The “installed base” of all iPhone users has almost stopped growing, according to Deutsche Bank. This is the biggest problem Apple meets with the launch of the iPhone 8, scheduled for September.
The industry expects a complete product upgrade with a radical redesign and a dramatic increase in sales as a result.
But the iPhone crowd is now so big – about 650 million users – that Apple is struggling to find new users to buy phones.
The growth of the installed base (total current users) goes to zero percent per year. The lifespan of an iPhone is so long that individual users can usually run for three years to buy one.
Everyone who wants a new iPhone now has a fundamental market and all types of smartphones are almost saturated, according to Deutsche Bank analyst Sherri Scribner.
Previously, Apple’s installed base was considered as a valuable asset. Each year, a growing percentage of current customers need a new phone, and Apple almost automatically carries a huge piece of this application.
Scribner’s analysis in head spin: the base is now so large that additional growth can not occur. Apple could be the best iPhone, in other words.
Scribner points out that other analysts expect that the 244 million new iPhones were sold during fiscal year 2018. This figure can not be fair, Scribner argues: “We estimate that there will be approximately 228 million iPhones ready to be upgraded during year 18.
Assuming that each of these iPhones is upgraded to a new phone and that Apple should lose no customers from its competitors, Apple still does not meet the expectations of street sales of 244M iPhones during year 18, unless they were able to Win a substantial set of new customers.
To achieve these optimistic figures, Apple is expected to add about 15 million new iPhone users. To put this in perspective, the smartphone market [as a whole] increased from 36 million units in 2016 and is expected to increase by 44 million units by 2017. ”
In other words, the 15 million new iPhone users account for 34% of all new smartphones sold in 2017. Historically, Apple has 15% of all phone sales.
It would now double the market share of new phones and not lose existing customers to reach analysts’ expectations for iPhone sales 8 says Scribner.
Old iPhones do not generate new iPhone
Part of the problem is that the installed base includes iPhones that still work: units that have one, two or three years, that are assigned to children, friends or poor sell online.
About 10% of all iPhone users are used owners, the bank believes. It is expected that the percentage of cell phones used to grow as each new model of iPhone hits the market, which motivates the owners to sell their old line or give them family members and charities.
The installed base seems to have shown a small increase in iPhone sales until it comes out of all the used iPhones, Scribner and his team argue:
People who own iPhones “secondary markets” are not the same as iPhone customers, according to the Deutsche Bank team, as it is unlikely to buy a new iPhone.
These are people who use old phones because they can not afford new ones. About 25% of iPhones finally recycle the market with a new owner, according to IDC data quoted by Deutsche Bank.