Apple has a $250B 'window of opportunity' this 2018 iPhone upgrade cycle

Posted:
in iPhone
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.

iPhone X rear camera


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.

iPhone annual sales, 2012-2017


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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Comments

  • Reply 1 of 26
    MacProMacPro Posts: 17,586member
    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.
    xamaxclaire1watto_cobra
  • Reply 2 of 26
    wood1208wood1208 Posts: 1,563member
    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.
    watto_cobra
  • Reply 3 of 26
    mjtomlinmjtomlin Posts: 1,777member
    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. 
    watto_cobra
  • Reply 4 of 26
    tmaytmay Posts: 3,145member
    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.
    baconstanglolliverclaire1watto_cobra
  • Reply 5 of 26
    tmaytmay Posts: 3,145member
    mjtomlin said:
    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. 
    I agree. I think that the SE will continue to be the model at the smallest form factor, whatever the internals are upgraded to.
    baconstangwatto_cobra
  • Reply 6 of 26
    jdgazjdgaz Posts: 298member
    Lets face it. The two year trade in cycle is about gone. Day long battery life used to be the goal. Remember carrying around a charging device everywhere you went? People camped in airports near electrical outlets? Now that battery life is overall pretty decent it takes quite a bit more for folks to want to replace their device.
  • Reply 7 of 26
    kruegdudekruegdude Posts: 150member

    “'window of opportunity' this 2018 iPhone upgrade cycle”


    And then what? What will they do to top that in 2020? If they’re setting these kind of extreme expectations on a yearly basis then they’ll need to do the same for the following year. A slightly slower, steady as she goes, product rollout makes much more sense. 

    Note, my opinion comes from from someone who doesn’t know how to run a trillion dollar company :-)
  • Reply 8 of 26
    78Bandit78Bandit Posts: 190member
    The potential supercycle is going to depend on how Apple positions the rumored full-screen LCD devices.  I think the $1K price of the X was off-putting to quite a few potential customers who had previously gotten flagship devices that started at $649.  The 8 used the same four-generation old design with big bezels and was $50 more expensive.  While the A11 processor was more powerful than the A10, I believe with a normal generational increment in processing and a small increase in base storage that the perception of the 8 was it wasn't generally worth the $150 premium over a comparable 7.

    If Apple can hit that sweet spot of having a flagship quality device that starts around $700 then I think there is a lot of potential for people with 6, 6s, and 7 devices to upgrade this year.  On the other hand, if it releases a deliberately crippled device with marginal RAM, minimal storage, an A11 or even an A10 processor, and a cut-down camera in an attempt to preserve the luxury exclusivity of the X then I think it could backfire.
    edited May 30
  • Reply 9 of 26
    frantisekfrantisek Posts: 347member
    I played a bit with graph. In case Apple would maintain grow trend from previous years it could be big jump even not huge as in 2015.So it could easily reach 250 mil units.

  • Reply 10 of 26
    frantisekfrantisek Posts: 347member
    mjtomlin said:
    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. 
    Could anybody who is informed elaborate on possible new SE functionality?

    If it could get full body display it would be much bigger but current body would not have much more room for bigger battery. Can new rumored LCD technology be enough or OLED will be needed to maintain battery performance?

    Is possible to get in current body display that will have usable screen ratio Apple is using in iPhone?

    edited May 30
  • Reply 11 of 26
    rogifan_newrogifan_new Posts: 3,237member
    Can analyst please stop with the super cycle nonsense. There isn’t going to be another super cycle and I doubt Apple is expecting one,
    muthuk_vanalingamcanukstormbaconstangsaltyzip
  • Reply 12 of 26
    rogifan_newrogifan_new Posts: 3,237member
    78Bandit said:
    The potential supercycle is going to depend on how Apple positions the rumored full-screen LCD devices.  I think the $1K price of the X was off-putting to quite a few potential customers who had previously gotten flagship devices that started at $649.  The 8 used the same four-generation old design with big bezels and was $50 more expensive.  While the A11 processor was more powerful than the A10, I believe with a normal generational increment in processing and a small increase in base storage that the perception of the 8 was it wasn't generally worth the $150 premium over a comparable 7.

    If Apple can hit that sweet spot of having a flagship quality device that starts around $700 then I think there is a lot of potential for people with 6, 6s, and 7 devices to upgrade this year.  On the other hand, if it releases a deliberately crippled device with marginal RAM, minimal storage, an A11 or even an A10 processor, and a cut-down camera in an attempt to preserve the luxury exclusivity of the X then I think it could backfire.
    Who’s paying the full price for devices? Aren’t most people on some monthly plan? My sister just got an 8 and did the iPhone upgrade program. $34/mo.
  • Reply 13 of 26
    As an Apple shareholder, I'm not counting on any "supercycle" in a totally saturated smartphone market. I'm somewhat annoyed that this "supercycle" nonsense keep being tossed around. All it does is try to lure greedy investors into buying Apple stock hoping for some huge payoff. I don't believe that's going to happen. Buy Apple stock for other reasons, such as a steadily growing customer base, more services in the future, a possible new product category or just for the dividends. If the "supercycle" idiots were wrong before, then they can easily be wrong again. Anyway, I'd hold off doing anything about Apple stock until after the WWDC event.

    So, if a "supercycle" can only produce a $200 a share price target, I'm sure greedy investors will head on over to the FANG stocks because they're being promised much greater share gains than Apple shareholders are.  Heck, even scandal-laden Facebook is going to make better share gains than Apple.  I sure don't see most consumers paying $1000 for iPhones and only getting two years use out of them. I don't think Apple is that stupid. I'm sure Apple is only counting on slowly and steadily growing its user base. $1000 iPhones are just a whipped-cream topping.
    edited May 30 muthuk_vanalingamlolliver
  • Reply 14 of 26
    canukstormcanukstorm Posts: 1,545member
    Can analyst please stop with the super cycle nonsense. There isn’t going to be another super cycle and I doubt Apple is expecting one,
    I know, right?
  • Reply 15 of 26
    tokyojimutokyojimu Posts: 373member
    Who’s paying the full price for devices?
    Pretty much everyone these days. Carrier subsidies are gone. They may be paying in installments but they’re still paying full price. 

    Previously, most people were paying for the subsidy whether they used it or not, so they figured they might as well upgrade every two years. Those days are gone. 
    78Banditbaconstanglolliver
  • Reply 16 of 26
    nunzynunzy Posts: 662member
    That's what they said last year. A supercycle. These analysts know nothing. They just pump and dump.
    lolliversaltyzip
  • Reply 17 of 26
    rogifan_newrogifan_new Posts: 3,237member
    tokyojimu said:
    Who’s paying the full price for devices?
    Pretty much everyone these days. Carrier subsidies are gone. They may be paying in installments but they’re still paying full price. 

    Previously, most people were paying for the subsidy whether they used it or not, so they figured they might as well upgrade every two years. Those days are gone. 
    I guess what I mean by full price is paying the entire cost of the phone up front. The iPhone upgrade program is a zero interest loan. So before you were paying $199/$299 up front plus installments to now where the only thing due up front is tax and activation fee. Got to Verizon, AT&T and what they quote you is the monthly installment with full price in smaller print. I don’t think of something I’m paying off over time as a subsidy,
    muthuk_vanalingam
  • Reply 18 of 26
    mattinozmattinoz Posts: 899member
    tmay said:
    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.
    Funny how that delay coincides with push for big phones yet every analyst and their dog is saying an even bigger phone is going to trigger the upgrades for these hold outs.

    i personally suspect I’m just going to putting another new battery in my 5s come December. That model must be getting close to the most environmentally friendly phone they have made given its life span. 
    carnegiebaconstangradarthekat
  • Reply 19 of 26
    nijiniji Posts: 288member
    with this report, i have marked Daniel Ives of GBH Insights as an analyst who can not analyze. 
    its hype of the worst type.
  • Reply 20 of 26
    bluefire1bluefire1 Posts: 817member
    Compared to other companies, every year is a supercycle year for Apple.
    edited May 30 lolliverclaire1radarthekat
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