Expect a Multi-Year iPhone Supercycle

Expect a multi-year iPhone supercycle

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It’s “beat up on Apple” season again…  And a popular refrain these days is complaining about the lack of a… iPhone supercycle.

What is a “Super Cycle”?

A “super cycle” or “supercycle” is a term for the massive rush by the over 1 billion worldwide iPhone owners to upgrade their iPhones to the latest model.

The last time this happened was after the launch of the iPhone 6 in Q4 2014.1

As you can see from the chart below from Statista, every year Apple has a huge spike in sales in the first quarter and during the holiday season.

Apple is on a fiscal year. Their Q1 starts on October 1st and goes through December 31st.

But Q1 2015 was the first big “super cycle”. It was a massive spike in iPhone sales… Much higher than previous first quarters.

Statistic: Global Apple iPhone sales from 3rd quarter 2007 to 1st quarter 2018 (in million units) | Statista

This year people were hoping for an iPhone X powered supercycle that would cause a massive spike in iPhone sales, relative to the prior four years.

iPhone X SuperCycle

The latest form factor upgrade is iPhone X… The edge to edge screen with Face ID led some analysts to predict that the newest, high-end iPhone would lead to another “supercycle” among iPhone owners.

However, the idea of the supercycle this time never felt right to me.

The reason is that people are just holding onto their phones for longer… Or buying refurbished iPhones.

I do plan on upgrading to an iPhone X or other newer version of the iPhone…

But there is no urgency to do this because my iPhone 6S still works great.

iPhone X Multi-Year SuperCycle

I expect that the supercycle will take place gradually, akin to what has been predicted by analyst Robert Cihra of Guggenheim.

He believes that instead of a brief quarterly supercycle, the upgrade period is likely to span years. More importantly, he expects Apple’s average selling price to increase throughout this time frame.

Expert Ming-Chi Kuo predicts that Apple will release a series of iPhone X-like form-factor models at different price points in the Fall of 2018.

The iPhone X not only “primed” the market for a high price model, but also it “anchored” buyers to a new psychological price point to mentally compare iPhone X with lower priced models with the same edge to edge form factor.

This will help increase the average selling price (ASP) with less sticker shock.

So… I believe the cool, new iPhone X form factor will result in a SuperCycle…

It’s just that the upgrade process will happen across several years.


 

Footnotes

  1. The iPhone 6 was a form-factor and design upgrade from the iPhone 4. It also brought about a larger “phablet” sized iPhone in the iPhone 6 Plus. The larger form factor option of iPhone 6 along with Touch ID and Apple Pay spurred a big upgrade among existing iPhone users…