Munster: Apple’s iPhone 5S Has ‘Staying Power’

Source: Piper JaffrayU.S. consumers are still crazy about Apple’s (NASDAQ:AAPL) iPhone 5S, according to a survey recently conducted by Piper Jaffray analyst Gene Munster. According to the survey’s results, 33 percent of U.S. consumers that planned to buy a smartphone in the next three months intended to buy an iPhone 5S. As noted by Munster, this was a high level of consumer interest for a device that has been on the market for nearly six months.

“The main takeaway from our most recent smartphone purchase intent survey is that the iPhone 5S seems to have staying power,” observed Munster in a note to investors. A similar survey conducted immediately after the iPhone 5S launch last year showed that 38 percent of U.S. consumers who expected to make a smartphone purchase in the next three months intended to buy an iPhone 5S. Another survey conducted in December of 2013 showed that 35 percent of consumers intended to buy Apple’s flagship device.

On the other hand, the most recent survey also showed that Apple’s iPhone 5C is rapidly losing favor with consumers who were never especially interested in the device. Only 6 percent of U.S. consumers that planned to buy a smartphone in the next three months intended to buy an iPhone 5C. However, even immediately after the device’s launch last September, only 12 percent of consumers said they intended to buy an iPhone 5C. By December of 2013, the level of consumer interest in the iPhone 5C had dropped to 9 percent, according to Piper Jaffray’s surveys.

Munster believes that there are two main reasons why the iPhone 5C failed to attract higher levels of interest from consumers. First, the analyst noted that there is a “significant value increase in purchasing the 5S.” The iPhone 5S features a revolutionary 64-bit A7 processor and a Touch ID fingerprint sensor. Second, the iPhone 5C’s focus on color options failed to excite consumers. “[W]e believe that the concept around colors as a unique selling point has not worked as well as it had with iPods because a significant number of smartphone users cover their smartphones with cases, which was typically not the trend for iPod owners,” wrote Munster.

Although Piper Jaffray’s survey showed that a total of 39 percent of U.S. consumers that planned to buy a smartphone in the next three months intended to buy one of Apple’s devices, the survey also found that 46 percent intended to buy an Android smartphone. However, it should be noted that the survey pitted Apple – one vendor — against multiple Android device vendors. According to data from market research firm comScore, Apple’s iPhones accounted for 41.8 percent of total U.S. smartphone subscribers in December of 2013. The nearest Android smartphone vendor was Samsung (SSNLF.PK) with a 26.1 percent share.

Although Munster believes that, “Apple’s position as top player in the high end smartphone market remains secure,” he noted that Apple’s guidance showed that the U.S. smartphone market is “rather mature.” Munster maintains an “Overweight” rating and a $640.00 price target on Apple shares.

Here’s how Apple traded on Friday.

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