Apple is about to run into a big buying pause ahead of its iPhone 6 launch, but analysts are betting that the device and a larger screen could lead to its biggest upgrade cycle yet.
With Apple expected to launch a 4.7-inch and 5.5-inch iPhone and ship it before the September quarter ends, analysts are expecting a big freeze on device sales.
Apple reports its fiscal fourth quarter results July 22.
Canaccord Genuity analyst T. Michael Walkley said in a research note that iPhone 6 is likely to benefit from pent-up demand for a larger screen device. To date, larger screens have benefited Android and the likes of Samsung as Apple has stayed out of the fray.
Our June/July surveys indicated the iPhone 5s remained a top selling smartphone. However, our surveys also indicated growing consumer anticipation for new larger-screen iPhones. Based on our analysis of global iPhone sales by region, we believe consumers slowed the pace of iPhone upgrade purchases during the iPhone 5 and 5s product cycles. We believe the extended replacement rates combined with new larger-screen iPhones position Apple with its large installed base for record iPhone 6 sales.
Recent history definitely indicates that Apple's September quarter iPhone sales will slow ahead of the iPhone 6 launch.
However, analysts are betting on a surge after that slowdown. Among the key reasons:
iPhone users haven't had a large screen option and Apple could convert Android customers who were fans of larger devices.
Samsung's Galaxy S5 largely missed the mark and there just hasn't been a lot of buzz around an Android hero device for months.
Apple's installed based trades up in waves like clockwork.
Here's a look at Walkley's installed base estimates.
Kulbinder Garcha, an analyst at Credit Suisse, also acknowledges the buzz about the iPhone 6, but said device volume will slow due to customer hesitation. Garcha said he's worried about gross margin and the supply chain transition to larger screen sizes for the iPhone 6.