Apple Inc. (AAPL) created a new record after it sold more than 10 million units of the new iPhone 6 and 6 plus handsets in the very first weekend. Last year, Apple sold 9 million units of iPhone 5S & 5C, which broke all records at that time.
Apple unveiled the two iPhones during an event on Sep 9, 2014 and started taking pre-orders from Sep 12. The company announced that four million orders were placed in the first 24 hours for the two iPhones, which exceeded current availability.
Apple started shipping the two devices at Apple retail stores from Sep 19. Along with the United States, Apple release iPhone 6 and 6 plus in Australia, Canada, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the United Kingdom. The devices will be made available to 20 more countries on Sep 26.
Carriers and Apple partners — AT&T (T), Sprint, T-Mobile and Verizon Wireless — and authorized retailers — Best Buy, Target and Wal-Mart (WMT) — also started selling the devices on Sep 19.
Per a survey conducted by research firm Piper Jaffray, consumer demand for iPhone 6 plus is more than iPhone 6, primarily due to the bigger screen. iPhone 6 has a screen size of 4.7” while iPhone 6 plus boasts a phablet-like screen size of 5.5''. Apple’s older iPhone 5S has a screen size of 4”.
Apart from a bigger screen size, the new iPhones come with near-field communication (NFC) technology, run on the new 64-bit A8 chip and include Apple’s new iOS 8 mobile operating system. The availability of NFC in iPhone 6 will enable customers to use Apple Pay, scheduled to be launched this October.
iPhone contributes a significant portion of Apple’s top line. The bigger screen brings iPhone at par with many phablets available in the market from the likes of Samsung, HTC and LG, which improves Apple’s competitive position.
According to a survey by Boston-based Gazelle Inc., a third of Google’s (GOOGL) Android users are expected to shift to iPhone 6. The user number is up from a 10th a year ago, when Apple shipped iPhone 5S and 5C.
Per SquareTrade, a company that provides extended protection plans, Apple’s new iPhones are much more durable than iPhone 5S and 5C and Samsung Galaxy S5.
We believe that the surge in demand for the all-new iPhones will be the key growth catalyst for Apple over the next 12 months. We also note that the company is yet to launch the new iPhones in its fastest growing market — China. We believe that a China launch in late 2014 will significantly boost Apple’s top line and profitability for fiscal 2015.
However, the huge demand for the devices will test Apple’s supply chain capability that has been inconsistent in the past. This can be a headwind in the near term. We also believe that pricing of the new iPhones in countries like China and India will be a key concern due to stiff competition from Asian handset makers.
Apple has a Zacks Rank #3 (Hold).
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