As iPhone 6s, iPhone 6s Plus land, Apple seen expanding installed base

Analysts are mixed about the strength of the iPhone 6s, iPhone 6s Plus upgrade cycle, but Apple is still expected to grab more of the high-end smartphone market as the installed base swells.

Apple's iPhone 6s and iPhone 6s Plus are available on Friday and analysts are expecting the devices to further strengthen the company's position at the high-end of the smartphone market.

In a statement, Apple outlined that its latest iPhones will be available 8 a.m. local time at its global retail stores. Apple also said that iOS 9 was downloaded by more than half the iPhone installed base.

The details surrounding the iPhone 6s and 6s Plus are already known. What's unclear is whether the new devices can keep an upgrade cycle humming.

Analysts are mixed and some have noted that the latest pair of iPhones won't see the demand its predecessors did. For instance, Pacific Crest Securities analyst Andy Hargreaves said:

Apple's statement that first-weekend "sales" are on pace to set a record appears to be a statement on supply. Relative to demand, the preponderance of data points suggests that demand for the iPhone 6s is lower than it was for the iPhone 6, possibly meaningfully so. This includes Google search data, device shipment times, third-party surveys, a lack of comments from carriers, and a lack of quantitative comment on pre-orders in Apple's statement.

Nevertheless, Apple has a hammerlock on the high-end smartphone market. In a research note, Canaccord Genuity analyst T. Michael Walkley said:

We anticipate Apple will maintain very strong share of the premium tier smartphone market. In fact, we believe the iPhone 6S products should enable Apple to continue to post strong sales and high-end smartphone market share gains, as we believe the iPhone 6/6S Plus smartphones generated very strong replacement sales from existing iPhone consumers who slowed the pace of iPhone upgrade purchases during the relatively disappointing iPhone 5 and 5s product cycles.

We believe the new Apple installment plan programs combined with similar to more aggressively priced installment programs from leading carriers will improve the rate of iPhone upgrade sales to the growing installed base of iPhone users. In fact, with only 27% of the iPhone installed base having upgraded to the iPhone 6/6 Plus devices by the end Q3/F15, we anticipate continued strong replacement sales through C2015 and beyond. Further, we anticipate continued high-end smartphone market share gains for the larger screen iPhone 6 devices as our surveys indicate a greater mix of Android smartphone consumers are switching to the iPhone 6 smartphones than during iPhone 5 series launches.

The upshot: Walkley projects an iPhone installed base of about 500 million by the end of 2015.

Also: Apple's iPhone: Looking at its past and present to predict its future | How the iPhone grew up: From battery life to storage, 10 charts that explain it all | Can Apple's iPhone 6s trade-in program shorten upgrade cycle?

The analyst upgraded his price and earnings target for Apple. Here's a snippet of Walkley's projections for the iPhone installed base.




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