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- Apple’s iPhone 12 lineup is expected to be a major smartphone launch that some analysts predict could be a once-in-a-decade opportunity for the company.
- The combination of 5G support, new size and design options, affordable prices, and the fact that many active iPhones are aging will likely culminate in a massive iPhone upgrade cycle.
- That’s especially important as Apple has been dealing with slowing iPhone sales in recent years, requiring it to push other product segments like wearable devices and services.
- Apple is expected to announce its new iPhones on Tuesday.
- Visit the Business Insider home page for more stories.
Apple’s annual iPhone launches are always closely watched by customers and Wall Street alike. But 2020 represents a particularly critical time for the tech giant.
Analysts expect the iPhone 12, which will likely be unveiled at the company’s event Tuesday, to represent Apple’s largest update cycle in years.
This is because many active iPhones around the world are now several years old and ready for an upgrade, according to Wedbush Securities analyst Daniel Ives. The iPhone 12 is also expected to be Apple’s first 5G iPhone, meaning that updates will likely continue over the next year as 5G networks continue to develop and customer demand for 5G-enabled devices grows.
The combination of the addition of 5G support, new size options, affordable pricing options for both the iPhone 12 and possibly older models, and the fact that many active iPhones are getting old could make this moment a blockbuster. for iPhone updates.
“From start to finish, it will be all iPhone,” Ives said in an interview with Business Insider ahead of Apple’s event. “In my opinion, this is the most important product cycle of the last decade for Apple.”
The anticipated launch comes after Apple reported a decline in iPhone sales in its quarterly earnings reports in recent years.
Some have attributed this drop to rising smartphone prices and the new features have been deemed too incremental to justify an upgrade for many consumers.
Apple began reversing this trend with the iPhone 11 line, which performed better than many had anticipated, but the iPhone 12 is expected to get the big boost Wall Street has been waiting for.
Apple has also made an effort to lessen its reliance on the iPhone and offset the slowdown in sales in its most important product line by boosting other areas, such as digital services and accessories, in recent years.
Analysts predict that Apple will kick off a major iPhone update cycle with the debut of its iPhone 12 line on Tuesday.
Wedbush Securities estimates that 350 million of the 950 million iPhones in use worldwide are in the window of an upgrade opportunity. Apple is said to have ordered at least 75 million units of the iPhone 12 by 2020, according to Bloomberg. Ives de Wedbush also says that 40% of Apple’s installed base hasn’t updated their phone in 3.5 years, creating a great opportunity for updates.
“It’s almost the perfect storm of demand for Apple, which is really why it’s such a super cycle,” Ives said.
It’s not just immediate sales that make iPhone 12 such a monumental upgrade cycle for Apple, according to analysts. The idea is that consumers will likely update their iPhones over the next year as 5G networks continue to develop.
“These levels of speed updates occur every six to eight years,” Gene Munster, managing partner at Loup Ventures, told Business Insider. “It is quite rare. That is remarkable and consumers are concerned about it.”
It will likely be a long time before 5G becomes the standard; Verizon’s 5G network can only be found in certain areas of just over 30 cities in the United States, for example. There are also many areas of the country that are exposed by AT & T’s 5G network, as shown on its coverage map.
But some analysts see the iPhone 12 as the beginning of what could be a long-term upgrade cycle as carriers increase their 5G presence.
“We expect this year’s lineup to start a significant replacement cycle that we believe will be a multi-year process as new applications and spectrum become available over time,” wrote RBC Capital Markets analyst Robert Muller and senior associate Michael. Murray in a recent report.
A Morgan Stanley analyst team led by Katy Huberty also said in a recent research note that this fall’s iPhone launch is expected to be “the biggest iPhone event in years.”
In addition to 5G support, Apple’s iPhone 12 lineup is expected to come in new sizes and likely have a revamped design. The iPhone 12 is said to come in four variants: a 5.4-inch “mini” iPhone 12, a 6.1-inch iPhone 12, a 6.1-inch iPhone 12 Pro, and a 6.7-inch iPhone 12 Pro Max.
The 5.4-inch and 6.7-inch sizes are new to Apple’s smartphone lineup, representing a departure from last year’s 5.8-inch iPhone 11 Pro and 6.5-inch iPhone 11 Pro Max.
Ives and Munster hope that these two new variants will be the most popular. Ives says he’s been seeing a surge in pent-up demand for the larger 6.7-inch model, mainly because bigger phones are more popular in China and that’s where a lot of iPhone updates are expected to occur in the coming year.
“Right now, there are 60 to 70 million iPhones in the window of an upgrade opportunity in China,” Ives said. “And ultimately, this is not a supercycle without China. So it’s key that the China component remains strong for Apple.”
Munster, on the other hand, believes that the shift to larger phones in recent years means there is likely a high demand for a smaller flagship iPhone. The smallest phone Apple currently sells is the $ 400 4.7-inch iPhone SE, which has the same processor as the iPhone 11 family but lacks modern features like Face ID, an edge-to-edge display, and a multi-lens camera. .
“I understand the move to bigger screens, but I think there is a group of people in the last seven years who have felt left out,” Munster said. “So I think there is a pent-up demand for the latest and greatest in a smaller form factor.”
New size options and the move to 5G aren’t the only factors that could make this a great iPhone launch for Apple. The company is also expected to continue to lean on its strategy of pricing the iPhone more aggressively compared to Android offerings, a tactic that was successful with the $ 700 iPhone 11 and $ 600 iPhone XR.
Despite new features like 5G, the entry-level iPhone 12 is expected to be priced at $ 700 just like its predecessor, Ives predicts, which could be particularly important given the economic ramifications of the COVID-pandemic. 19.
Plus, if Apple discounts an older model like the iPhone 11 after announcing the iPhone 12, as it has in years past, there could be an even bigger opportunity to convince budget-conscious iPhone owners with older phone models. for them to be updated.
Apple may also release a new, smaller and cheaper version of its HomePod smart speaker during its October 13 event. But the all-important iPhone will almost certainly be the main attraction. And keeping the iPhone price competitive with new offerings from Google and Samsung will be key to ensuring that the iPhone 12 is a success.
“This is not a company that normally cuts prices,” Ives said. “But I think they recognize that they need to have different prices because they cannot miss this opportunity.”
