New 4" iPhone predicted to drive $5.5B in new sales for Apple in 2016

Posted:
in AAPL Investors edited February 2016
Apple's refreshed 4-inch iPhone is predicted by one analyst to add 10 million units to Apple's total handset sales this year, resulting in an additional $5.5 billion for the company in fiscal 2016.




Amit Daryanani of RBC Capital Markets issued a note to investors this week, a copy of which was provided to AppleInsider, in which he laid out his forecast for Apple's so-called "iPhone 5se" expected to debut in March. He believes the 4-inch iPhone will sell more than 10 million units, but with some cannibalization of larger models, the net effect will be 10 million additional sales.

His forecast calls for the average selling price of the 4-inch iPhone to be $550, adding 23 cents to Apple's earnings per share, or about 2 percent to its fiscal year 2016 totals.

As to who the "iPhone 5se" is for, Daryanani believes it could drive upgrades for users on three-plus-year old iPhone models, specifically those still running the iPhone 5c or iPhone 5s. He sees the new 4-inch model being a boon particularly in markets like India, a country that was specifically cited by Apple during its most recent quarterly earnings call.




In fact, just this week, Apple discontinued both the iPhone 4s and iPhone 5c from its lineup in India, potentially setting the stage for a new 4-inch iPhone to shake things up.

Production of the next-generation 4-inch iPhone is supposedly underway ahead of an anticipated March 15 media event, at which Apple is also rumored to unveil a third-generation iPad Air. Both products are rumored to launch just three days later, on Friday, March 18.

Apple's new 4-inch iPhone is expected to include a metal-backed, curved-edge design similar to the current iPhone 6s with refreshed internals like an A8 or A9 processor and NFC support for Apple Pay. Rumored names include "iPhone 6c" and "iPhone 5se."

In all, Daryanani said he believes the refreshed 4-inch iPhone will have a "modest positive impact" on Apple's bottom line. RBC has maintained its "outperform" rating for shares of AAPL with a price target of $130.
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Comments

  • Reply 1 of 24
    mac_128mac_128 Posts: 3,400member
    And that's why they're releasing it in March.

    My money's on there being two models, budget and at least mid-tier if not premium. One to replace the budget phone in developing markets and one to take 4" enthusiasts money who can afford to pay much more.

    still seems like a pretty lame event if all they introduce is a 4" niche market iPhone, and a poorly selling iPad, with a MacBook processor speed bump, and some new watch bands. If there's an actual 2nd gen watch then at least all the rest will have something to support -- like a "Spring forward" event.
    edited February 2016
  • Reply 2 of 24
    irelandireland Posts: 17,552member
    I wish, wish, wish, wish, wish Apple would release a high-end 4" iPhone (I'd prefer ~4.2" personally) which feature/component parity of iPhone 6s right now. I want an iPhone 6s mini, not a slightly more budget, more crippled 4" iPhone with possibly an A9.
    edited February 2016 mcarlingpmzquinneycornchip
  • Reply 3 of 24
    As a runner, i'll be buying this form factor. I'm presently using a 4s and it's rather heavy.
    mcarlingcornchip
  • Reply 4 of 24
    calicali Posts: 3,495member
    FU**ING LAUGHABLE!!! 10 Million Units?!!!

    This iPhone could sell 10 million in it's first month of release.
    mcarlingcornchip
  • Reply 5 of 24
    MacProMacPro Posts: 18,155member
    ireland said:
    I wish, wish, wish, wish, wish Apple would release a high-end 4" iPhone (I'd prefer ~4.2" personally) which feature/component parity of iPhone 6s right now. I want an iPhone 6s mini, not a slightly more budget, more crippled 4" iPhone with possibly an A9.
    I must admit I agree.  
    ireland
  • Reply 6 of 24
    cali said:
    FU**ING LAUGHABLE!!! 10 Million Units?!!!

    This iPhone could sell 10 million in it's first month of release.
    The prediction is a gain of an additional 10 million units sold for Apple.  The analcyst acknowledges that many sales of this phone will come at the expense of other iPhones.  
  • Reply 7 of 24
    qwweraqwwera Posts: 264member
    Some people, me included own two phones. I love my small phone for a specific reason and a large phone for a different reason. It's all about how one uses the device. I will upgrade my 5s to the 5SE in march as the smaller phone is what i take to the gym and on hikes etc. And I will upgrade my other line to the 7 in the fall. Choice is good. And for those of us who want both, it's even better.
  • Reply 8 of 24
    mcarlingmcarling Posts: 1,106member
    I have been waiting nearly two years for an updated phone-sized iPhone.  I have no interest whatsoever in the phablet-sized iPhone 6 or 6S, let alone the small tablet sized iPhone 6 Plus or 6S Plus.  I already have an iPad Air for when I want a two-handed device.  Please Apple make 4" iPhones that are full-featured, not low-cost.
    edited February 2016
  • Reply 9 of 24
    pmzpmz Posts: 3,433member
    ireland said:
    I wish, wish, wish, wish, wish Apple would release a high-end 4" iPhone (I'd prefer ~4.2" personally) which feature/component parity of iPhone 6s right now. I want an iPhone 6s mini, not a slightly more budget, more crippled 4" iPhone with possibly an A9.
    I think what you'll see is a hybrid between the 6 and 6s. An A9 chip is a given.
  • Reply 10 of 24
    foggyhillfoggyhill Posts: 4,767member
    williamh said:
    cali said:
    FU**ING LAUGHABLE!!! 10 Million Units?!!!

    This iPhone could sell 10 million in it's first month of release.
    The prediction is a gain of an additional 10 million units sold for Apple.  The analcyst acknowledges that many sales of this phone will come at the expense of other iPhones.  
    It only comes at the expense if someone was actually going to buy those other iphones and not something else.
    The fact those people waited for this phone means maybe they would not have bought another Iphone; that's what Apple wants to prevent.
    pmzcornchip
  • Reply 11 of 24
    ireland said:
    I wish, wish, wish, wish, wish Apple would release a high-end 4" iPhone (I'd prefer ~4.2" personally) which feature/component parity of iPhone 6s right now. I want an iPhone 6s mini, not a slightly more budget, more crippled 4" iPhone with possibly an A9.
    Important to note that most of these rumors fall into two categories: “I have some information…” and “I speculate”

    “There will be a new 4" screen iPhone” falls under the former. All the name stuff — 6C of 5SE or 99++WTFBBQ, what kind of CPU, and whether it has 3D Touch or not — are thus far speculation. 

    Given that Apple typically designs devices to be on the market for 2-3 years, I think the notion that it would be called a 5x, or have an eighteen-month-old CPU, are silly. Remember how surprised some folks were by the specs on the latest iPod Touch? Long game

    (I also think it’s unlikely that Apple wants to sell phones that lack 3D Touch in 2018, but the persistent rumors of supply change shortages might have some credibility.
    cornchip
  • Reply 12 of 24
    Dude.  "Still" have a 5S?  I just got the 5S like two and a half years ago & it still works ok, aside from not having Apple pay (many stores near here take it).  Getting a new phone would be a risk that something would not work.  May I mention the $800 expense?  If it doesn't have a top camera, I'm not really interested. Bow wow wow.
  • Reply 13 of 24
    Getting a new phone would be a risk that something would not work.
    wait outside of a small amount of abandonware when have you ever heard of something not working on a newly installed iOS device? I’ve never known backward compatibility to be anything but rock solid.

    (not trolling, genuinely curious)
  • Reply 14 of 24
    JanNLJanNL Posts: 259member
    ireland said:
    I wish, wish, wish, wish, wish Apple would release a high-end 4" iPhone (I'd prefer ~4.2" personally) which feature/component parity of iPhone 6s right now. I want an iPhone 6s mini, not a slightly more budget, more crippled 4" iPhone with possibly an A9.
    I must admit I agree.  
    OK, I must admit I agree too. (never got used to the size of my iPhone 6)
  • Reply 15 of 24
    everyone misses a major target market of this phone. people who just want 4" phones!!
  • Reply 16 of 24
    JanNLJanNL Posts: 259member
    schlack said:
    everyone misses a major target market of this phone. people who just want 4" phones!!
    In the previous 14 posts and older threads about a 4" iPhone, there are numerous people who didn't miss this. We want specifically a 4" with up-to-date specs.
  • Reply 17 of 24
    mac_128mac_128 Posts: 3,400member
    Eric_WVGG said:
    Given that Apple typically designs devices to be on the market for 2-3 years, I think the notion that it would be called a 5x, or have an eighteen-month-old CPU, are silly. Remember how surprised some folks were by the specs on the latest iPod Touch? Long game

    (I also think it’s unlikely that Apple wants to sell phones that lack 3D Touch in 2018, but the persistent rumors of supply change shortages might have some credibility.
    I don't think this is so surprising if this is part of Apple's long term marketing strategy. If you consider they JUST discontinued the 4S in India, then I'd say Apple got an extra 2 years out of that phone they didn't necessarily build it for. Likewise for the 5c, which only got 2 years in most of the developed countries. Prior to that every new model had at least 3 years of availability. So it makes sense that the 5c was built for the 3 years it actually got thanks to developing nations.

    So they've already gotten their 3 years out of the 5s, all they have to do is spec bump it, and keep selling it in the developed world for a 4th year, then they likely get 5th year in developing markets. In the meantime, assuming Apple is planning on keeping their current numbering system for a few more generations, what better way to distinguish their phone lines than with numbers: 5, 6 & 7. Every year when the new phone is introduced, they all bump down a number. 

    As for 3D-touch, Apple did the exact same thing with Touch ID when they introduced the 5c without it. And they continued to sell the 5S for two years without Pay, when they otherwise just updated the rapidly declining iPod Touch line with the latest specs. Besides, developers don't really even know what to do with 3D-Touch yet, and it likely won't fit into he 4" form factor just yet, in much the same way there was no rush to spend the money and add Pay to the 5S since it wasn't and still isn't a very wide spread service. This year is likely to turn the tide on that however, and Apple doesn't want to sell any phone without it and that's why we're seeing the 5S update now. 
  • Reply 18 of 24
    joshajosha Posts: 901member
    williamh said:
    cali said:
    FU**ING LAUGHABLE!!! 10 Million Units?!!!

    This iPhone could sell 10 million in it's first month of release.
    The prediction is a gain of an additional 10 million units sold for Apple.  The analcyst acknowledges that many sales of this phone will come at the expense of other iPhones.  
    This smaller than the current much larger iPhone 6 is needed by many iPhone users.
    I and several people I know desire it, but we now have recent iPhone 5 models of that size.

    Last summer I bought an iPhone5c on clear out, love it except it needs more than it's 16gb of memory.
    I knew that it would be a bit low on memory, 32gb is what I desired but it is not available.
    One memory problem is the camera  increase in resolution takes lots more memory.
    I don't need a resolution higher than that of the iPhone4, for casual pictures.
    For quality pictures my travel pocket $100 digital camera is much better overall than the iPhone.

    Here in CDA we have a big problem with iPhone prices.
    Apple uses the current approx 30% exchange rate to price their iPhone 6, 
     but the iPhone 6 is made in countries where the exchange rate has only changed in relation to CDA by about 10%.
    The base (too little memory for me)  iPhone 6s 16gb today is C$899 up 38% from the US$649.
    Based on the countries where it is made it should only be up 10% in CDA, to about  C$714.
    Not surprising that Apple is still making very good money on the iPhone,
      about 60% of sales are outside of the USA and subject to excess pricing.
  • Reply 19 of 24
    With a later-in-the-cycle "new" phone release this will allow Apple to have a lower buy in for their latest phone, and will allow them to push further into developing markets without compromising the brand. Add to that greater volume of trade ins, and expansion of the iPhone upgrade program, and Apple will have some very solid, steady user-base growth in the coming years. This is a great thing to release in the year they're releasing a high-volume "new" (i.e. new design) phone (iPhone 7). I have a strong feeling that Apple will correct the drop in ASP in the 7s cycle year by releasing an iPhone Pro with a reduced bezel and more advanced design.

    I'll soon be jumping onto the iPhone upgrade program.. looking forward to seeing what Apple comes up with!
  • Reply 20 of 24
    Am I the only one longing for the return for a 3.5-inch screen? Is "compact" or "pocket sized" that bad?
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