The iPhone is unstoppable
AP
Apple sold 47.5 million iPhones last quarter, which is up 35% year over year, or three times as much as the overall smartphone market, Apple says. Even though Apple didn't meet analysts' expectations, that kind of growth is incredible.
Despite threats from young startups like Xiaomi and Android's dominance of the smartphone market, the iPhone still appears to be unstoppable.
But there are some doubts that the iPhone can continue its incredible run, especially when new models that look similar to the current phones launch this fall.
Some analysts, like those at Macquarie and Piper Jaffray, believe that the iPhone 6 had a ton of pent-up demand because users were holding out for big-screen devices. They think iPhone growth will slow down because the next iPhone, the so-called iPhone 6S, will have the same screen size and design as the iPhone 6. Apple will still sell a boatload of iPhones, the analysts say, but sales growth won't look the same as it did for the past year.
But that argument won't play out, and there's plenty of evidence available now that proves it.
Since the launch of the iPhone 6 last September, Apple has consistently pointed to higher-than-normal rates of people switching from Android to the iPhone, meaning there's still plenty of opportunity to snap up Android users in the years to come. (It seems like Android phone owners were holding out for the big-screen iPhone too.) Apple said it saw the highest rate of Android switchers ever last quarter.
To be fair, Apple didn't give specifics on how many new iPhone owners switched from Android, but we do have some other evidence.
China is the perfect example. The country was practically all Android users before Apple made a big push there. Now, Apple is the top-selling phone maker after getting a big boost from the iPhone 6. In the last quarter, Apple said it saw 87% revenue growth in China.That's been particularly bad news for Samsung. Without a key differentiating factor like a large screen, those who want a pricey, high-end device have started choosing the iPhone 6 over Samsung's Galaxy phones. If they don't buy an iPhone, they buy an Android phone like those made by the Xiaomi, which makes phones with specs just about as good as what you'd find in a Samsung but for half the cost. Xiaomi ranks second behind Apple in China in terms of smartphone unit sales, according to most estimates.
On top of that, Apple said in April that only 20% of iPhone users had upgraded to the iPhone 6, so there are still a lot of people who will be ready to upgrade during the 6S cycle this fall and beyond. If you want to take an even longer view, the overall smartphone market is supposed to grow to nearly 2 billion devices over the next few years, meaning there's still opportunity for first-time smartphone owners to choose the iPhone.
So now you have several big factors that will keep Apple's magic iPhone money machine chugging along: Android users who want a high-end experience will continue to switch to the iPhone, those who haven't upgraded from an iPhone 5S or earlier will do so soon, and first-time buyers will be able to get the iPhone in the coming years.
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