Survey Shows Interest In Upgrading to Next iPhone Higher Than Last Year. The weekend before WWDC, we surveyed 501 U.S. consumers regrading their intent to purchase the next iPhone, expected to be released early to late this fall (possibly delayed a month, see below for details). Of the 220 current iPhone users we surveyed, 25% plan on buying the next iPhone at release, up from 23% in our previous survey in early March 2017. This compares to last year when our survey found 15% of iPhone owners planning to buy an iPhone 7 at its launch in 2016. The iPhone 7 data point is based on a survey we conducted while at Piper Jaffray in July 2016. 

AR Interest High Among Expected iPhone Buyers. When asked about augmented reality features, interest is high among those expecting to purchase the next iPhone (even though this survey was conduct before Apple’s ARKit announcement on June 5th). We found that 54% of respondents that intend on purchasing the next iPhone indicated interest in AR features, compared to 26% percent in our March survey. Among those not planning on buying an iPhone, interest in AR was much lower at 14%.

AR Interest Low Among Android Users. Overall, just 20% of the 501 respondents indicated interest AR. The message that the next iPhone will have more AR features is resonating with loyal iPhone users but Android users have far less interest in AR. As expected, the 18-29 age group showed the highest interest level in AR at 26%.  

2017 iPhone Should Mark A Step Up In iPhone Growth.  The increase in iPhone growth from the coming iPhone cycle is already factored into shares of AAPL. We are modeling for iPhone unit growth to increase from 0% for the iPhone 7 cycle to 8% for the upcoming iPhone cycle. We expect iPhone revenue growth to increase from flat during the iPhone 7 cycle to 11% for the next iPhone cycle. Revenue growth outpacing unit growth is attributed to an ASP increase from $651 (current iPhone cycle) to $674 due to the addition of a new high-end iPhone SKU with 3D depth mapping which we expect to start around $1,000 vs. today the high-end entry level (128 GB) iPhone 7 which is priced at $869. This new high-end SKU should run about $47 per month on the iPhone upgrade program, compared to $41.58 today for the entry level iPhone 7.

Expect iPhone Announcement In September, Shipping In October. Previously we had expected Apple would announce and ship the new iPhone in Sept. 2017, maintaining their annual fall launch of new iPhone hardware (iPhone 5, 5S, 6, 6S, and 7 each shipped in Sept.). Based on a recent conversation with a component supplier, we now expect the new iPhone to be announced in Sept. and ship in Oct. given challenges with the OLED curved screen. This delay would result in a shortfall in the Sept-17 iPhone units of ~10m units (now expect 39m units compared to the Street at around 49m). We expect 6m units to be shifted to the Dec-17 quarter and 4m into Mar-18. We expect the iPhone will be at supply demand equilibrium earlier in the Mar-18 quarter.

Thoughts On The Name. We have been referring to the next iPhone as “iPhone X”; however, Apple has been simplifying their naming schemes across product lines (e.g., “iPad” and “iPad Pro,” dropping the numerical value to show its position in the lineup). All that to say, we now think Apple will refer to the new iPhone as “iPhone” and “iPhone Plus.”

Additional Survey Details.   

• Total sample size: 501 U.S. consumers
• iPhone 7 users: 63 of 501 (13%)
• iPhone 6s users: 61 of 501 (12%)
• iPhone 6 users: 64 of 501 (13%)
• Other iPhone users: 32 of 501 (6%)
• Total iPhone users: 220 of 501 (44%)
• iPhone users planning to upgrade to next iPhone: 54 of 501 (25%)
• More interest in AR: 100 of 501 (20%)
• Less interest in AR: 80 of 501 (16%)
• Unchanged in AR: 319 of 501 (64%)
• 18-29 (19%)
  • iPhone users: 48 of 96 (50.o%)
  • Purchasing the next iPhone: 13 of 96 (13.5%)
  • More interest in AR: 25 of 96 (26.0%)
  • Unchanged interest in AR: 59 of 96 (61.5%)
  • Less interest in AR: 12 of 96 (12.5%)
• 30-44 (27%)
  • iPhone users: 66 of 135 (48.9%)
  • Purchasing the next iPhone: 25 of 135 (18.5%)
  • More interest in AR: 32 of 135 (23.7%)
  • Unchanged interest in AR: 80 of 135 (59.3%)
  • Less interest in AR: 23 of 135 (17.0%)
• 45-59 (22%)
  • iPhone users: 40 of 110 (36.4%)
  • Purchasing the next iPhone: 12 of 110 (10.9%)
  • More interest in AR: 22 of 110 (20.0%)
  • Unchanged interest in AR: 78 of 110 (70.9%)
  • Less interest in AR: 10 of 110 (9.1%)
• 60+ (31%)
  • iPhone users: 64 of 156 (41.0%)
  • Purchasing the next iPhone: 20 of 156 (12.8%)
  • More interest in AR: 19 of 156 (12.2%)
  • Unchanged interest in AR: 101 of 156 (64.7%)
  • Less interest in AR: 36 of 156 (23.1%)
• Male (48%)
  • iPhone users: 99 of 240 males (41.2%)
  • Purchasing the next iPhone: 44 of 240 (18.3%)
  • More interest in AR: 54 of 240 (22.5%)
  • Unchanged interest in AR: 153 of 240 (63.7%)
  • Less interest in AR: 33 of 240 (13.7%)
• Female (51%)
  • iPhone users: 119 of 257 (46.3%)
  • Purchasing the next iPhone: 26 of 257 (10.1%)
  • More interest in AR: 44 of 257 (17.1%)
  • Unchanged interest in AR: 165 of 257 (64.2%)
  • Less interest in AR: 48 of 257 (18.7%)
• Plan to purchase next iPhone 71 of all 502 U.S. consumers (14%)
  • iPhone users: 54 of 71 (76.1%)
  • More interest in AR: 38 of 71 (53.5%)
  • Unchanged interest in AR: 31 of 71 (43.7%)
  • Less interest in AR: 2 0f 71 (2.8%)
• Not planning to purchase next iPhone 430 of all 502 U.S. consumers (86%)
  • iPhone users: 166 0f 430 (38.6%)
  • More interest in AR: 62 0f 430 (14.4%)
  • Unchanged interest in AR: 289 0f 430 (67.2%)
  • Less interest in AR: 79 0f 430 (18.4%)