Will old users upgrade to the new iPhone 7?
One of the key drivers for the sale of Apple’s (AAPL) iPhone 7 will be the willingness of current iPhone users to upgrade and purchase the latest model. According to Piper Jaffray analyst, Gene Munster, the current iPhone installed base for customers using handsets more than two years old is approximately 275 million. A majority of these users will have handsets that have a screen size of 4-inches or smaller.
As we discussed earlier in this series, the base model of iPhone 7 will have a 4.7-inch screen while the larger “Plus” model will have a screen size of 5.5 inches. Munster forecasted iPhone sales to reach 234.5 million units in fiscal 2017, with 150 million units estimated to be of the new iPhone 7 model.
Sales fell in the past two quarters
According to research firm Gartner, 344 million smartphones were used worldwide in 2Q16. Apple’s share in the global smartphone market fell to 12.9% in 2Q16 from 14.6% in 2Q15. Gartner stated that Android (GOOG) (GOOGL) leads the OS (operating system) platform with 86.2%, followed by Apple at 12.9%.
Apple’s iPhone revenue fell by 26.8% YoY (year-over-year) to $24.0 billion in fiscal 3Q16 from $32.9 billion in fiscal 3Q15. Also, iPhone unit shipments fell by 21% YoY to 40.4 million units from 51.2 million units in fiscal 3Q15.
Apple’s revenues fell for the first time in 13 years in fiscal 2Q16 when the firm’s revenue of $50.6 billion was lower than the consensus analyst estimate of $51.5 billion.
The iPhone generates over 55% of Apple’s revenue, and any impact in revenue for this segment will significantly impact overall revenue as well.