Troubling news for Apple as analysis results from Bernstein analyst Toni Sacconaghi dictate that the average iPhone user is holding onto their device for four years before upgrading their phone, instead of 3 years in 2018.
Sacconaghi says that people are waiting longer than ever to upgrade their iPhones, which means trouble for Apple.
“Replacement cycles are elongating … a lot,” Sacconaghi said, noting that people are using their iPhones longer because of Apple’s battery replacement program, changes in carrier subsidies and higher prices, among other reasons.
This was confirmed by the Apple CEO Tim Cook on a recent earnings call, where he himself said “Our customers are holding on to their older iPhones a bit longer than in the past”
“When you paired this with the macroeconomic factors particularly in emerging markets, it resulted in iPhone revenue that was down 15 percent from last year.” – said Cook
Estimates say that only 16% of Apple’s installed base will be buying a new iPhone in 2019. Sacconaghi says that its unlikely company’s fiscal 2020 offering will offer any boost in the iPhone replacement cycle.
What Sacconaghi says about the iPhone:
Analysis reports from Sacconaghi predicts that even though the iPhone’s install base grew 9% last year, the units will be down 19% in fiscal 2019, which is a significant number.
“In our view, the single most important controversy surrounding Apple today is the iPhone replacement cycle – despite the iPhone installed base growing +9% last year, we now expect units to be down -19% in fiscal 2019, implying a material pushout in upgrade rates.” -Sacconaghi says.
Sacconaghi also raised awareness saying that there is a “myriad of unknowns,” and notes that “modeling iPhone’s installed base is as much art as science, with myriad assumptions,”
Even though Apple stopped revealing iPhone’s unit sales, it reported an install base of 900 million iPhone devices in use at the present time in its Q1 earnings report.
For the full report by CNBC click here