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Here's Why Apple's iPhone 13 Should Be a Resounding Success

Motley Fool2021-09-21

Key Points

  • Apple's iPhone 13 should end up encouraging more of its installed base to switch to 5G.
  • Incremental upgrades and accessibility to more markets through better carrier support will be tailwinds for the iPhone 13.
  • The iPhone 13 is the next step in Apple's 5G domination, which can continue for years.

Apple's (NASDAQ:AAPL) iPhone 13 has arrived, and the initial reactions to the smartphone giant's latest and greatest device don't appear all that optimistic. Apple added the usual suite of upgrades to its latest iPhone models, packing in a better screen, faster processor, superior camera system, and bigger battery, among others. But the absence of any "pathbreaking" features has given birth to several memes on the internet, with some expressing disappointment at the lack of any substantial innovation.

However, I think the iPhone 13 could turn out to be more successful than the iPhone 12, which was a runaway hit last year thanks to aggressive pricing and the addition of 5G.

Let's see why that may be the case.

IMAGE SOURCE: GETTY IMAGES.

The iPhone 13 can continue the iPhone 12's terrific sales momentum

The iPhone 12 helped Apple become a dominant player in the 5G smartphone market. Strategy Analytics estimates that Apple held 29% of the 5G smartphone market thanks to the iPhone 12. The new iPhone models are expected to push that market share up to 40% as more consumers are expected to make the switch to Apple's 5G offerings.

That won't be surprising, as out of Apple's huge installed base of nearly 1.1 billion iPhones, less than 1% have a 5G-enabled device, at least according to a third-party research estimate. The iPhone 12 crossed 100 million units in less than seven months of its launch, and the iPhone 13 can carry forward that momentum since it is likely to appeal to those customers who have held off upgrading to a 5G device so far.

Apple has increased the storage of the base iPhone 13 models to 128 GB (gigabytes), which now start at $699 for the mini version and $799 for the 6.1-inch version, removing the 64 GB option altogether. While that's $100 higher than the price of the base models of the iPhone 12, the new prices are almost in line with the industry standard. The average selling price of a 5G smartphone stands at $634 as per IDC's estimate.

Throw in upgrades such as more 5G wireless bands for better connectivity and Apple's claims that the iPhone 13 models can last 1.5 to 2.5 hours more than the iPhone 12, and it becomes easy to see why those who haven't jumped on to the 5G bandwagon would take the plunge this time. Additionally, Apple points out that the increased number of 5G bands on the iPhone 13 will help it double its 5G support to more than 200 carriers spread across 60 countries.

All of this indicates that Apple is all set to bring more 5G users into its fold with the iPhone 13 given the improvements it has brought to the table. There may not be any eye-popping changes to this year's device, but it is likely to continue the impressive sales growth triggered by the iPhone 12 because of a huge installed base of users that are in an upgrade window.

Apple's 5G dominance will get a shot in the arm

Wedbush Securities analyst Daniel Ives estimates that there are 250 million iPhone users with a device that's at least three years old. Also, we saw earlier that the number of customers without a 5G iPhone is even higher.

As a result, it is not surprising to see why Apple's sales in 2022 are expected to be better, as per Credit Suisse estimates. The investment bank expects Apple to move 237 million units next year as compared to an estimated 234 million in 2021. In 2023, iPhone shipments are expected to jump to 249 million units.

More importantly, Apple's shipment growth in the 5G era can continue beyond the next two years as global 5G mobile subscriptions are expected to hit 3.36 billion in 2026, up from an estimated 569 million this year, as per Ericsson. This massive growth will be driven by 5G network rollouts in more markets in Latin America, the Middle East, Europe, and North America.

So, if Apple continues to hold a strong 5G market share on account of its massive installed base and a budget-friendly device that could appeal to a wider audience in price-conscious markets, it can keep winning big in 5G smartphones in the long run. The iPhone 13 will play an important role in that regard, as it can encourage upgrades and bring more users into the Apple ecosystem because of the improvements it packs. That's a solid reason why investors should continue holding this 5G stock, as it now has a new growth driver to count on.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment11

  • Hk01
    ·2021-09-21
    Nice
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  • LEESIMON
    ·2021-09-21
    Well done Apple?
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    • koolgal
      Apple to the moon ??????
      2021-09-22
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  • JunHaoT
    ·2021-09-21
    Apple fans will support 
    Reply
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    • ngckkk
      yes always!
      2021-09-21
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  • JerryChiang
    ·2021-09-21
    Lack of innovation 
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    • yl2021
      ya
      2021-09-21
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    • EPK
      In term of spec, Apple is very expensive vs Android phone but once stuck with Apple is quite hard to move to Android
      2021-09-26
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  • 慢的老人
    ·2021-09-21
    I disagree. iPhone 13 and iPhone 12 specs are quite similar so not many IP12 users will be tempted to upgrade to IP13. This might be why Apple is quietly killing off its older models by stopping support or downgrading performance after updates.
    Reply
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  • EPK
    ·2021-09-21
    May be can buy Apple share if there is a market crash?
    Reply
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    • DKim
      Yup
      2021-09-21
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    • JerryChiang
      yeah, still can buy as apple has big die hard fans
      2021-09-21
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  • och
    ·2021-09-21
    Like pls thx
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    • HMHu
      Apple to the moon!
      2021-09-21
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    • JunHaoT
      Like
      2021-09-21
      Reply
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  • Tohyx
    ·2021-09-21
    Like
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    • Myname
      ?
      2021-09-21
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  • Timjoe
    ·2021-09-21
    Like like
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  • yeelyn18
    ·2021-09-21
    Cool
    Reply
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  • lowniu
    ·2021-09-21
    Like please. Thx 
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    • foreret
      k
      2021-09-21
      Reply
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