Our recent intent to upgrade iPhone survey suggests the following:

• 22% of current iPhone users intend to buy the newest model that is yet to be announced. This compares to 23% a year ago (iPhone X) and 15% two years ago (iPhone7).
• The iPhone business is settling into a lower growth, more predictable rhythm.
• The mix of iPhones in the next year will remain consistent with the latest model accounting for about half of new unit sales. This is in line with our model.
• This does not rule out a supercycle in FY19 given this survey was conducted before widespread rumors of a larger iPhone this fall.

Methodology. We surveyed 511 people in the US regarding their intent to upgrade to a new iPhone in the next year. Among the 226 iPhone users we surveyed, 22% of them intend to upgrade to the new iPhone to be released this fall. While we don’t have a comparative number from last year, an additional 20% intend to upgrade to either an iPhone 8 or X in the next year.

Lower growth, more predictable iPhone demand. Looking at the data over the past two years suggests annual iPhone growth will settle into a more predictable 1-5% range. The good news is a more predictable iPhone growth, albeit at a lower rate, should be a positive for AAPL’s multiple. We expect investors will increasingly view the iPhone hardware business as a subscription business, given the upgrade patterns are becoming more predictable. This is also consistent with current Street expectations of 4% iPhone unit growth in FY18 and 2% in FY19.

We’re not ruling out a supercycle in FY19. Our survey did not capture the latest rumors of an iPhone that is likely 25% bigger than the iPhone X. Typically, measurable increases in the screen size (above 10%) have a positive impact on iPhone growth. We would expect to see an uptick in intent to buy as these larger screen iPhone rumors become more mainstream. We’re taking a conservative approach to our model, and expecting 3% iPhone growth in FY19 compared to 7% in FY18. We would define a supercycle as greater than 10% annual iPhone growth.

Below is the breakdown of which iPhone current users intend to upgrade to. Of the 226 iPhone users surveyed, a total of 42% (96 people) intend to upgrade in the next year.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.