iPhone 8 Launch Lines Short as Expected

Short line at the Apple Uptown Store in Minneapolis, MN on launch day at 11am.

Lines for Apple products are short, as expected. This year’s iPhone 8 launch line at Apple’s flagship 5th Avenue store in NYC was 275 people vs 400 for the iPhone 7, 650 for the iPhone 6S,  and 1,880 for the iPhone 6. Overall, this line count is as to be expected for two reasons:

  1. Consumers continue to trend toward pre-ordering new devices to avoid long launch day lines.
  2. This year’s iPhone upgrade is split between the iPhone X and iPhone 8.

Remain comfortable with Street iPhone estimates for FY18. These shorter lines don’t change our expectation that iPhone unit growth for this next cycle will be 9% versus 3% for FY17. The reason we remain optimistic about the step up in iPhone growth over the next year is the large pool of old iPhones that need to be upgraded. Specifically, we estimate the number of active iPhones that will be three years old or older to exceed 300M over the next year. This is greater than the ~245M iPhone units currently modeled by the Street in FY18.

iPhone 8 Launch Day Line Recap. We have counted iPhone launch day lines since the launch of the iPhone 3G in 2008. In the US, we visited five stores including the 5th Avenue store in NYC, and four in Minneapolis. For stores where we have y/y data, the iPhone 8 lines were down 32% on average vs iPhone 7 lines last year with the 5th Avenue store down 31% y/y (table below). As a point of reference, last year for the iPhone 7 launch, lines were down 23% from the iPhone 6S launch.

Surprise of the day – people waiting for Apple Watch + LTE. Excluding the 5th Avenue store, we found about half of the people in line were waiting for the Apple Watch + LTE. This surprise mix of Apple Watch buyers in today’s lines is likely attributed to the long (3-5 week) lead times for Apple Watch + LTE. Despite the negative reviews around Watch + LTE (battery life and network connectivity) we remain comfortable in our estimates that the Watch + LTE will add 10M Watch units over the next year (accounting for 38% of our Watch estimates for FY18). We did not interpret the greater number of people waiting in line to buy Apple Watch as a sign that demand for Watch is greater than our model reflects.

Noise in this year’s data. Our line data is less comparable to previous years because Apple Watch buyers accounted for 19 of 42 survey respondents. We did not conduct surveys at the 5th Ave. store, so we don’t have color on the largest line sample.

Details on this year’s line survey.  The biggest takeaway in our survey is the rebound in the percentage of iPhone 8 Plus buyers, accounting for 57% of survey responses. This compares to 46% of iPhone 7 launch day buyers opting for the larger form factor.

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