Apple: iPhone 7 May Outsell iPhone 6 In First Six Months Of Availability

Apple: iPhone 7 May Outsell iPhone 6 In First Six Months Of Availability

Analysts continue to expect Apple to see a great benefit from a massive upgrade cycle for the iPhone 7 this year. Bank of America Merrill Lynch analysts are the latest to chime in on the topic, and their recent survey suggests a “solid pipeline of upgrades” in the first half of fiscal 2017. Also another firm has added its research to the pile pointing to an improving average selling price thanks to the iPhone 7.

Survey indicates strong iPhone 7 cycle

In a report dated September 28, BAML analyst Wamsi Mohan and team surveyed more than 1,000 people in various demographics in the U.S. They found that “regular upgrade appetite” appears to be strong as a large number of phones are becoming eligible for upgrade in the first half of fiscal 2017.

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Their findings are interesting in light of what KGI analysts said recently about Apple potentially selling fewer iPhone 7 units in calendar 2016 than it sold iPhone 6s units in 2015.

According to Mohan, upgrades alone could boost Apple’s U.S. iPhone units 11% year over year. The BAML team analyzed the timing of iPhone purchases by month and year and the amount of time the buyers had until they became eligible for an upgrade. Based on this analysis, they estimate that 33% of U.S. iPhones are already eligible for an upgrade. They say most of the upgrades will likely be skewed to the December quarter due to the aggressive carrier promotions.

More than half of iPhones in the U.S. to be eligible for upgrade

Through the first half of fiscal 2017, they estimate that an additional 20% might become eligible for an upgrade for a total of 53% of iPhones being eligible in the first half of the year (through March 2017). They’re estimating that all these upgrades will drive 34 million iPhone sales in the U.S. through March 2017, which doesn’t account for any increases in market share. The BAML team believes this leaves plenty of room for the iPhone 7 and 7 Plus to beat the iPhone 6 in the first half of their respective years. Apple sold 36 million iPhone 6 and 6 Plus units in the first half of fiscal 2015.

They add that the two-year upgrade cycle is still the dominant plan in the U.S., based on their survey. They report that the vast majority of the respondents to their survey bought their phones between September 2014 and now.


Additionally, more than half of those who plan to upgrade within the next six months have an iPhone 6 or newer.


The BAML team also found that on average, 49% of users upgrade their phones every two years and 5% said every year.


iPhone 7 to boost Apple’s ASP

Bernstein analysts also provided their update on iPhone 7 sales, with their September 28 report focusing on average selling prices. They believe this year’s models will indeed boost ASPs, thanks to the higher price on the 7 Plus and the matte black and jet black models being limited to only the higher storage configurations. Also most of Wall Street is expecting a mix shift to the iPhone 7 Plus because of its greater functionalities. BAML analysts said the same in their report and highlighted some reasons people gave for choosing the plus-sized model over its smaller counterpart.


As a result of all these factors, the Bernstein team expects the iPhone ASP to rise from its recent low of $595 in the third fiscal quarter to $679 in the upcoming December quarter. They peg consensus ASPs at only $659 for the December quarter.

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