92 percent of iPhone owners that are "somewhat likely" or "extremely likely" to upgrade their smartphone in the next 12 months plan to purchase another iPhone, according to investment banking firm Morgan Stanley.
Apple's loyalty rate, up from 86 percent a year ago, is based on an April 2017 survey of 1,000 smartphone owners aged 18 and above in the United States. It's the iPhone's highest retention rate measured by Morgan Stanley since a record high of 93 percent set in September 2015, when the iPhone 6s
An excerpt from Morgan Stanley analyst Katy Huberty's research note distributed today:
It's our belief that a maturing installed base that is accustomed to iOS and increased press around potential new technologies in the upcoming iPhone drove the strong year-over-year increase. Importantly, the rise in Apple's loyalty rates comes after Samsung, Apple's biggest competitor in the United States, introduced the Galaxy S8, which was available for pre-order starting March 30th. Apple's loyalty rate of 92% dwarfs that of all other vendors, with Samsung garnering a 77% retention rate, followed by LG (59%), Motorola (56%), and Nokia (42%).
Despite reports suggesting "iPhone 8
" mass production could be delayed by months
, Huberty said Morgan Stanley's Greater China Technology Research colleagues have "not yet seen delays in the supply chain" and still expect new iPhone production to start on time for most components, including the OLED display.
"Nevertheless, we remain conservative in our initial expectations for iPhone supply," the research note cautioned.
Morgan Stanley raised its price target for Apple's stock to $177 today, up from $161, given growing confidence in its 2018 fiscal year "supercycle
" estimates, along with a greater mix of recurring, high-margin services revenue, and a larger cash balance with potential for repatriation in the United States.Discuss this article
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Apple's rumored iPhone with an edge-to-edge OLED display will have longer battery life
, which will drive customers with older iPhone models to upgrade at an accelerated rate, according to Morgan Stanley analyst Katy Huberty.
Huberty also expects the high-end iPhone to have a significant form factor change with wireless charging
, 3D sensors
, and more advanced AI software capabilities
, which are all features that have been previously rumored.
In addition to more modest updates to current iPhone SKUs, we expect Apple to launch a higher priced device with AMOLED display that allows for a curved form factor and longer battery life, wireless charging technology, 3D sensors, and more advanced AI software capabilities. While we see accelerated upgrades for Apple's highest end users in all regions, our work suggests China users are especially sensitive to new technology and form factor changes.
Her research note said a larger base of customers that own at least a two year old iPhone, particularly in China, has resulted in "pent-up demand" for the significantly redesigned "iPhone 8
," and this "supercycle" will help drive sales growth alongside modestly updated 4.7-inch and 5.5-inch models. Morgan Stanley raised its Apple stock price target to $154 accordingly.
KGI Securities analyst Ming-Chi Kuo
said the "iPhone 8" will have a stacked logic board design
that provides room for a larger 2,700 mAh L-shaped battery. As such, while the "iPhone 8" is expected to have a 4.7-inch form factor, Kuo said it will have comparable battery life to a 5.5-inch Plus model. For comparison, iPhone 7
has a 1,960 mAh battery and iPhone 7 Plus has a 2,900 mAh battery.Discuss this article
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