Apple (AAPL -2.30%) has held its floor within the smartphone market to date this yr, as its iPhones have witnessed wholesome demand at a time when main Android producers have discovered it troublesome to extend gross sales.

The tech large appears set to get pleasure from stable iPhone gross sales progress within the second half of the yr as properly as a result of it can replace its smartphone lineup quickly. Apple is predicted to unveil the rumored iPhone 14 fashions in September, with the brand new lineup anticipated to go on sale later subsequent month. Let us take a look at the 2 the reason why Apple’s upcoming iPhones may set the gross sales registers ringing.

1. The iPhone improve cycle remains to be stable

IDC experiences that international smartphone shipments had been down 8.9% within the first quarter of 2022, adopted by an 8.7% drop within the second quarter. However Apple noticed progress in iPhone shipments in each quarters. In Q1, iPhone shipments had been up 2.2% yr over yr to 56.5 million models. Second-quarter iPhone shipments elevated by a small margin of 0.5% over the prior-year interval.

One motive why Apple has been in a position to defy the smartphone slowdown is due to a giant put in base of customers which are in an improve window. Final month, Wedbush analyst Daniel Ives estimated that there are 240 million iPhone customers in Apple’s put in base that have not upgraded their gadgets in three and a half years. These customers are probably utilizing the iPhone XR (launched in September 2018) or older gadgets from Apple.

As a consequence, a giant chunk of Apple’s put in base of 1 billion iPhones is but to be 5G-enabled, because the iPhone 12 lineup launched in 2020 was the primary from the corporate’s steady to help the newest wi-fi customary. With 5G networks now out there to a quarter of the worldwide inhabitants, in accordance with Ericsson, as in comparison with 2019, when the wi-fi customary was nonetheless in infancy, it will not be shocking to see a sizable chunk of Apple customers improve to its upcoming iPhones.

Not surprisingly, Apple appears upbeat concerning the demand for its next-generation smartphones. The corporate has reportedly positioned orders to make 90 million models of the brand new iPhone fashions in 2022. For comparability, the corporate produced an estimated 80 million models of the iPhone 13 fashions final yr, owing to the availability crunch.

This explains why there are expectations that this yr’s iPhones may promote higher than final yr’s choices.

2. The Android-to-iOS change could possibly be one other tailwind for Apple

The smartphone gross sales tendencies in 2022 to date point out that Apple might have been attracting extra customers from the Android ecosystem. CFO Luca Maestri indicated the identical on Apple’s July (*2*)earnings convention name: “We additionally attracted a file variety of switchers for the June quarter, with robust double-digit year-over-year progress.”

Switchers seek advice from these iPhone customers who moved to the iOS ecosystem from different platforms. The smartphone cargo information backs up Apple’s claims, as Android heavyweights resembling Xiaomi, Oppo, and Vivo have witnessed a steep gross sales decline this yr. Even smartphone market chief Samsung had seen its shipments drop 1.2% yr over yr in Q1 when Apple’s numbers headed larger.

There may be one massive motive why Apple has been in a position to appeal to customers from the Android ecosystem. The arrival of 5G smartphones has led to a rise within the common promoting worth of smartphones. As a consequence, clients in rising markets resembling India, Indonesia, and Vietnam are shopping for iPhones though they could be costlier than their Android rivals in these markets.

The nice half is that 5G smartphone gross sales are anticipated to move larger in the long term. In accordance with Statista, 5G smartphones reportedly accounted for 43% of world smartphone shipments final yr. By 2023, that proportion is predicted to leap to 69%, indicating that there’ll nonetheless be a lot of room for progress on this phase. As such, the expansion of the 5G smartphone market may give iPhone gross sales a enhance in the long term by serving to it win extra customers from the Android fold.

All this means why Apple appears upbeat concerning the efficiency of its upcoming iPhone fashions. The corporate was anticipated to supply 220 million iPhones in 2022, and the cargo figures for the primary half of the yr counsel that it might have produced shut to 101 million models. So, Apple may get pleasure from a terrific second half due to the potential success of its subsequent iPhone lineup.

That is as a result of the iPhone has produced 53% of Apple’s income within the first 9 months of the present fiscal yr, so it strikes the needle in a massive approach for this tech inventory. Shares of Apple have gained 10% prior to now month, they usually may head larger due to the potential success of the subsequent iPhone.

Harsh Chauhan has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Apple. The Motley Idiot recommends the next choices: lengthy March 2023 $120 calls on Apple and quick March 2023 $130 calls on Apple. The Motley Idiot has a disclosure coverage.

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