Estimating Global iPhone Activations

January 22, 2013 (1:15 pm)

Verizon reported quarterly earnings this morning and announced 6.2 million iPhone activations. This came in above our estimate of 6 million iPhone activations posted on January 9. We explained that AT&T issued a press release, and used historical market share data to estimate activations of roughly 8 million iPhone’s this quarter. Verizon has historically activated around 3/4 of AT&T’s reported activations. That’s how we got to the 6 million estimate. So now we’re at approximately 14 million iPhone’s sold in the U.S. between those two carriers. Sprint is the only remaining U.S. carrier to mention, assuming only nominal sales of full-priced iPhone’s and those sold to customers of smaller carriers.

Domestic Market Share: Over the last four quarters (excluding the current period), during which all three major carrier’s – AT&T, VZ and Sprint – have been selling the iPhone, Sprint has held roughly 16% domestic market share. (Remember, these depict Apple’s fiscal calendar – 4Q12 represents 9/30/12).

US iPhone Activations - Domestic

Since we know that VZ + AT&T activated approximately 14 million iPhone’s this quarter, we can estimate their combined market share at 84% (assuming Sprint’s share is the remaining 16%). That implies Sprint activations of roughly 2.5 million iPhone’s this quarter. Domestic iPhone activations would be approximately 16.5 million. That said, Sprint pushed hard for the iPhone during the holiday season and may report higher numbers than out projections. Until then, we’ll stay with our more conservative numbers.

US iPhone Activations

Global Market Share: On a global scale, it becomes more challenging to forecast. The chart below illustrates the market share of each individual U.S. carrier as well as the aggregate U.S. activations as a percentage of total global sales.

The left axis represents market share of the individual carriers. The right axis represents the U.S. market share as a percent of global activations (purple line).

US iPhone Activations - Global

Based on historical market share and our estimate of 16.5 million domestic iPhone activations, total global unit sales would range from:

  • High domestic market share (37.0%): 45.2 million units
  • Average domestic market share (31.0%): 53.8 million units
  • Low domestic market share (25.7%): 65.1 million units

Our Take. Apple pursued an unprecedented roll out schedule for the iPhone 5 during the holidays. It beat its goal of selling the new device in over 100 countries before the end of 2012. Due to this aggressive roll out, especially in high impact markets like China, we expect domestic sales to be a smaller portion of global sales than the year ago quarter (37.0%). But how much lower will they be?

During the March 2012 quarter, domestic (U.S.) sales saw their market share drop as a percent of global sales. The introduction to the Chinese market (and the Chinese New Year) took place during that quarter, driving strong year-over-year growth. We expect to see a meaningful impact from the Chinese market this quarter. Further, The U.S. market (and especially AT&T in the U.S.) is the most iPhone-saturated market in the world. The fact that Verizon reported 44% growth year-over-year is incredible growth for what many consider to be a “saturated” market place.

These factors lead us to believe that domestic iPhone activations this quarter will very likely be at or below the average 31.0% market share of total sales, implying at least 53.8 million units. We are comfortable with our 54 million unit estimate and look forward to 4:30 pm tomorrow.

Let us know your thoughts.