Earlier this month, Re/code said it had finally heard word of the official launch date for Apple's (AAPL 0.64%) highly anticipated iPhone 6: Tuesday, September 9. As the date approaches, it's a great time to revisit the trajectory of Apple's iPhone business to help us make some guesses about the potential for Apple's next-generation iPhone. Is there still room left for the world's largest tech company to grow sales of its most important product? Absolutely.
4.7-inch and 5.5-inch iPhone 6 mockups pictured with the 4-inch iPhone 5s. Source: 9to5Mac, used with permission.
In three simple charts, here is why Apple's iPhone 6 is almost certainly to lead the company into yet another year of record revenue.
Apple's iPhone business hasn't peaked yet
Looking at historical sales of the iPhone, there aren't any signs that annual unit sales growth is hitting a roof.
Consider the company's trend of annual iPhone sales to date.
Data for chart retrieved from quarterly SEC filings. The 2015 figure, marked with an asterisk, is an estimate based on an extrapolation of the growth rate achieved in 2014. Fiscal quarters used.
Given Apple's historical iPhone sales growth, combined with the refresh of its flagship iPhone and a price cut to its existing line, Apple could sell close to 190 million iPhones in the next twelve months. This would be two consecutive years of 15% growth to iPhone unit sales for Apple.
But, for two key reasons, this growth projection for Apple's iPhone line in 2015 may prove to be too conservative.
- There is a larger than usual percentage of wireless subscribers who are eligible for subsidized iPhone upgrades in the U.S.
- Rumored to launch in two different models, both with larger screens, the iPhone 6 should help Apple tap in to pent-up demand in a proven market for displays larger than 4 inches.
China Mobile will be a key catalyst
China and, more specifically, China Mobile, will continue to be a catalyst for iPhone sales growth for years to come. The best way to see the potential for growth in iPhone sales at the world's largest carrier is to observe just how tiny the carrier's 4G penetration is today.
Data for chart retrieved from China Mobile's monthly operating data. Figures are in thousands.
While the key takeaway from the chart is the opportunity for hundreds of millions of smartphone sales over the long haul as users transition to 4G phones, it's always worth noting just how promising the trend of 4G-supported smartphone sales for China Mobile has been so far.
First, when put in perspective, 20 million 4G subscribers for China Mobile is quite an achievement, indicative of just how fast it is growing its 4G network. Consider that the carrier didn't even begin to roll out its 4G network, which supports the iPhone, until January this year.
Second, the absolute number of incremental China 4G subscribers has been larger each month since 4G figures were first reported in February. Between June and July, China Mobile added an impressive 6.5 million 4G subscribers.
And if there's any doubt that Apple will benefit from this trend, this data point should soothe concerns: four out of five of the 27% of smartphones in China that cost $500 plus are iPhones, according to Chinese app analytics company Umeng.
The global iPhone launch continues to grow
With operational wizard Tim Cook at the helm of Apple, the company continues to pull off bigger and bigger initial roll-outs every time the iPhone is refreshed.
Production is always the key factor limiting iPhone sales in the first few months of availability -- not demand. Last year was no exception. While the iPhone 5c seemed to be available in excess, the iPhone 5s was stricken by supply constraints in less than 2 days. Nevertheless, Apple's opening weekend sales and its holiday quarter sales surpassed those in the year before, thanks in part to greater supply. In fact, Apple was able to offer so many iPhones in the first few months that it was confident enough to add in China among the countries that can buy the iPhone when it first hit the shelves.
This operational feat is best illustrated by looking at Apple's fast-growing opening weekend sales in subsequent iPhone launches.
Opening weekend iPhone sales continue to grow as Apple beefs up initial supply and adds countries to the list of markets included in the initial rollout. Data retrieved from Apple press releases.
Combining the general trend of Apple's growing iPhone business, growth opportunity in China, and Apple's improving initial iPhone supply during the first months of its availability, the iPhone 6 looks poised to help Apple set new sales records.
