Analyst: Orders for Apple’s iPhone 6 to Surpass iPhone 5S

Source: martinhajek.com

Apple’s (NASDAQ:AAPL) upcoming iPhone 6 could reignite the company’s sales growth, according to a new research note from Morgan Stanley analyst Katy Huberty. According to Apple Insider, the analyst recently visited sources in the Cupertino-based company’s Asian supply chain. Based on her supply chain checks, Huberty reported that sales for the iPhone 6 were expected to be 20 percent higher than last year’s iPhone 5S launch, reports Apple Insider. The anticipated production boost could make Apple’s next iPhone launch the biggest in its history.

Huberty was originally expecting only a 12 percent increase, according to Business Insider. As noted by Apple senior vice president and chief financial officer Peter Oppenheimer during the company’s fiscal first-quarter earnings call in January, Apple saw only a 7 percent increase in iPhone sales during the last quarter of calendar 2013, so an increase of 20 percent would be an impressive improvement. On the other hand, as noted by Apple Insider, Apple doesn’t separate its iPhone sales by model so it’s impossible to know how what percentage of its sales was derived from the iPhone 5S.

Huberty also noted that this year’s launch would likely go smoother than last year’s iPhone 5S launch. “At this point, we see no major bottleneck in iPhone 6 production and an earlier production ramp could improve volumes early in the cycle,” wrote Huberty in a research note obtained by Business Insider. Last year, Apple’s iPhone 5S launch was plagued with worldwide inventory shortages, which some analysts blamed on production constraints due to yield issues with the Touch ID fingerprint sensor.

Much of the buzz surrounding Apple’s next-generation iPhone is focused on the expected increase in screen size. Although Apple has yet to confirm an increase in the iPhone’s screen size, multiple media outlets have reported that the iPhone 6 will be available in two larger screen sizes. Most sources peg the screen size of the smaller model at around 4.7 inches, while the larger screen model is believed to feature a phablet-sized screen of around 5.5 or 5.6 inches.

A large-screen iPhone could boost Apple’s market share in Asia, where phablets are especially popular. According to data from market research firm Canalys, smartphones with screens that are five inches or larger accounted for 43 percent of total smartphone shipments in the Asia Pacific region last quarter and 39 percent of shipments in Greater China.

On the other hand, Huberty also expects that a larger screen device will increase the bill of materials for Apple’s next device by $20 to $30, reports Apple Insider. “However, we don’t detect any abnormal component pricing pressure from Apple suggesting lower inventory, deprecation, and warranty costs along with the potential for a modest price increase and/or NAND mix change may help digest the higher (bill of materials),” wrote Huberty, according to Apple Insider. While Apple is widely expected to release its next iPhone iteration in September, a recent report from Taiwan’s Economic Daily News via Reuters cited unidentified supply chain sources who said that Apple would release the 4.7-inch iPhone 6 model in August.

Looking for more iPhone 6 rumors? Earlier, we wrote on the possibility of the new device from Apple including NFC technology. Here’s a recap:


According to “a source close to the matter” cited by BrightWire via MacRumors, Apple’s so-called iPhone 6 will include a payment function based on Near Field Communication (NFC) technology. The source also said that Apple has reached a deal with China UnionPay that will allow users to make mobile payments with their iPhones on the more than 3 million “QuickPass” point-of-sale machines in the bankcard association’s network.

As noted on China Union Pay’s website, the company is “the central and pivotal part of China’s bankcard industry” and is the only “bankcard association established under the approval of the State Council and the People’s Bank of China.” China UnionPay’s network includes around 400 domestic and overseas associate members.

According to BrightWire’s source, iPhone users will be able to use the mobile payments service by downloading a China UnionPay app to Apple’s Passbook. The source noted that China UnionPay is currently creating a system that will align with its People’s Bank of China QuickPass standard, but also be compatible with Apple’s iOS. Separately, the bankcard association is partnering with Apple to develop another mobile payment solution to be implemented in the Cupertino, California-based company’s own retail stores.

Rumors about a new Apple payments service were bolstered earlier this year, when The Wall Street Journal reported that Apple executives were meeting with various industry leaders to discuss the implementation of an expanded mobile payments service. Although Apple already allows users to pay for multimedia items and apps through its iTunes Store, the new mobile payments service would likely encompass purchases of physical items and services from a number of retailers and businesses.

Last month, in a research note issued by well-connected KGI Securities analyst Ming-Chi Kuo and obtained by 9to5Mac, Kuo predicted that the iPhone 6 would include an “NFC chip with security element and metal casing.” Although many Android-based smartphone makers currently include NFC technology in their devices, Apple previously appeared to be favoring the use of the Bluetooth LE wireless protocol in lieu of NFC. While Apple will continue to use Bluetooth LE for indoor navigation and location-based advertising through its iBeacons, it now appears that it is moving toward the widely used NFC technology for its mobile payments system.

It should be noted that BrightWire’s report also aligns with recent reports that Apple plans to replace the Apple Store’s current mobile point-of-sale system that uses the iPod touch with a new system that uses the iPhone 5S. According to Forbes, the upgraded system includes a new “shell” made by electronic payment transaction technology provider VeriFone (NYSE:PAY). The shell, which attaches to the back of the iPhone, includes an area where an NFC receiver could be installed.

Finally, Apple also filed a patent for an NFC-based retail shopping system earlier this year. In the patent, Apple described a secure mobile payments system that would utilize several different types of wireless protocols, including NFC. Although it remains to be seen if the latest mobile payments service rumor proves to be true, Apple is already well positioned to create such a service due to its almost 800 million iTunes accounts, the majority of which are linked to credit cards.

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