Handicapping Apple's iPhone 4 debut: 77 percent upgrades; 1.5 million units or so
Apple's iPhone's 4 debut is meeting its advanced billing: The device is creating a powerful upgrade cycle.
Analysts on Friday were busy handicapping the first day sales for the iPhone 4. Piper Jaffray analyst Gene Munster said his firm surveyed 608 people in line for the iPhone 4 and found that 77 percent of buyers were existing iPhone owners, compared to 56 percent in 2009 and 38 percent in 2008.
With 77% of our surveyed iPhone buyers upgrades, Apple is effectively building a recurring revenue stream, where iPhone users pay on average $200 year to stay current with the latest iPhone. While it’s true that iPhone 4 is a more significant feature upgrade compared to the 3GS, and we expect this upgrade rate to decline next year, Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone. While we think Apple will sell between 1.0m to 1.5m iPhones in the first three days (including preorders), the actual number is largely irrelevant.
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What's notable here is that only 16 percent of iPhone 4 buyers were switching carriers to go to AT&T, down from 28 percent last year. In a nutshell, if you haven't moved to AT&T for the iPhone you probably aren't going to.
Other details of note from Munster's survey:
- 54 percent of buyers bought the 32GB phone;
- 28 percent of buyers also owned an iPad;
- Of the 72 percent of iPhone buyers that didn't own an iPad, 39 percent of that group said they would likely buy one in the next year;
- 90 percent of buyers cited new features for the primary reason they were standing in line for the iPhone.
Meanwhile, Oppenheimer analyst Yair Reiner conducted a survey of 174 iPhone 4 buyers. His findings:
- 76 percent of iPhone 4 buyers already had the iPhone;
- 26 percent of respondents bought the iPhone because their old phone was failing them (desire over need);
- Android was seen by respondents as the best iPhone alternative. Previously, RIM's BlackBerry was the choice.
Reiner is projecting first day iPhone 4 sales of 1.5 million.