14 DAY TRIAL // Investment bank ISI says in a new research note this week that Apple is on the cusp of announcing the “mother lode” of all iPhone upgrades this summer, when the company will roll out two major new iPhone versions, one of which sports a display measuring 5.5 inches on the diagonal.
ISI’s note, obtained by Business Insider, projects Apple releasing a 4.7-inch iPhone and a 5.5-inch version of the same handset this year.
“‘Large-screen envy’ is prevalent among the iPhone installed base and we believe a ~5" form-factor iPhone would spark a massive upgrade cycle as well as many ‘Android switchers’ returning back to the iPhone,” says ISI.
The launch is expected in summer, according to the BI report, which coincides with Apple’s annual Worldwide Developers Conference (WWDC) where product launches are a common affair. However, for the past two years, Apple has refreshed its iPhone at events held in fall.
“We estimate the current iPhone installed base to be about 260mil users (roughly equivalent to the last 7 quarters worth of iPhone units),” ISI writes. “By our calculations, we estimate slightly over half of iPhone sales today go to upgrades (with the majority of new users coming from international markets).”
The researchers at ISI continue, “However, we believe that while the upgrade rate (i.e., % of installed base upgrading their device in a given quarter) had hovered in the 10-11% range over 2011-12, it has now dropped closer to 9% as users find few compelling reasons to upgrade.”
“In peak quarters, the upgrade rate has reached the ~12-14% range and we expect a similar upgrade rate in 2H14 for iPhone 6, if not better. We believe this could drive ~$3.00 [€2.16] (or ~10-15%) EPS accretion over 2H14 assuming an incremental ~3% of the base upgrades each quarter,” ISI says.
The financial jargon may not be of interest to all of our readers, but it does well to support the claim that Apple stands to benefit a lot from launching two all-new iPhone models, both capable of spurring “large-screen envy” the other way around.
Android users have long slammed Apple for offering what they regard as an inferior experience caused by the limited screen real estate of the iPhone. However, even with a single iPhone model launching this year (sporting the more plausible 4.7-inch spec), Apple can still shake up the smartphone industry.