Most tech industry watchers aren’t expecting the iPhone 7 to be a huge upgrade for Apple, and as a result, Wall Street is predicting another lackluster smartphone cycle for the iPhone maker. However, a survey suggests that the iPhone 7 could surprise, and sales data from Apple’s suppliers suggests that the company is planning for a strong cycle.
Apple Monitor shows strong performance for suppliers
Drexel Hamilton analyst Brian White said in a July 7 report that his Apple Monitor indicates that the company’s suppliers enjoyed a “better than seasonal” June. The Apple Monitor covers the company’s key Taiwanese suppliers. He said June sales in the monitor increased by almost 2% from May, which is meaningfully better than the 11-year average of almost a 3% decline month over month for June. He adds that because seasonality around the iPhone has been increased, June sales over the last five years have declined by 6% on average and are down 6% from June 2015.
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Catcher Technology, which supplies the chassis for Apple’s iPhones, reported a 4.6% decline month over month and a 9.4% year decline year over year in June, reports DigiTimes. The company said the reason for the declines was that a major client is switching over from last year’s model to the updated version, and although it didn’t specifically name Apple, most are concluding that Catcher was referring to the iPhone maker. The chassis supplier also said it expects sales to recover in the second half of this year.
Half of users to upgrade to iPhone 7
So will the iPhone 7 bring a return to unit growth? White certainly thinks so, although most analysts and investors are concerned because of all the reports that this year will be another small incremental upgrade instead of a major one. Of course we won’t know exactly how well this year’s model will do until the first sales numbers start to roll in later this year, but at least for now, it sounds like a lot of Apple users are planning to get the iPhone 7.
A survey of more than 1,000 users conducted by The Leadership Factor for mobile phone insurer Insurance2Go in June indicates that half of iPhone users are planning to upgrade to the iPhone 7 upon its release. The survey also indicated that 19% of users actually plan to switch to a Samsung phone and that 8% are planning to upgrade to a new phone from a different brand.
The survey also found that 77% of iPhone owners are planning to upgrade, whether to an iPhone or a phone from another brand. However, 23% of the Apple users surveyed said they won’t be upgrading when they next become able to. The most common reason given for not upgrading to the iPhone 7 this year is Apple’s premium price tag, as a good chunk of users proclaimed their current iPhone “good enough for me and I can’t afford to upgrade at this time.” Others said they plan to go to a pay-as-you-go plan in the future.
What’s in a survey?
Some analysts have maintained that the huge iPhone 6 cycle two years ago means the iPhone 7 cycle will be big this year as well because those who bought one then will now be eligible for upgrades. However, if the iPhone 7 is only a small upgrade, this could greatly impact consumers’ decision about whether to upgrade, particularly as we hear more about how next year’s model, potentially the iPhone 8, will be a huge upgrade. With that said, there are small upgrades Apple could do that might be just enough to trigger a huge upgrade cycle, such as adding a higher storage tier.
And then there’s the growing popularity of monthly payment plans for phones that makes this whole dynamic even more complex. While some users may upgrade to a new phone just because they can, others might keep their old phone because it means their monthly mobile phone subscription will go down by the price of the phone payment after they’re paid in full on it.