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Technology Stocks : Apple Inc.

AAPL 270.19

-0.6%

1:22 PM EST

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To: slacker711 who wrote (190397)	5/12/2016 8:34:53 AM
From: pyslent	Read Replies (2) of 213177

I dont know what the floor is but a 23% upgrade rate means the average customer would upgrade once every 3 years and 4 months. Qualcomm's data on 3G/4G upgrade rates for developing markets have never been that low. They currently sit around 27% or so and developed markets are at 36%. These don't seem like apples-to-apples comparisons to me. Even the iPhone 6's upgrade rate (37% after a year), which is presumably an all time high, only translates to a 26 month upgrade cycle. I think it's because Apple is fairly unique in that a large percentage of used iPhones stay in use even when the original owner gets a replacement. If the userbase is at 580m, let's say 100m are people using a hand-me-down or bought a used iPhone. If those people eventually acquire a replacement the same way, they don't register in the traditional upgrade rate calculations. So while the total iPhone base appears to upgrade at a rate slower than the population (23% per year expected), the smaller pool that buys replacements upgrades at a more reasonable clip (it would be 28% a year if you net out 100m "free loaders."). Of course, that doesn't change the calculation of how many new iPhones Apple will sell.

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