Unprecedented iPhone Demand

As we lead up to this years “main event,” I wanted to share some initial points underscoring my read that there is unprecedented demand for Apple’s iPhone this holiday quarter and beyond.

Major Upgrade Cycle: This has been the source of many analysts’ upside, but I think it may even be larger than many realize. From data points I have from the US, China, and even parts of Europe, it appears there is an unusually large number of legacy devices (smartphones more than two years old) still in use in the world. This includes devices like the iPhone 4, and Galaxy SIII. Our own research revealed the average life cycle of an iPhone in the US is 2.8 years. That number is even higher when only multi-person families are included. Apple’s quality curse is they build such good devices they can and do remain in use for longer than the traditional 24 months.

Gaining Share with the Phablet: One of the more compelling theories for the existence of the 5.5 inch iPhone is it could steal customers away from Samsung who were previously fans of the Galaxy Note line, on the simple premise of screen size alone being the most premium smartphone on the market.

Emerging Market Growth: Perhaps one of the most interesting things Apple can do is use previous years’ models, as they typically do, but be even more aggressive at their price points and target them in emerging regions. Keeping the 5s, for example, at a 5c price would go over very well in China for the middle tier market. Keeping the 4s and pricing it even lower could do extremely well in markets like India and other parts of South East Asia.

All of this gives me the sense this could be more than just a typical growth holiday quarter for Apple but that they blow past most consensus estimates for the holiday quarter with ability to meet the demand their only limiter. While my job does not depend on making estimate predictions for shipments, I would not be surprised, assuming they can make sufficient quantities, that Apple sell mid-60’s of iPhones in the holiday quarter.

The other thing that will be interesting to watch is what happens with Samsung’s sales. Last quarter, Samsung shipped 78m smartphones and they stuffed the channel prematurely to mask some of their challenges. I think it is extremely possible, given the sense I get on both Apple and Samsung trend lines, that Apple and Samsung sales in the holiday quarter could be closer than people think.

As some recent comScore data suggests, iOS and Android are neck in neck as far as users go in the US. I have a sense Apple takes the majority share in the US by end of the year.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

22 thoughts on “Unprecedented iPhone Demand”

      1. Hey. For just $10 dollars a month you can get my opinion. That’s not based on much data gathering or leg-work either.
        Let me know if you are interested.

        1. I don’t have any reason to value your opinion. And this post makes me believe that I won’t in the future either.

        2. You obviously have not read anything I have written before, or familiar with my industry analyst firm Creative Strategies, or our history in this industry. To say our insight is not based on actually research or data, is astoundingly ignorant.

          My body of work is out there, feel free to actually read it.

          1. I use the Disqus app on Windows Phone which gives me a categorized digest of article headlines and the comments across sites using the Disqus commenting system. I can usually click into the article.
            As a consumer it is annoying to see dramatic headlines, presented as fact, but actually based on opinions which I then can’t read to be able to comment on.
            I would apologize but a quick skim of the site suggests strong Apple bias which makes me wonder if Techpinions is just more paid for tech PR masquerading as independent thought.
            Whether it is or isn’t, I wouldn’t be subscribing so it’s a shame I don’t have a way to filter Techpinions out from my Disqus news stream as I’m sure your headlines will continue to wind me up!

          2. It’s a shame a quick skim of the site is all your willing to give it. Like I said, my body of work is out there of you to analyze. Lots of it for free, my column at TIME, Techcrunch, lots of my articles here as well.

            You can choose to believe what you want, I have no quarrel with disagreement and will not shy away from a good debate, but attempting to criticize something without actually reading it, or saying my opinions are not based on the massive amount of actual research my firm does, has no place when you can easily search my work out and judge for yourself.

            I hope you learn to take the higher road in the future.

          3. You poor thing! It’s really a heavy cross to bear, isn’t it? Words appearing on a screen (on a page you arbitrarily choose to frequent) which magically send you to more words on a separate page that you hadn’t previously chosen to visit. Then, you devote MINUTES of your life to a “quick skim” of this new site only to confirm your own presupposition that it is an Apple-friendly community! What a waste of what are so obviously valuable minutes of human life.

            It really is a shame that Disqus didn’t consider your very specific needs when designing a news feed around your personal interests (as determined by your own web activity on its affiliate sites). I’m sure you pay good money for that service, and are thus rightly entitled to demand nothing short of excellence from Disqus and its algorithmic suggestions.

          4. I actually noticed the changes on Disqus a few days ago, and was worried that it might cause something like this to happen.

            Disqus recently decided to scrape the content of the articles on which it finds it’s commenting system on, put the text on their own website, and encourage users to comment inside that context. I wrote some harsh criticism about this design decision and even their philosophy on their blog. The huge problem with Disqus’ idea is that it separates comments from the article. In my opinion, comments belong to the article and should never be separated. If they are separated, then unfortunate misunderstandings can happen.

            I would put the blame on Disqus. 🙂

            I agree that a quick skim of the site may suggest an Apple bias. In an age when even mainstream media seems to periodically flip-flop between pro-Apple and anti-Apple, I’m not sure if a lack of bias is what we should be looking for in journalism or reporting. I consider it mostly a non-issue.

            Instead, what I find valuable about this site is that there are a number of contributors (of course, no all) who collect data, frequently communicate with industry insiders (from multiple angles), and perform detailed analysis. For me, their insights are what makes this site truly unique. You may not agree with their opinions, but the depth of their thinking and “feel” is definitely something to respect.

            As for the dramatic headline, I’m sure that Ben was thinking about this tweet when he wrote the article, but for some reason, left out the FedEx stuff. The headline itself is based on industry insider comments.


        3. Since this is an insider piece, I’m sure you’re familiar with the work Ben has been doing and have subscribed knowingly.

          I do agree that this current article is rather thin on data and seemingly looks like a “opinion”.

          The thing is, Ben is basing this article on a lot of data and discussions with industry insiders, most of which he cannot disclose at this point. You can see this if you follow his twitter account; he has been giving us quite a few teasers that are causing us to salivate on Tuesday’s announcements.

          For example, he gave us a tweet that hinted about the logistic issues that Apple is causing for firms trying to ship stuff out of China. Ben presumably had this info before the news actually broke, I think after this article was published. He probably has much more confidential info like this that he wants to share, but can’t just yet.

          You can argue that his arguments aren’t convincing unless they come with data, like this article. I don’t think you can ever say he hasn’t got a good amount of data and insider info on which his opinions are based.

          1. Thanks for the vote of confidence. 🙂 I’m actually certain this person is not a subscriber and just trolling the comments here without actually reading any of the content.

    1. My firm and myself are as equally respected as Gartner or Forrester analysts. I’m on the advisory council of many of the large Fortune 500 tech firms with analysts from those firms. My firm was started before both of theirs and just a few years after IDC.

  1. Ah, channel stuffing… It’s reassuring to know the classics are still around. Reminds me of my days at Novell :-p

  2. If iPhone 6 sells better than expected then earnings forecasts are likely also too low; perhaps the run in the stock price over the past year is not over.

  3. Samsung smartphones are well known to be among the best smartphones with high definition Liquid Crystal Display (LCD). In addition, Samsung galaxy has a larger of pixels which make them more admirable by users in this world where people may need to take photographs that are of high quality.

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