Apple Inc.’s most recent iPhone lineup may not have launched with the momentum that investors initially hoped for, but analysts say it has had staying power.
A greater portion of iPhone buyers are choosing phones from Apple’s AAPL, +0.16% latest line than chose from the then-most recent line a year ago, according to research from M Science, which looks at alternative data such as mobile-device activations.
In other words, iPhone buyers in May were more likely to pick one of Apple’s newest iPhone models than iPhone buyers last May were, the analysts said.
“We didn’t see that in the first six months of the lifecycle,” said M Science analyst Matt Goodman, whose firm tracks monthly sell-through of iPhones across the world. For much of the current iPhone cycle, the latest lineup underperformed the prior lineup on a relative basis. The mix shift toward newer devices “has positive implications for ASPs,” Goodman said, referring to the iPhone’s average selling price.
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Apple Chief Executive Tim Cook shared on the company’s last earnings call in May that the iPhone X was the top-selling model in every week of the March quarter, and M Science’s data show that the device has continued to be a top performer. However, while the iPhone X is doing better in terms of sell-through than the company’s other models are on their own, it’s being increasingly outperformed by the iPhone 8 family. The iPhone 8 line also came out last fall and includes both the 8 and 8 Plus.
“Some of that could be that you have the iPhone X refresh coming up, or that people willing to spend $1,000-plus on a phone have already done so” Goodman told MarketWatch.
Apple is expected to release three new phones again this fall, and one popular rumor is that the company will introduce 6.5” and 5.8” OLED models as well as an LCD model. The iPhone X is currently the only OLED model and has a 5.8” screen.
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One notable data point from M Science’s chart concerns the iPhone 6, which has “seen a real resurgence” over the past year, according to Goodman. The iPhone 6, launched in 2014, is doing well at prepaid carriers and is also a low-cost option in emerging markets, he said. The phone made up between 5% and 10% of global sell-through in May, according to M Science.
A separate analysis by M Science showed that the iPhone cycle in the U.S. continues to lengthen, though that’s mainly being driven by owners of older phones. More people are upgrading their phones after just a year, thanks in part to early-upgrade programs, Goodman said. More than 22% of people who’ve purchased an iPhone this cycle already had an iPhone 7 or 7 Plus, the prior year’s model.
At the same time, those who have older models are holding on for longer, which Goodman suspects is partly because many people essentially get their phones via a 24-month loan from their carrier and then like that their bills go down once they’ve finished paying off the device. Older phones are also staying functional for longer now.
Goodman said that the average holding period for a phone has been 727 days during the current iPhone cycle, up from 697 days in the prior cycle and 667 during the “supercycle” of 2014 to 2015.
Apple shares are up 32% over the past 12 months, while the Dow Jones Industrial Average DJIA, +0.38% of which Apple is a component, has gained 15%.
