“I am as pragmatic as the next guy when it comes to forecasting iPhone growth, but our research continues to show that Apple will still have a serious upside in iPhone growth with the iPhone 6 models well through this year, and very likely into next year, too,” Tim Bajarin writes for Re/code.
“We have very good ties to the supply chain and, if you have followed our iPhone predictions for each quarter over the last few years, you will find our iPhones predictions are pretty consistent with what Apple actually ship,” Bajarin writes. “There are three key reasons I am still optimistic about iPhone growth over this period and well into 2017-2018. The first lies in the fact Apple execs have stated that less than 20 percent of iPhone users have upgraded to the iPhone 6… There is another key issue that bodes well for Apple… In China there is a rising middle class that loves Apple. Apple products are status symbols in the country, and this demographic will drive sales of Apple products sky high in the next few years.”
“The second reason is due to what Apple calls ‘switchers.’ During the recent analysts call, Apple CEO Tim Cook stated, at least five times, that demand for iPhones by those switching from other smartphone platforms are very strong. This is not a trivial fact. Our own research shows that Apple is luring millions of Android smartphone users over to the iPhone and iOS, and we have no reason to believe this will not continue for the near future,” Bajarin writes. “As Android users move out of their two-year contracts, more and more of them will migrate to the iPhone platform. I see switchers continuing to help drive strong iPhone sales at least through early 2016.”
MacDailyNews Take: Apple is too polite (in public). In the interest of accuracy, we don’t call them “switchers,” we call them “extreme upgraders” or “red pill swallowers.” Welcome into the light, friends!
“The third reason goes under my ‘never underestimate Apple’ mantra,” Bajarin writes. “It is crazy to think Apple will not continue to innovate around the iPhone. ”
Tons more in the full article – very highly recommended, as usual – here.
MacDailyNews Take: Bajarin, as usual, is excellent. One of the very best, if not the best, Apple analysts ever.
What other company is going to keep up with Apple’s iPhone, much less beat it? Eight years on, and all the also-rans and wannabes have come up with are piss-poor facsimiles. Only Apple builds the whole widget.
“It is crazy to think Apple will not continue to innovate around the iPhone.”
Oh, well, there ya’ have it: Apple’s just a one-trick pony. Everyone knows the iPhone can’t last forever. Sell the stock now while you can, take your money and run.
/s
I’m currently running a JAM analysis on iPhone sales trajectories adjusted +- for BUN. Will have more to share once the analysis is completed.
I think an important thing he did not write about is the IBM deal. That will open new markets to Apple.
The consensous EPS growth for fiscal 2016 is around 6 percent. This consensus includes the addition of the Apple Watch, increased earnings from services and Macs, plus buybacks. This growth projection does not include a new iPad form factor, Apple TV hardware or streaming content services. So, it appears the analysts currently believe the total iPhone sales will be much less than they were in fiscal 2015. If Bajarin’s thesis and contacts are correct than EPS growth for fiscal 2016 will be much higher than estimate.
Well, China is all about prestige. There is nothing prestigious about a Korean copy from a company who lost a $1billion lawsuit for appropriating Apple’s IP. Even less prestige in a cheap Chinese copy of a Samsung device.
The really important statistic is the 10% growth in Mac sales. It’s important because the Mac is the premier apple product and, more than the iPhone, the predictor of future purchases. Think about it… Lots of iPhone users have a winPC, but I would guess close to zero Mac owners have an android phone. Acquiring a Mac is the Apple bar mitzvah… iPhone users might (in tiny numbers) switch to android or MS, but a Mac user is so unlikely to switch to windows that Microsoft makes special advertisements every time someone does.
Incidentally, I believe we have arrived at the point where those whose phone has a name starting with “S” are starting to think about painting over it, to avoid embarrassment. And not buying their dishwashers either.
I’m not sure, however, that the iPad works so well for Apple. I am typing this on an iPad, but you can’t see how long it takes or how many mistakes I have to fix. Are Android tablets so much worse? I doubt it. Just as well that iPad is being cannibalised by the 6+ and the Mac.
So look past the iPhone sales numbers, fabulous as they are. Apple’s future is more reliably underpinned by the rise and rise and rise of the Mac.
“So look past the iPhone sales numbers, fabulous as they are. Apple’s future is more reliably underpinned by the rise and rise and rise of the Mac.”
As more people buy iPhones, they will embrace the Apple ecosystem and the “Halo Effect” will materialize. Slowly but steadily, the Apple growth machine will continue for quite a while. Buy AAPL and hold.