By Sam Boughedda
Morgan Stanley analysts said in a research note based around its smartphone survey that purchase intentions are mixed with the U.S. better and China worse, while Apple (NASDAQ:AAPL) hardware subscription screens positively.
They explained that smartphone upgrade intentions are mixed for 2023, with China down year-over-year but the U.S. up.
Meanwhile, iPhone blended upgrade rates are said to have reached a new survey high, and Apple hardware subscription adoption reads bullish.
"U.S. smartphone purchase intentions show resilience, while China remains challenged. Today, the market expects global smartphone market declines persist into 2023, as vendors contend with weaker consumer spending, a flattening smartphone innovation curve, and COVID impacts to production/demand. Our 2022 AlphaWise Smartphone survey confirms some of these concerns, as China next 12 month smartphone upgrade intentions fell 5 points Y/Y," wrote the analysts.
On Apple's iPhone, the analysts stated: "iPhone upgrade intentions and mix surprise positively, implying upside to our FY23 iPhone unit and ASP estimates. Contrary to investor concerns, Apple doesn't screen as cautiously in our 2022 smartphone survey. Blended U.S./China upgrade intentions actually came in at a record high, with near-record U.S. upgrade intentions more than off-setting China upgrade intentions that were down 5 points Y/Y, but still elevated vs. history. These results imply a flat to slightly decreasing iPhone replacement cycle (or 245-250M iPhone shipments), 8% higher than our current 230M FY23 shipment forecast, which implies iPhone replacement cycles elongate to >4 years in NTM."
In addition, Morgan Stanley said its survey results support their thesis that Apple's model is becoming more subscription-like, and they believe Apple is in the "midst of a business model transition away from maximizing iPhone unit growth towards maximizing installed base monetization."