The following is a comprehensive analysis:
▲ Tim Cook released a three-shot iPhone 11 Pro last year
iPhone sales this fiscal year is expected to increase by 10%
4G without fire iPhone 5
Apple is a master at upsell, but 5G may pose the biggest challenge for this company.
Apple is scheduled to hold a special event on October 13th (October 14th, Beijing time). The market generally expects Apple to release this year's iPhone 12 series mobile phones at this event. As usual, Apple is silent about its plans for the 20th iteration of its iconic smartphone, but reports from whistleblowers and suppliers all confirm that the next-generation 5G network standard will be supported by at least some new models. Moreover, Apple also used the theme of "Hi, speed" in the invitation letter, suggesting a new generation of mobile networks.
Almost all Apple's competitors, including Samsung Electronics, the largest smartphone manufacturer, have already launched 5G phones in the market. However, most of the world's 5G activities have always occurred in China. Market research firm Counterpoint Research reports that China accounted for more than three-quarters of 5G equipment shipments in the second quarter of this year.
The benefits and limitations of 5G
In the United States, the coverage of 5G networks is still limited, even in large cities, which hinders the popularization of 5G. IDC, a well-known market research company, predicts that in the first half of this year, 5G mobile phone sales in the United States will be 4.2 million, which is about 7.5% of the total domestic smartphone shipments in the United States during the same period.
This is because the 5G networks launched by the three major US carriers-Verizon Wireless, AT&T, and T-Mobile America-are not yet able to provide sustained and stable faster data transmission speeds, and the coverage is not wide enough. If these companies cannot significantly upgrade their networks as soon as possible, many consumers who buy new iPhones will find that Apple's main features this year are not so powerful.
In addition to the US, Apple may also encounter network troubles in the UK. According to the British "Daily Telegraph" report, iPhone 12 may not be able to connect to the UK's 700MHz 5G frequency band. In the United Kingdom, 700MHz and lower frequency bands are used to expand the coverage of mobile phone networks, enabling signals to reach more remote areas. If the new iPhone does not support the 700MHz frequency band, then users will encounter signal troubles.
However, the industry generally predicts that the launch of the iPhone 12 is still expected to accelerate the popularity of the 5G market in the United States. Counterpoint analyst Jeff Fieldhack predicts that this year's new iPhone will dramatically increase the market share of 5G devices, making 5G mobile phones accounted for 20% of domestic smartphone sales in the United States by the end of this year.
Several Apple stock analysts have re-used the term "supercycle". In the past, super cycles were used to predict the prosperous sales cycle of the iPhone, but it was not always accurate. According to the consensus forecast of investment technology company Visible Alpha through a survey of analysts, the total sales of Apple iPhones are expected to increase by 10% to 203.8 million units for the 2021 fiscal year ending in September next year, ending the continuous decline in the past two years.
The iPhone’s hot sales will also boost Apple’s stock price. Although Apple's stock price has fallen below the high point set on September 1, it has grown by 59% this year. Apple's current price-to-earnings ratio is more than 31 times, still in the most expensive valuation range in more than a decade.
Lessons from 4G
Is 5G the selling point alone? It may not work. Prior to this, the arrival of 4G did not usher in a super cycle for Apple, and the stock price fell sharply.
The last major network transition occurred from 2010 to 2012, when the mobile network at that time evolved to the current LTE standard. At that time, smartphones were still a fast-growing global business. Apple's first LTE device is the iPhone 5, which will be available later in 2012.
At that time, iPhone 5 also triggered the prediction of the super cycle, but its sales and low profit margin did not meet the expectations of this round of hype. In 2012, before the iPhone 5 went public, Apple's stock price had soared 65%. But after the iPhone 5 went public, Apple's stock price fell 24% for the rest of the year.
Buyers value size, camera and battery life more
The motivation for smartphone buyers to upgrade seems to come more from larger screen sizes, better cameras and longer battery life.
iPhone 6 is a good example. The cycle of this phone started in late 2014 and turned out to be the strongest sales cycle in Apple's history, thanks to the significant increase in the screen size of the iPhone 6.
Last year's iPhone 11 Pro series was equipped with a three-lens camera, and its popularity exceeded expectations. Analysts predict that the iPhone 11 Pro series accounted for 28% of the total iPhone sales in the last fiscal year, higher than the 23% of the previous generation flagship models.
What would happen if iPhone 11 sale is good?
Bloomberg reported last month that Apple has required suppliers to produce at least 75 million new iPhones this year, which is roughly the same as last year and may reach 80 million at most. This shows that during the global new crown pneumonia pandemic and economic recession, the market still has strong demand for the iPhone, Apple's most important product.
However, the success of last year's iPhone 11 actually poses another challenge to this year's iPhone 12, because consumers now use a mobile phone for three to four years. Of course, Apple still has a huge fruit powder foundation, and they are willing to line up to buy the products that Apple launches every year.
However, for Apple, it is a difficult task to obtain enough fruit fans to prove its valuation of up to 2 trillion US dollars.