Apple customers are known for their loyalty, but a recent Bank of America survey reveals they're also slow to upgrade their iPhones. The survey, covering over a million iPhone users in the U.S., U.K., India, and China, found that a significant number are still using older models. About 29% of users have an iPhone from the 13 series (released in September 2021), while 13% are using the 12 series (released in October 2020), and 31% have even older models.
In essence, less than a quarter of iPhone users have purchased a new device in the past three years, which poses challenges for Apple's flagship product. This trend has contributed to a decline in iPhone demand, dropping over 10% in the first quarter to a six-year low. Tech experts and analysts on Wall Street have criticized Apple for not offering compelling reasons for users to upgrade their older phones, and for lagging behind competitors in introducing innovative hardware and software features.
iPhone sales are crucial for Apple, accounting for more than 50% of its revenue in the second quarter. However, analysts from Bank of America see potential in this situation, suggesting that the aging iPhone user base could lead to a significant uptick in Apple's stock. They have raised their price target on Apple to $256 from $230, anticipating a multi-year cycle of iPhone upgrades driven by aging devices and new AI features that enhance customer appeal.
This optimism follows earlier predictions from Bank of America analysts in May, envisioning Apple's shift towards AI-enhanced "intelliphones" with advanced processing capabilities and new applications. Apple's recent announcements at its Worldwide Developers Conference (WWDC), including enhancements to Siri with Apple Intelligence, aim to persuade customers to upgrade. Addressing concerns about lagging hardware development, Apple plans to launch a slimmer iPhone next year and potentially a foldable model akin to Samsung's offerings.
Looking beyond hardware updates, the Bank of America analysts highlight Apple's strong customer loyalty as a significant factor in their positive outlook. Their survey shows that 58% of current iPhone users intend to stick with Apple when they upgrade, compared to lower figures for competitors like Samsung, Huawei, and Xiaomi.
Furthermore, the survey indicates strong interest in Apple's wearable tech, particularly the Apple Watch, among current smartwatch users. In India, China, the U.S., and the U.K., a significant majority of smartwatch owners planning upgrades express a preference for the Apple Watch.
Similarly, interest in the Apple Vision Pro, despite its high price tag, exceeds expectations across these markets. This suggests a robust demand potential that analysts view favorably, noting significant increases compared to earlier surveys.
Overall, while challenges persist in stimulating iPhone sales, Bank of America remains optimistic about Apple's future growth prospects, buoyed by its loyal customer base and forthcoming innovations in both hardware and AI-driven software.
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