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