New iPhones Poised to Do Land Office Business

Apple is trumpeting the figures for its iPhone 6s and 6s Plus preorders, saying that it's on track to beat last year's first-weekend iPhone sales record of 10 million units. Last year's models included Apple's first large-screen smartphone, the iPhone 6 Plus. Getting off to a good start is very important for a product, said Patrick Moorhead, principal analyst at Moor Insights and Strategy.

Apple on Monday trumpeted the figures for its iPhone 6s and 6s Plus preorders, saying it’s on track to beat last year’s first-weekend iPhone sales record of 10 million units, according to multiple press reports.

Last year’s models included Apple’s first large screen smartphone, the iPhone 6 Plus.

The new iPhones will start shipping Sept. 25. However, Apple is alerting users at its website that they may have to wait two to three weeks for the new iPhone 6s Plus.

Getting off to a good start is very important for a product because it can feed future sales, said Patrick Moorhead, principal analyst at Moor Insights and Strategy.

“It says, ‘This is a good product. Millions have purchased it, and you should too,'” he told the E-Commerce Times.

Headroom for Sales

However, early sales can distort a product’s potential, noted Bob O’Donnell, chief analyst at Technalysis Research.

“Preorders and those first-weekend sales are always the highest, and then things drop off dramatically,” he told the E-Commerce Times. “In the case of the Apple Watch, there was a ton of preorders and then sales dropped off a cliff.”

Since only a portion of iPhone owners upgrade their phones when a new model is released, marshaling sales from existing owners hasn’t been a problem for Apple.

“To date, only about 27 percent of Apple customers have updated to the iPhone 6, so there’s a lot of headroom” said Creative Strategies President Tim Bajarin told the E-Commerce Times.

Message to Wall Street

When a new iPhone model is released, it doesn’t compete with the previous model, Moorhead maintained.

“The iPhone 6sand 6s Plus … are competing with the 5, 5s and other Android phones,” he said. “Consumers who bought the 6 aren’t looking to upgrade. It’s the people who have phones two to three years old. When you make that comparison, the [feature] differences are huge.”

New bells and whistles aren’t driving early sales, according to Michael Morgan, an independent mobile devices analyst.

“Strong preorders are no longer a factor of killer features in a hero phone,” he told the E-Commerce Times. What is a factor, however, is “a strong loyal install base that is satisfied with the continued execution of Apple and willing to reinvest in another two years.”

By suggesting that the latest iPhone models are outselling last year’s versions, Apple appears to be sending Wall Street a message, Morgan added. “Strong preorders are the earliest signa that the last model released has not deadened demand for the iPhone, and that the current model still fits into Apple’s forecasted demand curve.”

Easier to Upgrade

Apple’s weekend sales also may be getting a boost from changes in smartphone marketing.

“Some of the sales may have to do with how consumers acquire new smartphones,” said Ross Rubin, principal analyst at Reticle Research.

“We’re shifting away from two-year commitments to one carrier, to plans that allow customers to update their phones more frequently,” he told the E-Commerce Times. “It could be that some changes in that process are facilitating a faster sales rate out of the gate.”

In the long term, features will rule, and “these models add some new features that will drive very strong sales,” noted Creative Strategies’ Bajarin, who predicted iPhone holiday sales of 82 to 85 million units, up from 74 million in 2014.

PC in a Pocket

Those new features include 3D Touch, which allows the phone to perform tasks based on the amount of pressure applied to the display.

Apple’s taptic engine is built into the new models, so they can communicate using subtle taps.

The cameras received an upgrade; the front camera supports 5 megapixels and the rear, 12 MP. The rear camera offers higher-quality 4K video, too.

The new phones also have a new chip — the 64-bit A9 — which delivers 70 percent faster processing power and 90 percent faster graphics performance than previous generations of the silicon, according to Apple.

“It gives you a desktop PC in a pocket computer,” Bajarin noted.

The growth rate in smartphone shipments will decline in 2015 — sliding to 10.4 percent from last year’s 27.5 percent, IDC predicted last month. Apple may be bucking that trend, but that’s not necessarily good news for the rest of the market.

“Apple may be taking away some share from Android,” Technalysis’ O’Donnell said, “so if Apple’s doing well, it doesn’t mean everybody else is going to be doing as well.”

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

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