Why Apple Could Sell 200 Million iPhones in 2015
The new iPhones offer quite a few reasons to upgrade. Source: Apple
Apple sold an astonishing 169 million iPhones in its fiscal year 2014, increasing unit sales about 13% over 2013. With the iPhone 6 presenting a compelling upgrade to the product line, Samsung struggling to sell its high-end phones, and a growing global market for Apple, it's quite feasible Apple's iPhone unit sales will accelerate this fiscal year and reach 200 million.
I've been waiting for a reason to upgrade my old iPhoneThe iPhone 6 seems to have convinced a lot of iPhone owners that it's worth the upgrade. (I'm among those owners who upgraded from an iPhone 4.) While some analysts believe the compelling upgrade will pull demand forward, fellow Fool Adam Levine-Weinberg argues more upgrades are coming from older iPhones and not last year's iPhone 5s.
Indeed, CIRP estimates 80% of new iPhone purchases in the U.S. this September upgraded from older iPhones compared to less than 65% in 2013. Kantar Worldpanel estimates that 86% of new iPhone buyers in the three months ending with October upgraded from an old iPhone, and 5% came from Samsung.
On the other side of the coin, that means Apple is converting fewer customers from other platforms like Android. But that may be a short-term problem. If anything, the larger iPhone models offer Android users another reason to make the switch. The CIRP survey notes that Android users who did make the switch were more likely to buy the flagship phone compared to previous years.
For Apple to reach 200 million iPhones in 2015, it will need to attract more new-to-iPhone users.
That's where the international markets come inThe iPhone 6 is shaping up to be Apple's fastest iPhone rollout ever. The company plans to make the iPhone available in 115 countries by the end of the year.
Apple still can't compete with Samsung's distribution. The Korean electronics maker launched its Galaxy Note 4 in 140 countries in October. Of course, the demand for Samsung's phablet is far lower than overall demand for the iPhone 6 and iPhone 6 Plus.
Nonetheless, Apple's rollout to new markets will help it reach a larger market and naturally sell more iPhones. The company's retail distribution plans in emerging markets like China, Brazil, and India is still in the early stages and set to expand further in 2015.
Apple plans to triple its retail presence in India next year from where it was in 2013. Additionally, Apple plans to increase the number of stores in China from 15 to 40 in two years. In Brazil, Apple has only just opened its first retail location.
Providing a showroom in these markets for users to test out and compare the iPhone to their current phone will go a long way to increase sales.
More carrier support than everApple launched the iPhone 6 on more carriers this year than ever before. The iPhone is supported by the world's largest carrier, China Mobile, at launch compared to January in the last product cycle. Meanwhile, Japanese carrier NTT Docomo is entering its second year of iPhone support.
An extra quarter of sales at China Mobile should help drive a significant amount of sales growth on top of last year. Chinese consumers also seem to prefer Apple's iPhone over Samsung and other high-end devices, which could lead to more upgrades when current contracts expire this year.
Meanwhile, Apple continues to gain support from other small carriers throughout the world, which should cumulatively impact iPhone unit sales.
Taking back market shareFor the first nine months of 2014, Apple's iPhone sales accounted for just 13% of the market. Meanwhile, Samsung took approximately 26%. But that dynamic is shifting, as Samsung has seen falling sales of its flagship phone while the iPhone 6 continues to sell better than its predecessor.
While IDC estimates smartphone market growth will slow significantly in 2015, reaching 1.4 billion, Apple should be able to grow faster than the market with the iPhone 6.It's poised to take back share from Samsung in emerging markets like China and India, where Samsung took share with its mid-to-low-end smartphones. It's also a compelling upgrade for both old iPhone owners and Android owners. As a result, I believe Apple will sell over 200 million iPhones in fiscal year 2015.
The article Why Apple Could Sell 200 Million iPhones in 2015 originally appeared on Fool.com.
Adam Levy owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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