- iOS continued to gain market share in major markets while holding its earlier gains in others.
- The strong sales of the iPhone are expected to continue into 2015, pulling away higher end android users due to the larger form factor of the iPhone 6 models.
- We estimate iPhone to add close to $40 billion to Apple revenue in Q2 2015.
Apple (NASDAQ:AAPL) is off to a solid start to 2015. Apple stock price is up 8.5% in the year to date compared to losses in the S&P 500 and NASDAQ composite.
One prime reason for the strong performance of Apple stock was the company’s record performance through the holiday season. As stated in our Apple earnings review Q1 2015, the huge earnings beat in the holiday quarter was driven by record sales of the iPhone.
iPhone Drives iOS Market Share Gains
The iPhone sales continued to be strong as reflected in the latest iOS market share numbers. The latest iOS market share numbers for the three months ended December 2014 are summarized below.
|iOS Market share||3 months ending Dec 2013||3 months ending Dec 2014||YoY Percentage point change||QoQ Percentage point change|
Apple continued to gain market share in key markets while losing market share in Japan. However, the 2013 Japan numbers were impacted by the launch of the iPhone on NTT Docomo in 2013. On a quarterly basis, iPhone market share leveled off in the US and Australia and marginally lost share in Germany and Great Britain. The biggest quarterly gain was registered in Japan, where the company gained 6.4% points on a QoQ basis over the month of December.
Apple Revenue Forecast For Q2 2015
According to a post on Barrons.com, Canaccord analyst Mike Walkley, estimates only 15% of Apple’s installed base of 404 million users has upgraded to the latest iPhone 6 models. As a result, iPhone 6 replacement sales are expected to remain strong throughout the year. Moreover, Walkley expects Apple to gain market share as the larger screen devices pull customers away from high-end android devices. The new customers addition will lead to the iPhone installed user base growing to 487 million users by 2015, adding over 80 million new customers in 2015.
Another iPhone sales forecast by KGI analyst Ming-Chi Kuo confirms the strong growth expectations in iPhone sales. The KGI analyst estimates Apple to sell 61.6 million iPhones in Q1 2015 (Apple’s Q2 2015 ending March 2015). Using the estimates of Ming Chi Kuo and iPhone average selling price trends, we estimate iPhone revenue potential for the current quarter.
Using various average selling price points and a forecast of 61.66 million units, iPhone revenue for Apple’s Q2 2015 can be modeled as below.
|iPhone ASP ($)||iPhone revenue (in billions of $, at 61.66 million units)|
Using the historic trends in iPhone ASP and the impact of the iPhone 6, we expect the ASP will come in closer to $650, implying that iPhone segment will add $40.08 billion to Apple revenue in the March quarter, a 54% growth over the segment revenue in Q2 2014. Our Apple stock analysis assigns the stock a buy rating, reflecting our positive long term outlook on the stock.