The debate about whether Apple relies too much on revenue from the iPhone seems to have dissipated, and Wall Street is running full speed ahead on estimates for growth. But just where exactly do Apple’s iPhone buyers come from? Of course some upgrade from older models, while others switch from another phone and still others buy an iPhone as their very first device.

Continued growth in iPhone units

BMO Capital Markets analyst Tim Long has initiated coverage of Apple with an Outperform rating and $145 per share price target. He expects iPhone units to post a compound annual growth rate of 8% between this year and 2019 with the potential for upside into the double-digit percentages. He believes smartphone users who switch from an Android device to an iPhone are the most important iPhone buyers to watch.

Long noted that investors have been worried about iPhone units recently as debate about the strength of the iPhone 6s cycle rages on and said that if Apple shares pull back significantly due to iPhone unit concerns, he “would buy the stock more aggressively.”

iPhone to remain Apple’s key growth driver

The BMO analyst pointed out in his Dec. 10 report that the iPhone makes up approximately 65% of Apple’s sales and nearly 75% of gross profits, and as such, he expects it to remain the key growth driver “for several years.”

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He also thinks that unit growth will be quite a bit better than expected. Long listed five types of iPhone buyers to analyze where they come from. The first is iPhone upgrades, and he estimates that 60% of iPhone purchases in the 2015 calendar year are coming from upgrades from previous iPhone models. The other types are: “Premium to iPhone;” “Mass market to iPhone;” “Feature to iPhone;” and “No phone to iPhone.”

He expects the global iPhone installed base to reach 427 million at the end of this year after starting the year at 347 million.

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He estimates that 44% of the starting installed base will be replaced this year, mostly by new iPhone models. He does expect that “a small portion” will defect from Apple and purchase another brand of smartphone.

The analyst said 28% of the iPhones shipped this year have been smartphone buyers switching from another platform, usually Android, and the rest are buyers who either upgraded from a feature phone or bought an iPhone as their first device. Here’s a look at his breakdown by type of iPhone buyer:

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And here’s a look at how iPhone sales have evolved over the years, according to type of buyer.

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Android switch rate skyrocketed for a time

Long said the “non-iPhone premium” installed base isn’t especially large, as he estimates it at only 7% of the global smartphone base this year, with most of the phones being part of Samsung’s Galaxy line. He said the switch rate from premium phones improved a bit over the last couple of years as a result of Apple finally releasing models with lager screens.

However, he expects this switch rate to decline as pent-up demand for a larger iPhone is relieved. He estimates that there will be about 175 million premium Android users at the end of this year, which leaves Apple with less room to take share.

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The analyst believes that the rate of people switching from an Android phone to an iPhone has skyrocketed from 2009 to 2012 because of how rapidly the Android installed base was growing. Apple said 30% was the highest rate ever. Long expects a decline in the switch rate from Android, although he sees the potential for upside to his iPhone unit estimates if a decline doesn’t materialize.

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He’s ahead of consensus estimates for iPhone units going forward:

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Apple shares fell by as much as 2.51% to $113.25 per share during regular trading hours on Friday.

All graphs in this article are courtesy BMO Capital Markets.

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