Apple CEO Cook may not subscribe to ‘peak smartphone’ theory, but Citi analysts sure do

“Apple beat analyst estimates with better-than-expected iPhone sales in its latest results. The numbers certainly convinced Tim Cook, Apple’s CEO, that the smart phone market is not at its peak,” Nick Kostov reports for MarketWatch.

“But others, namely analysts at Citi, aren’t so sure,” Kostov reports. “In a gloomy report Thursday, they argue that ‘device exhaustion suggests that demand growth for high-end smartphones is noticeably decelerating.'”

Kostov reports, “In developed markets, Citi estimates that 75% to 80% of the population already have smart phones. Even assuming an 85% target penetration rate, saturation would be hit next next year.”

Read more in the full article here.

MacDailyNews Take: Let’s see: Tim Cook or Citi analysts?

We had a more difficult decision choosing the maker of our personal computers.

[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]


    1. On DeWitt, Glen Yeung from Citigroup estimated 17 (yes, read that number again… 17!!!!) million iPhones last quarter. Apples total: 31.24.
      Yeah, I’m going to believe everything Citi tells me. I’m moving my retirement fund over there as we speak…

      1. It doesn’t really matter if overall ownership is approaching saturation. iPhone sales will continue to grow as the ‘switcher’ dynamic continues to favor iPhone over Android by 4:1.

        When ownership saturation does occur, Android share will suddenly stall, then drop, as Android users flock to iPhone. This is not a theory, its already happening 4:1.

        2014 will be a very telling year.

  1. This analysis totally ignores the upgrade cycle. Another way to look at the market is that Apple has CREATED the smartphone market, proven by the degree of penetration. Now that it is created, it is ripe for changing over to an upgrade market. Assuming most folks upgrade every 2 years, this means 85% of us will buying new phones every two years.

    1. Exactly. While the growth of the smartphone market in developed countries is slowing, the lifespan of smartphones is fairly short for many consumers. I have upgraded on an 18-24 month cycle, personally. Yes, that is not short for phones, but relative to computers, it certainly is.

      That is an important point because Apple has done something that carriers were dying to do for years – create revenue from users aside from data/voice/texts. Apple gets money from apps, iTunes, iAd, as well as valuable aggregated data on users.

      Somehow the computer industry managed to be OK once that market was fairly saturated in the US. Wall Street only cares about growth.

  2. I dont think its about a smartphone peak. Its more the smartphone market has grown so much from people ending up with a smartphone instead of feature phones cause thats what came with the new contract. They still get used like feature phone and will probably never download an app and not a chance in hell of buying an app. This is the bread and butter of samsung/android market share. If google play starts to become more profitable for google and developers silly enough to deal with android I’ll eat my words but I don’t see that happening any time soon

  3. I don’t believe that anyone has ever been fired for underestimating a stock. So they are being safe. They are also being idiots. Saturation is fine when you are discussing TVs. But smartphones are not TVs. Folks do not replace their TV every year or so, but they do replace their phones regularly. Classic saturation will never be achieved. Say…. Wasn’t Citi one of the big banks that was bailed out when they bought a bunch of stupid shit?

    1. First, yes, they are idiots. That’s a given.

      However, they are not talking about saturation. They are talking about market growth. Growth can, in theory, slow long, long before market saturation. Saturation does cause a near zero growth, but slowing growth does not require market saturation.

      And since when is slowing growth a bad thing? Growth started slowing right after the second iPhone was sold. (Apple has not maintained its 100% growth rate per second since that moment! Apple must be dying!) Total sales is what really counts — whether those sales are replacement phones or sales to new customers. If Apple sells 150 million iPhones a year for the next 20 years then everyone should be happy with iPhone sales — even the idiot analysts.

  4. What analysts predicted iphone would be successful in 2007 ? What anal ists checked their ” channel” to know in advance what Apple will release .

    ( you got it right – asshole channel lol

  5. People who buy large android phones are simple , they just want big and know nothing about quality .
    As long as Apple has large iphone , Apple can surely grow and no saturation .

  6. Analysis from the center of excellence that brought you the global financial crisis.

    Separately, I’m pleased to see the analysts underestimating AAPL again. The stock rises when earnings pummel these dorks, and it drops when they over-estimate.

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