Here’s a link to Apple’s official sales numbers. The first column shows the quarter that we’re interested in, labeled Q1’15. Note that total iPhone sales went from 51 million units from Q1’14 (a year ago) to 74 million units this last quarter. That’s a 45.9% increase.
Here’s Tim Cook, responding to an analyst question:
You can see from the March guidance that we’ve given that we’re incredibly bullish about iPhone going forward. We believe it’s the best smartphone in the world, our customers are telling us that, the market is telling us that. We’re doing well in virtually every corner of the world, and so we’re very bullish that it does have legs. I would point out that only a small fraction of the installed base has upgraded, so there’s a lot more people within the installed base, but I would also point out that we had the highest number of customers new to iPhone last quarter than in any prior launch. And also that the current iPhone lineup experienced the highest Android switcher rate in any of the last three launches in any of the three previous years. We didn’t look back to the other years, I don’t know about those.
First, “only a small fraction of the installed base has upgraded”. Not sure what that small fraction is, but this is followed by, “we had the highest number of customers new to iPhone last quarter than in any prior launch” and “the current iPhone lineup experienced the highest Android switcher rate in any of the last three launches in any of the three previous years”.
These are solid indicators all the way around. There is still lots of room for growth within the installed base, and the potential market for iPhones continues to grow outside the installed base. Some of that growth is coming at the expense of Android cannibalism in existing markets. But we also know that Apple is making headway in establishing new markets, especially in China.
These are remarkable results. Apple might just survive.
Tim did say the number of existing iPhone users who upgraded was “barely in the teens” so we can assume it’s around 13%. That means 87% of those phones (~65m units) were either the buyers first smartphone, or someone switching from a different platform, pretty impressive numbers no matter which way you look at it!
Anecdotally, the upgrade rate in my office is at most 8%, and that’s because our head of IT buys the shiny toys first. There are at least a dozen other iPhone users here who haven’t upgraded yet, including some still clunking along on the 4S. I expect that 8% will multiply over the year.
Long term, I think things will get better when we storm the barricades and take over the ridiculous wireless providers.
A low upgrade rate is not entirely good news, though. While a low percentage of current sales being upgrades means many new users, a low upgrade rate against the existing customer base could indicate a reluctance to move beyond 4″.
In short: They COULD be gaining new customers but losing loyalty and existing customers.
Sadly, no.
The base is somewhere around 500 million units; 13% of that is 65mm of the 74mm units sold last quarter.
Also of note: if upgraders sold or gave away their old iPhones, they’re still in the base, so the percentage who’ve upgraded doesn’t go up the way it would if a “base” unit went from the non-upgraded column straight to the upgraded one. Math.
But 74 million is still awfully impressive. My favorite Apple analyst was speechless, literally dumbfounded.
some other phone, or had an older iPhone.
Note especially that people waiting for a Lumia flagship may have tossed in the towel, and BlackBerry products haven’t kept pace with Apple’s rate of improvement; that could contribute to a surge.
Lowest upgrade rate of any iPhone. Upgrade rate is Upgrades/Previous iPhone Users. Total iPhone 6 Purchases is not a factor. The only way that’s affected by new users is supply constraint.
I’m not saying that they’re losing loyalty. I said it COULD be an indicator of that. The data is the upgrade rate. This is basic math.
Most iPhone users are on a two-year carrier subsidy cycle. That’s 8 quarters. Assuming an even distribution yields about 12.5% per quarter. 13% isn’t low — it’s high.
Of course, there were also a fair number of iPhone 6’s and 6+’s sold in September, as well as last quarter’s sales of 5’s and 4’s so both of 65 and 74 should be substantially reduced before subtraction.
I assume Apple knows their historical upgrade rates and spoke with authority when they called this one low. But I’m also assuming the quotes that they called it low are even accurate. I haven’t had time to scrub the phone call to verify that.
Tim Cook didn’t call the rate low — you did.
This info is getting reported different ways so it’s NOT 100% clear what’s happening.
But when you say, “[a] low upgrade rate is not entirely good news,” you are misleading people as to what evidence you have of why it is not good news. Instead, you reply with why it could be bad.
People who follow adoption of new technology take it as a given that at this stage of usage (>50% of US adults use a smartphone), the rate of new users slows down, almost by mathematical necessity. It’s also true that while speeds & feeds keep zooming on phones, older phones are not at all bad at serving existing functions, so a user with a 2-year-old phone has a double disincentive to upgrade: her iPhone5 works just fine and her kid already has one; no need to hand-me-down.
It is not good news. It is not bad news, either. I am reacting to the “solid indicators all the way around” comment.
Please don’t be a douche and try to put words in my mouth to be right and prove me wrong. I meant exactly what I said.
“only a small fraction of the installed base has upgraded” — presumably, this is compared to something and found smaller than usual.