Apple iPhone 12 lineup could lead to 5G 'supercycle'

5G carriers are likely to be pleased with Apple's iPhone lineup given that now the other half of the smartphone market in the US will be ready to upgrade.

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Apple's iPhone 12 launch with 5G will complete the smartphone equation to make speedier wireless access a reality in the US. And coverage with broader price points will spur upgrades into 2021.

The company launched what analysts were largely expecting --  iPhone 12 mini, iPhone 12, iPhone 12 Pro, and iPhone 12 Pro Max -- with price ranges from $699 to nearly $1,400 for the top of the line iPhone 12 Pro Max. Perhaps the biggest takeaway is that Apple is going after the middle-of-the-road price band for 5G devices with the iPhone 12 mini. 

Until now Android devices have been all over 5G, but Apple represents 46% of the market in the US, according to Counterpoint Research. In addition, 5G devices have typically been reserved for the premium market until recently.

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Apple's iPhone 12 series will ensure the two leading smartphone platforms are 5G equipped. As a result, analysts are betting on another supercycle for the iPhone, or a once-in-a-decade upgrade cycle.  

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Counterpoint

Also: An iPhone 12 to please everyone -- well, except Android fans

Wedbush analyst Daniel Ives lays out the 5G upgrade argument for Apple.

Across the board we are seeing an uptick around production and pent up demand for the slate of iPhone 12 models (expecting 4 new models) set to be unveiled next week in this launch event. In particular we are seeing Apple and its Asian suppliers anticipate stepped-up demand for the larger 6.7-inch model which is raising the overall iPhone 12 expectations heading into this "once in a decade" potential launch. We continue to believe the line in the sand a few months ago was between 65 million to 70 million 5G iPhone 12 units and now has moved into the 75 million+ range with 80 million a stretch goal. Importantly, with our estimation that 350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity, we believe this will translate into an unprecedented upgrade cycle.

Ives adds that China is the linchpin to Apple's 5G upgrade cycle for the iPhone. Should China demand spike along with India, Apple is likely to see the most "significant product cycle since iPhone 6 in 2014," said Ives.

Jefferies analyst Kyle McNealy said Apple is also likely to benefit from carrier subsidies. At the moment, carriers aren't discounting and offering subsidies to recruit customers. However, carriers are going to need to add 5G users to utilize the capacity that has been built up through 2020.

In addition, Apple has an aging installed base, especially in China. That reality points to a 5G inspired upgrade cycle. A Jefferies survey found that 75% of China iPhone users have iPhone 6, 6S, 7, 7S, and 8.

McNealy said:

As we head into Apple's 5G cycle, we've reviewed the set-up in key regions. Of course, Apple's most important regions are the Americas, Europe, and Greater China which contributed 45%, 23%, and 17% to 2019 net sales respectively. We think the setup as very positive for Apple with a lot of room for growth and several catalysts. Regional growth drivers include: 1) trend reversal for handset upgrade rates and carrier device subsidies in the US; 2) share gains for Apple versus Huawei in Europe due to US trade restrictions; and 3) China survey data that indicates future share gain for Apple and that there's a massive legacy device installed base looking to upgrade.