iPhone Sales Seen Falling Below 50 Percent of Market Ahead of Next Launch

The iPhone will experience weaker-than-expected demand through the September quarter as consumers continue to delay purchases of new iPhones ahead of the expected iPhone 7 launch that month, Canaccord Genuity analyst Michael Walkley said in a research note Tuesday. Canaccord forecasts iPhone sales in the U.S. will fall below 50 percent of total smartphone sales in the June quarter “for the first time since the larger screen iPhone 6 products launched.” Replacement rates likely will continue to shrink but recover when the iPhone 7 is available this fall, Walkley said. Longer term, due to the success of the iPhone 6 and iPhone 6s in attracting Android switchers, Walkley believes Apple’s installed base of 500 million users at the end of 2015 -- and the company's connected devices universe of more than a billion users -- “should drive strong future iPhone replacement sales and earnings.” Despite anticipating softer iPhone sales for the next couple of quarters, Canaccord believes the “growing, loyal, and sticky iPhone installed base provides Apple with long-term opportunities” to drive growth through additional products, services and software sales, said Walkley, who maintained a “buy” rating on the company's stock.