Data suggests tens of millions of iPhone users ready to fuel 2017 'supercycle'

AppleInsider · April 21, 2017 4:21AM

Lending credence to speculation of a coming iPhone "supercycle," market research firm comScore on Thursday released data showing tens of millions of users who own legacy iPhones are primed to upgrade.

According to statistics published in comScore's 2017 U.S. Cross-Platform Future in Focus report, Apple's latest iPhone 7 and 7 Plus accounted for 15 percent of the estimated 85.8 million U.S. iPhones -- an all time record -- in operation as of December.

As with any new hardware release, previous-generation models expectedly account for the lion's share of units in circulation. For a product like iPhone, however, that translates to many tens of millions of units.

Specifically, some 48.4 million people were using iPhone 6 series devices at the end of 2016. Another 21.9 million owned an iPhone 5s or older during the same period, according to comScore MobiLens data. If historical upgrade trends continue, a healthy portion of the collective 70 million iPhone users will buy Apple's latest and greatest device, representing a huge windfall for the company.

As presented in the graph above, iPhone ownership tends to surge in the fall quarter when new models are released and older versions are afforded price drops. Apple helped upend its own smartphone sales model when it introduced a phablet device in the iPhone 6 Plus in 2014, creating an even larger iPhone user demographic that swelled to 53 million combined iPhone 6 series owners in September 2016.

Though iPhone 6 marketshare is slowly decaying, especially as existing users update to iPhone 7, there remains a strong contingent who have held on to older hardware. Along with new converts, owners of legacy iPhones are widely expected to fuel a so-called "supercycle" when Apple releases its next-generation handsets this fall.

Coined by industry analysts, the coming "supercycle" is best described as a sudden upwelling of demand following a comparatively weak fiscal 2016. Apple last year faced three straight quarters of revenue declines as iPhone faced stiff competition and lower than anticipated sales in China.

The company managed to stabilize the downturn with iPhone 7 and last quarter demolished Wall Street expectations to set a new quarterly record of $78.4 billion in revenue on the back of 78.3 million iPhone sales.

For the coming iPhone upgrade cycle Apple is widely rumored to introduce not only updated iPhone 7 series hardware, but a completely new device some have dubbed "iPhone 8." Thought to be priced above "iPhone 7s" handsets, the forthcoming "Jesus phone" is expected to feature a number of exotic technologies including a large OLED display, curved glass sandwich design, dual rear-facing camera array with potential AR applications, 3D sensing front-facing camera, in-screen Touch ID and more.

melgross · April 21, 2017 4:58AM

I can see this happening because the original super cycle, and the drop in sales the next year was misunderstood.

i believe the 6/6+ series sales rose 48% from the year before, and the 6S/6S+ series dropped 15% from that level. Consequently, people were saying that Apple had hit a peak, and it would be downwards after that. But the reality is different, and for good reasons. Many people upgrade every two years. The 6/6+ had a major redesign. Two new phones instead of one, and, for Apple, a super sized model too. As a result, upgraders went wild. The opportunity to match the sizes of Android models was too much of a draw to ignore.

as a result, people who planned to upgrade the year after, on their normal two year cycle, decided instead to upgrade a year earlier, and the upsurge in sales occurred.

but what happened next year with the S series? Well, a lot of upgraders for these phones already upgraded the year earlier, and so weren't available for the next year. So sales declined. Oddly enough, I haven't read that from anyone, anywhere. But sales were still 30% higher than for the 5S series. My expectations were that many would return for the 7/7+ cycle, and they did. Sales are up. More sales last quarter than Apple ever had during a holiday season. Even if the extra days were subtracted, sales would still have about about the same.

so now we have the third year we're in. The next phones later this year will be the third generation after that 6/6+ series. Even if we didn't have (supposedly) an all new OLED based model, we could expect increased sales. By how much, we can only guess. But it would be there. The new model will help to increase them further.

prokip · April 21, 2017 5:01AM

Yeah I'm an iPhone 6+ user waiting toes whether iPhone 8 is worth the step up?

bestkeptsecret · April 21, 2017 5:54AM

melgross said:

I can see this happening because the original super cycle, and the drop in sales the next year was misunderstood.

i believe the 6/6+ series sales rose 48% from the year before, and the 6S/6S+ series dropped 15% from that level. Consequently, people were saying that Apple had hit a peak, and it would be downwards after that. But the reality is different, and for good reasons. Many people upgrade every two years. The 6/6+ had a major redesign. Two new phones instead of one, and, for Apple, a super sized model too. As a result, upgraders went wild. The opportunity to match the sizes of Android models was too much of a draw to ignore.

as a result, people who planned to upgrade the year after, on their normal two year cycle, decided instead to upgrade a year earlier, and the upsurge in sales occurred.

but what happened next year with the S series? Well, a lot of upgraders for these phones already upgraded the year earlier, and so weren't available for the next year. So sales declined. Oddly enough, I haven't read that from anyone, anywhere. But sales were still 30% higher than for the 5S series. My expectations were that many would return for the 7/7+ cycle, and they did. Sales are up. More sales last quarter than Apple ever had during a holiday season. Even if the extra days were subtracted, sales would still have about about the same.

so now we have the third year we're in. The next phones later this year will be the third generation after that 6/6+ series. Even if we didn't have (supposedly) an all new OLED based model, we could expect increased sales. By how much, we can only guess. But it would be there. The new model will help to increase them further.

Makes sense to me.

theotherphil · April 21, 2017 6:51AM

Myself and the wife both have iPhone 6 and will be upgrading with the next release.

cali · April 21, 2017 6:57AM

It's gonna be called the iPhone 9. Officially.

yojimbo007 · April 21, 2017 8:54AM

... and who will buy the remaining 160 million units to match the 2015 230 million unit sales? And then some? Not being sarcastic.. just curios how these numbers will come together..

gregg thurman · April 21, 2017 10:04AM

melgross said:

as a result, people who planned to upgrade the year after, on their normal two year cycle, decided instead to upgrade a year earlier, and the upsurge in sales occurred.

but what happened next year with the S series? Well, a lot of upgraders for these phones already upgraded the year earlier, and so weren't available for the next year. So sales declined.

An examination of iPhone ASPs shows that during FY2016 (iPhone 6S/6S Plus) Apple sold more iPhone 6 units than it did iPhone 6S units.

Ergo, the base of 6/6S iPhones will be at least 2 years old come October 2017, but importantly, with well over half (2/3s?) being 3 years old technologically.

Average December quarter bi-annual upgrade rate of the last 4 years (5S/C, 6/Plus, 6S/Plus, 7/Plus)) is ~36"%". Applying that rate to FQ1/2016 unit sales (74,772,000) yields FQ1/2018 unit sales of 101 Million units.

I believe Apple is going to announce an iPhone 7S (4.7"), an iPhone 7S Plus (5.5") AND an iPhone "X"*. (OLED 5.0") that will be offered at $969 with 128 GB memory. Although this price may limit iPhone "X" sales it will raise iPhone ASPs significantly nevertheless.

I also believe the iPhone "X" will only be available during FY2018 as a special iPhone, that will be replaced by an iPhone 8/Plus in FY2019. By discontinuing the iPhone "X" Apple makes room for a $769 iPhone 8 (64 GB 5.0" OLED) and an $869 iPhone 8 Plus (64 GB 5.8" OLED) in FY2018.

Without the iPhone "X" I do not see iPhone unit sales growing by the implied 36% bi-annual rate. With an iPhone "X" I see that growth rate as very doable.

[Deleted User] · April 21, 2017 11:46AM

I own a 6 - 64GB; since I removed the FB app,I get 2 days of battery lifetime. For all my purposes and as long as the battery holds, no reason to upgrade. I would need a really compelling unique selling point. All rumors today point more to new features that I am really not interested in.
Considering I actually buy the thing, since I don't want a 2-year contract (I have a pre-paid; in Germany they offer mostly 2 years contracts otherwise), before I dish 800€ or more for a phone, I really need a compelling reason.
If that is not the case, I will wait another year assuming my phone doesn't die before...

[Deleted User] · April 21, 2017 11:47AM

PS: I also have a 7 from work - apart being markedly faster, and a somewhat brighter and more saturated screen, not really much different than the 6 (for my use case, that is).

macxpress · April 21, 2017 12:12PM

cali said:

It's gonna be called the iPhone 9. Officially.

I hope they just simply call it, iPhone. It doesn't need number after it.

jcdinkins · April 21, 2017 12:13PM

pakitt said:

I own a 6 - 64GB; since I removed the FB app,I get 2 days of battery lifetime. For all my purposes and as long as the battery holds, no reason to upgrade. I would need a really compelling unique selling point. All rumors today point more to new features that I am really not interested in.
Considering I actually buy the thing, since I don't want a 2-year contract (I have a pre-paid; in Germany they offer mostly 2 years contracts otherwise), before I dish 800€ or more for a phone, I really need a compelling reason.
If that is not the case, I will wait another year assuming my phone doesn't die before...

It's amazing what simply removing FB does for battery life on a phone. I don't care what they say about disabling auto video and various other ways to try and save battery life - that app eats your phone's battery, period. As for the iPhone 8, I have an SE and the smaller screen and inability to accurately type is now becoming a little frustrating for me personally. I'll be upgrading to the 8 when it comes out.

rotateleftbyte · April 21, 2017 12:26PM

Looks like those who are gonna short the stock are getting their buy orders in early.
(sic)

I honestly don't see how Apple will sell more each year on year. There are only an finite number of customers and with the main competition (Galaxy S8/S8+) generally getting a good reception the competition will be fiercer than ever. Then if Google ever gets its 'Pixel' line properly sorted out then we are in for a three way split in many markets if not an increase in the % of device running Android.
With that, how can these guys say that there is gonna be a bumper year with a straight face?

airnerd · April 21, 2017 12:52PM

Since my first foray into the iPhone with the 3G, I've upgraded every third iteration (3G, then 4s, then 6) and so I'll be re-upping this time too. Will be cool to have new features, but I just want a stable phone that has good usability, is reliable, and will last me 2 years hassle free. The 6 and my wifes 6+ have not been that. On her 3rd 6+ with screen and antenna issues, and I need a THIRD new battery because mine can't make it a full day on a full charge...and I'm never on it. Just paired with my watch runs it down.

Bells and whistles are cool, but I'd trade 3D sensors for another hour of bluetooth supporting battery.

macxpress · April 21, 2017 1:02PM

Now that most (if not all) carriers have dropped 2yr plans I think a lot more people down the road could upgrade whenever they want versus before they could only upgrade every 2yrs unless they wanted to pay for the full price of the phone which some did. Thats being said, perhaps Apple could benefit from this in the future.

rogifan_new · April 21, 2017 1:09PM

So did they actually survey people or are they just making assumptions? I'm skeptical about this whole super cycle talk. Seems like something good to fuel a large stock rise only for the stock to drop like a rock when Apple sells 69.9M phones in the holiday quarter instead of 70.0M.

tht · April 21, 2017 1:24PM

rogifan_new said:

So did they actually survey people or are they just making assumptions? I'm skeptical about this whole super cycle talk. Seems like something good to fuel a large stock rise only for the stock to drop like a rock when Apple sells 69.9M phones in the holiday quarter instead of 70.0M.

I'm skeptical too. My wife uses the iPhone 6 for typical Facebook, shopping, messaging uses, and the device still plows through everything well. Having a device that is slow is the number 1 reason for upgrading imo. Don't really see sluggishness in the 6, so I don't think there is going to be a "super cycle". It'll be an incremental increase or decrease in sales. It's a smartphone saturated world.

All the rumors are saying that Apple will have a 7S, 7S Plus, and a "new" higher price iPhone model. That type of lineup sounds like Apple is planning for a post market saturation world, where they are making sure they take a big chunk of the high end. If they expected a super-cycle, why have a fancy "new" phone?

brucemc · April 21, 2017 2:12PM

rotateleftbyte said:
I honestly don't see how Apple will sell more each year on year. There are only an finite number of customers and with the main competition (Galaxy S8/S8+) generally getting a good reception the competition will be fiercer than ever. Then if Google ever gets its 'Pixel' line properly sorted out then we are in for a three way split in many markets if not an increase in the % of device running Android.
With that, how can these guys say that there is gonna be a bumper year with a straight face?

Although debating with someone who has a preconceived outcome is generally useless, it is Friday so why not try for fun?
- Clearly the iPhone will not be able to increase sales "forever". That is simply a stupid straw man statement.
- iPhone sales do not necessarily increase "every year" (as last year showed0 but have & are expected to increase when looked at 2-3 year periods
- The sales battle isn't really Apple vs. Samsung, Apple vs. Google, etc. It is iPhone vs. high-end Android phones, for the small % that are likely to make a decision that way, instead of iOS vs Android OS/ecosystem. A Google Pixel is more likely to take sales from Samsung than Apple. Android has the dominant market share by far - that isn't going to change - the question is about iPhone sales. Samsung had their best phone last year in Galaxy 7, yet Apple increased its sales from previous year.
- Apple continues to increase its iPhone installed base. Some estimates are to the tune of ~100M new users a year for past few years. As installed base grows, so does the potential for upgrades (which is counter-acted by fact the average time between upgrades lengthens).
- There are still new markets for Apple, such as India. As global average incomes rise, there is a small but still increasing number that enter the financial range to purchase premium phone if they want to (even if they had a very cheap Android phone before).

I do agree that "super cycle" might be misplaced here, as iPhones simply are very durable and are lasting longer. No one is predicting iPhone will grow (averaged over a few years) at a high % - but there is still growth to be had. iPhone itself should get to 1B users in next few years - that is not counting iPad.

maciekskontakt · April 21, 2017 2:22PM

Sure they are ready, but question if upgrade to iPhone or move/upgrade to Android device. Apple would be much more ready if it did not experiment with phone jack removal and disabling remote in-line controls just to promote that fancy but so-so clips... pardon me... earbuds that do not represent any sound quality and hurt some people's ears (I use full headphones like many do). So they may decide for some if next device is going to be iPhone or good bye Apple phone if they at least provide dongle that allows wired in-line control of phone with some quality headphones (I use Sennheisers so do not ask about quality if you haven't tried anything on that level and above).

Metriacanthosaurus · April 21, 2017 2:30PM

macxpress said:

cali said:

It's gonna be called the iPhone 9. Officially.

I hope they just simply call it, iPhone. It doesn't need number after it.

What about iPhone XE

Short for 10th anniversary edition.

iPhone XE
iPhone 7s
iPhone SE

It wouldn't rule it out as a possibility.

rogifan_new · April 21, 2017 2:34PM

maciekskontakt said:

Sure they are ready, but question if upgrade to iPhone or move/upgrade to Android device. Apple would be much more ready if it did not experiment with phone jack removal and disabling remote in-line controls just to promote that fancy but so-so clips... pardon me... earbuds that do not represent any sound quality and hurt some people's ears (I use full headphones like many do). So they may decide for some if next device is going to be iPhone or good bye Apple phone if they at least provide dongle that allows wired in-line control of phone with some quality headphones (I use Sennheisers so do not ask about quality if you haven't tried anything on that level and above).

I use Audio Technica cans which I really like. But I think headphone snobs are a tiny percentage of iPhone users.

Data suggests tens of millions of iPhone users ready to fuel 2017 'supercycle'

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