumored major redesign for the "iPhone 8" that will supplant the expected "iPhone 7s" in the 2018 fiscal year -- statistics compiled by Long and his team suggest the iPhone 7 may, like the iPhone 6, see a massive upgrade. This is due to the massively larger number of users, and how many of those users have iPhones that are approaching two years old or older.
Thanks to the strong sales of the iPhone 5s, the iPhone 6, and more recently the iPhone 6s -- along with mass changes in the US market to "pay as you go" plans that allow for more frequent upgrades -- the market of potential iPhone 7 buyers is larger than it has ever been. While iPhone sales saw their first-ever decline in the March quarter of this year, 25 percent of the installed user base -- about 120 million users -- will have two-year-old or older iPhones by the time the iPhone 7 comes out, Long reports.
Long's analysis for clients
According to Long's analysis, around 17 percent of iPhone users upgrade their iPhones immediately when a new model comes out and they are eligible to upgrade. The majority, 58 percent, upgrade within the first year, and 22 percent upgrade in the second year of the sales cycle of a new iPhone. Only two percent of users wait longer than two years to upgrade their iPhones. Thanks to the massive sales of the iPhone 6 line, the number of smartphones coming eligible for upgrades is higher than even the pool of those who were eligible to upgrade to the iPhone 6.
The graph also provides some insight into why iPhone 6s upgrading was less than the iPhone 6 cycle: by a slightly higher margin, more consumers upgrade on the "redesign" cycle (the iPhone 4, 5, 6, and upcoming 7 release years) than on the "s" cycle (the 4s, 5s, 6s). When the iPhone 6s came out, only 19 percent of iPhone users were eligible for upgrade at the time, compared to 23 percent for the iPhone 6, and an alleged 25 percent for the iPhone 7.
Long's analysis contradicts predictions from analysts like Ming-Chi Kuo, who have already said they expect the iPhone 7 to continue the sales decline due to a lack of visual differences from the iPhone 6s models, though there are suggestions that software and internal changes may foster a number of new features. Reports claiming that Apple has
ordered more "iPhone 7" units from its suppliers than it made of the iPhone 6 has caused some analysts to become more optimistic.
Sales of iPhone by quarter
Wells Fargo analyst Maynard Um, citing an (unconfirmed)
Economic Daily News report from Taiwan that Apple is ordering between 72 million and 78 million units, predicts that around 15 million of those units could sell during the limited period of time the new iPhone models are available for pre-ordering and ordering prior to the end of the September quarter. This would imply that Apple expects to sell between 57 million and 63 million iPhone 7 units at Christmas, and when added to the other models, could well top 75 million units sold in the company's fiscal Q1, a new all-time record.
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