Apple's iPhone 6 has been so successful — it's the single-biggest selling phone of the year — that it might be creating a "super cycle" that will cause some temporary trouble for Apple in the second half of this year, especially in China.
The "problem" — and it's one of those problems that is good to have — is that so many people have bought an iPhone 6 that it may weaken demand for the new iPhone 6S/iPhone 6S Plus that Apple is expected to launch in September, according to Bank of America Merrill Lynch analyst Wamsi Mohan and his team.
If everyone who wants a new iPhone already has iPhone 6, they're unlikely to ditch it after only a few months of use. So maybe Apple's next year of sales is going to be softer, Mohan argues. "The iPhone 6/6 plus represents a super cycle, in our opinion, demand is being pulled in from the next year, and we see the December quarter of 2014 as the peak shipment quarter for iPhones until the potential iPhone 7 release in Sep 2016," his note to investors from last night says.
Here are a couple of charts that illustrate that problem.
First, iPhone sales in China are becoming a much more important part of Apple's sales than they used to be.
Apple is becoming more and more dependent on China:
Now, with demand for iPhones temporarily sated, Apple is losing market share against Android phones again. While demand and share cycles are cyclical, note that over the long term Apple's share of all phones sold is fairly unpredictable and lumpy.
Apple's market share in China is not guaranteed:
"The iPhone sales over the past 3 quarters combined with the replacement rates (see above) suggest that there was a significant acceleration of replacements driven by the iPhone 6/6+, which has since tailed off sharply, offset by very strong new user adoption," Mohan writes. "The stronger new user growth is bullish overall (installed base grows larger over time) but also makes the quarterly sales more volatile. We view this latter dynamic at significant risk given the headwind being created by the stronger dollar, and broader economic uncertainty which can lead to lower sales from large markets like China."
What might that look like?
Well, a good guide is what happened to Apple in the post 2012 period, when the company released a small-sized iPhone 5S when sales of large-sized Androids (like the Galaxy S4) became huge. Apple did OK, but because the 5S wasn't a great improvement on the 5, and because there were more interesting Android alternatives, Apple's sales growth went into a trough.
You can see that trough on this chart from BI Intelligence (below).
The iPhone 5S global sales trough:
There are two ways to interpret that 2013-2014 trough. You can say that this was when Apple appeared to lose the initiative, giving Samsung momentum it never should have never had. In this theory, Samsung's main strategy here should be to lean on sales of the Galaxy S6 Edge and Galaxy Note 5. Both phones offer a different physical shape and features (a curved screen and a stylus, respectively) than the iPhone does, in a parallel of the way that the Galaxy S4 and Note 2 and 3 offered a far bigger screen than the iPhone 5S did.
Alternatively you can say that this merely part of Apple's natural two-year product cycle, and the real action comes with iPhone 7 in 2016, which will once again wipe the floor with whatever Samsung has on the market at the time.
