This Survey Reveals iPhones Are Selling Well In US, But Apple's China Softness Continues

UBS semi-annual Evidence Lab Global Smartphone Survey indicated that while the iPhone was expected to see modest growth in 2017, 2018 showed better growth potential.

iPhones Selling Well

The survey was conducted across nearly 6,500 customers in five countries and revealed “higher overall smartphone purchase intentions in the next six months with iPhone 7 interest especially strong in the US and rising demand for the Plus,” analyst Steve Milunovich stated.

The analyst also stated that there appeared to be signs of softness in China in FY 2017, including decreased interest in the iPhone 7, as compared to the 6 and 6S, although the Apple Inc. (NASDAQ: AAPL) brand remained strong.

In fact, Apple holds a 40 percent share of the U.S. smartphone market, while recent numbers show the company only has an 8.4 percent share of the China market.

Positives

The positives from the UBS survey include the fact that nearly 50 percent of the U.S. respondents were “very” or “somewhat likely” to purchase an iPhone 7, which is higher than the iPhone 6 cycle two years ago.

In addition, there appears to be a shift in the US toward the Plus, “with a 9-point rise over the 6s,” the analyst said, while adding, “Apple rates high in product uniqueness, and its customers are more concerned with design and less focused on price.”

China Concerns

The interest in the iPhone 7, however, has been lower than that for the 6 and 6S in China, while Apple’s retention rate declined in the country.

Milunovich expects a single digit decline iPhone units in China for FY 2017, with a slightly longer upgrade cycle.

Milunovich maintained a Buy rating on Apple, with a price target of $127.