Apple, Inc. iPhone 6 To Trigger A Massive Upgrade Cycle

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Apple Inc. (NASDAQ:AAPL) launched the iPhone 6 and iPhone 6 Plus on Tuesday. As expected, the new phones are slimmer, faster, with larger screens (4.7-inch and 5.5-inch). The devices also have improved camera features and better battery lives. However, Apple disappointed some users who were expecting the iPhone 6 to have a scratch-proof sapphire display.

Over 80% users looking to upgrade to iPhone 6

Shipping of the iPhone 6 and iPhone 6 Plus will begin on September 19. The new phones will initially be launched in nine countries across more than 200 carriers. The tech giant also introduced ‘Apple Pay’ mobile payment service and the iWatch, expanding its ecosystem. Stifel analysts Aaron C. Rakers and Sanjiv Wadhwani said in a research note that they expected the company to ship 10-13 million units of the new phones in the opening weekend.

The research firm expects the Cupertino company to ship 96.3 million iPhone units during the current September quarter (Q4, 2014) and December quarter (Q1, 2015). The second chart below shows the off-contract iPhone pricing since 2008. Since the iPhone 6 Plus will have a higher price tag, Stifel expects it to increase the average selling price for iPhones to $630 per unit in the fiscal first quarter of FY2015.

iPhone 6-1

iPhone 6-2

Recently, 9to5mac conducted a survey that showed that more than 80% of respondents were planning to upgrade to the new iPhones. Over 48% people said they would upgrade to 4.7-inch iPhone 6, while 38.5% were interested in the 5.5-inch iPhone 6 Plus. Only 4.3% of respondents said they would switch to Android, and the remaining 13.1% had no plans to upgrade.

iPhone 6-3

The iPhone 6 is just 6.9mm thick, and its big brother has a thickness of 7.1mm. Both models come with Retina HD screens. The new iPhones are powered by 20nm, 64-bit A8 processor, which is 25% more powerful than the A7 chipset in the iPhone 5S. There is also a new M8 motion coprocessor. Along with the iPhone 6, the Cupertino company also announced ‘Apple Watch‘ that will hit the markets in early 2015.

Stifel not very much impressed by Apple Watch

Apple Watch pricing starts at $349. It will be available in two different sizes (38mm and 42mm). Stifel analysts said they were underwhelmed by the Apple Watch because it doesn’t offer any more problems than the existing wearable devices that track health & fitness information. Anyway, the research firm expects Apple to ship about 25 million units of its Watch at about 30% gross margin. It could add 30-40 cents per share to Apple’s EPS.

Stifel has a Buy rating on the stock with $110 price target. Apple shares rose 0.37% to $98.35 in pre-market trading Wednesday.

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