History repeats: Apple’s iPhone 7 will exceed expectations (again)

This was the scene at the O2 store when the first iPhone was sold in the UK way back in November 2007.

You have to ask what many in the media are smoking. I’ve been reading reports that attempt to pre-position iPhone 7 as a failure for months. This has been a sustained pattern that’s gone on for so long I question the ethics and motivation of the people who write those reports.

While we wait for the author’s of those opinions (who I won’t link to on the grounds of good taste) to disappear into history’s dust, here is a small collection of hard evidence to demonstrate that Apple has a huge opportunity with the new iPhone – even before 2017’s wearable revolution (I’ll keep you posted on that in the coming months).

Big upgrade wave

Mizuho Securities Senior Analyst Abhey Lamba predicts Apple will sell up to 230 million iPhone 7’s across the next year. A third of the iPhones now in use are three or more years old, according to Localytics (via Computerworld). “32% of all iPhones used in August were models that debuted in 2013 or earlier, with that year’s iPhone 5S the third-most popular device at 17%. Others, including 2012’s iPhone 5 and 2011’s iPhone 4S, accounted for single digit shares,” says Gregg Keizer.

So how many of these people are going to upgrade?

Turns out it will be millions. A recent survey from electronics trade-in company NextWorth found that 55 percent of people that currently own an iPhone plan to purchase the iPhone 7 by the end of the year.

Apple sold a total of 183.17 million iPhones (iPhone 6, iPhone 6 Plus, iPhone 5s and iPhone 5c) in the first three quarters after launching iPhone 6. These estimates make it far more likely we’ll see upgrade figures toward the top of the estimates, with Jackdaw Research analyst Jan Dawson pointing out just how great the iPhone 7 release will appear to be to owners of older devices.

So where are we with this? In very basic terms the new iPhone will have enough to make it seem a desirable product to interest millions of happy Apple customers who are currently using older models.

Position of strength

Apple is in a position of strength. Strategy Analytics figures yesterday tell us the iPhone 6S was the world’s top-selling smartphone in Q2 2016; with the iPhone 6 chasing in the number two slot and the Samsung Galaxy S7 Edge a distant third place device.

“Apple’s iPhone 6s is currently the world’s most popular smartphone. The iPhone 6s is wildly popular in dozens of countries globally, due to its attractive hardware design blended with rich features such as 4K video, large multi-touch display, and fingerprint security,” said analyst, Neil Mawston.

The 6-series iPhone remains the best-selling model in some European markets (and is still a better phone than many flagship competitors).

Smartphone sales data from Kantar Worldpanel ComTech for the three months ending July 2016 shows year-on-year sales growth for iOS in most regions, including Europe, the US, and Australia, according to Kantar Worldpanel.

You can read all about it here, and while the company has seen some decline in some areas (principally China) there is huge scope for growth in line with all the previous data – particularly that from Nextworth. Commenting on China Kantar said,

“However, 33% of the current iOS installed base owns an iPhone 6 or 6 Plus, representing a large opportunity for iOS to return to growth in the coming months as the latest iPhone is released and consumers contemplate the upgrade.”

Where we’re at

It seems clear that as it prepare to ship iPhone 7 Apple enjoys a huge amount of pent-up interest in the new device, even as its closest competitor (Samsung) is forced to withdraw its new flagship devices from sale.

With over 100 million iPhones actively in use in the US at this time, if Apple achieves a 55 percent upgrade rate (while continuing to attract new users and Android switchers), the new iPhone could once again deliver the biggest   news in smartphones since the last iPhone. Again.

So what have those critics been smoking?