Morgan Stanley: Potent mix of new and current customers driving Apple’s iPhone 4 sales

Invisible Shield for Apple iPhone 4!“One of the unanswered questions about Apple’s latest hit product is how many of the 600,000 iPhone 4s that were pre-sold on Tuesday were ordered by iPhone owners upgrading from their older models and how many by new customers who’d never owned an iPhone before,” Philip Elmer-DeWitt reports for Fortune.

“Morgan Stanley’s Katy Huberty… in a note to clients issued Wednesday evening… cites a proprietary Morgan Stanley survey that suggests the upgrade rate will be more than 50%, but not that much more,” Elmer-DeWitt reports. “Even 50% is considerably higher than the 18% upgrade rate found in a November 2008 survey and 25% since the launch of the original iPhone in 2007.”

“A loyal and growing installed base is a good thing for Apple, she argues. She estimates that if 30% of current iPhone owners upgrade this year, Apple will sell 42 million units in 2010,” Elmer-DeWitt reports. “If 50% upgrade, it will sell 48 million. In her model, the iPhone installed base rises from about 30 million at the end of 2009 to 100 million by the end of 2011.”

Elmer-DeWitt reports, “She adds that AT&T’s introduction of tiered data pricing, which can reduce the total cost of owning an iPhone by 20% or more, may also be driving the rush of early pre-orders.”

Full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]


  1. Boy, you’ve gotta wonder what Apple (And Android clones et al) will need to improve in the future to keep us all on a non-stop upgrade path? It boggles the mind what iPhones will be capable of in 10 years. Any guesses?

  2. I wonder what effect the video conferencing capability will have on the data usage rates. Is it comparable to streaming TV? Because, while I know I don’t currently come near the limits they’re talking about, video conferencing may change that. Anybody have info or insight into that?

  3. Plus, consider the turnover of phones compared to portable or fixed location computers. Phones are assaulted by all elements, abuse, lost, and other situations too numerous to list.

    So, phone are a constant replacement item every two to three years with a profit margin exceeding that of low ball computers. I think the industry is just starting to see what Apple started in 2007.

    Profit, profit, and throw in a little more profit!!!

  4. @Jings

    Video is by WiFi and does not count. In addition, you can “call” any connected to WiFi with the iP4 anytime without using minutes. Great in the city and when at Starbucks.

    No more hour to call.

  5. I doubt very many people make their smartphone buying decision based on saving a few bucks each month on a data plan. Sure, it’s nice to save some money, but Joe Public isn’t standing in an ATT store debating between a Blackberry, Android and iPhone based on the cost of the data plan.

    People buy the phone first. The carrier comes second, primarily because of coverage issues but occasionally (coverage being equal) past negative experience, followed by data plan cost. Why? Because the data plan costs aren’t that much different phone to phone, carrier to carrier.

    If you can’t afford a data plan, you’re still not buying an iPhone, even with a lower cost data plan available.

  6. “I doubt very many people make their smartphone buying decision based on saving a few bucks each month on a data plan.”

    You are very wrong on that one. The (preceived) exorbitant $30 data plan was the dealbreaker for smartphones for many people. The $15 is psychologically below the barrier to entry. No other smartphone can be had on a $55 monthly plan.

    Ordinary people hear about the iPhone everywhere. They get intrigued, go to the store (Apple or AT&T), ask about it, and get even more interested. Then they hear $80 minimum monthly plan — cold shower. They go home and start coveting the device, but very few decide that $70 is actually not all that much.

    The different price will be the single most important change that brings new customers to the platform.

  7. $80 is the actual number, when you add all taxes, surcharges and fees. The plan does cost $70.

    The $55 plans is proportionately cheaper than the $70 (the real difference being closer to $17 with all taxes, surcharges, etc).

  8. When you are a parent of teens, five phones on a family plan with unlimited texting, you start to look at that monthly bill a little closer.

    I realized the monthly minutes for actual phone calls was not even close to being used, so I dropped down to the next plan.

    People like me are the ones who want cheaper data plans. $15 times five phones adds up.

    So, for now I will keep waiting for a Verizon iPhone.
    Out where I am they are the only one with great coverage. Friends with AT&T always complain about the lack of signal.

  9. I bet most of them are upgrades.

    New customers who don’t have iPhones are not Apple fanatics who pre-order on the 1st day possible. That’s the sign of an Apple fanatic and how many Apple fanatics don’t already have an iPhone ?

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