Apple has been plugging along in its quest to beat back Android and steal a greater share of the smartphone market. Apparently the company has been making some serious progress, particularly during the March quarter when about 50% of iPhone buyers were first-time buyers.

Apple Inc. (AAPL): Half Of 2Q iPhone Buyers Were Switchers

This is huge for Apple, but it marks a major discrepancy from the first quarter when most iPhone buyers were upgrading from a previous version of the handset.

Meetings with Apple management

Bernstein analyst Tony Sacconaghi, Jr. made these observations in his June 11 report after meeting with Apple CEO Tim Cook and CFO Luca Maestri. He added that the March quarter (Apple’s second fiscal quarter) marked the first time almost half of all iPhone buyers were buying one for the first time. In the previous quarter, however, the percentage of first-time iPhone buyers was much lower.

Maestri stated that this discrepancy should come as no surprise because consumers who are switching from another brand of smartphone take longer to decide that they want to switch. Also those who are upgrading from previous iPhone buyers tend to do so much more quickly than switchers because they want the latest model as quickly as possible.

Sacconaghi stated that if the percentage of switchers remains as high in the June quarter as it was in the March quarter, it would be “a very bullish indicator.” It would also quiet worries that the strength in the iPhone this year has mainly been the result of an acceleration in the replacement cycle of the smartphone, which of course would suggest that Apple isn’t gaining market share.

Apple strong in China, India

The Bernstein analyst also said that the two Apple executives believe the iPhone’s market share in China could meet or beat the company’s global share of the smartphone market. They noted that Apple’s Mac notebook computers had already done it.

Data from Strategy Analytics suggested that Apple had about a 12% share of the smartphone market in China during the first quarter and an 18% global share. According to Sacconaghi, boosting Apple’s share in China to 18% would add an incremental 30 million units, assuming no growth in the Chinese smartphone market.

The Apple executives also identified India and Indonesia as the next markets where they see opportunities following China.

Apple’s quest to expand U.S. share

Further, they reported that the iPhone is gaining traction among U.S. prepaid smartphone buyers, which they say is important to improving Apple’s share in the country. Because of this goal, Sacconaghi said he wouldn’t be surprised to see a refresh of the iPhone 5C / 5S along with the introduction of the iPhone 6S this year. We’ve been hearing rumors about an iPhone 6C coming this year, and since Apple is targeting prepaid customers in the U.S., it’s one that certainly makes sense.

Of course if Apple does offer an iPhone 6C as an updated version of its lower-cost smartphone, then it would be to target prepaid U.S. subscribers and emerging markets. Cook and Maestri reported that the iPhone 4S still sells in emerging markets.

The Apple Watch and the living room

Sacconaghi also reported that Cook was very optimistic on Apples opportunities in the living room and that his comments were consistent with the over-the-top streaming TV service that has been rumored for some time. He thinks Apple might begin looking “more bold investments” in content from now on, particularly because Cook commented that the current TV experience is outdated.

On the topic of the Apple Watch and wearables, the Bernstein analyst reports that Cook sees “enormous” opportunities for wearables in the areas of health and fitness. The executive also said they can “bend the cost curve on healthcare,” and Sacconaghi believes that the Apple Watch could “evolve to an essential health monitoring device, with a huge potential addressable market” over time.