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Apple will 'set the world on fire' with iPhone 6 sales

Gregg Keizer | July 29, 2014
Look for Apple to "set the world on fire" later this year with huge sales of the next iPhone.

Apple will "set the world on fire" with "unbelievably massive" sales of the next iPhone, analysts said this week.

"As well as they did with the iPhone this quarter, with all the rumors of a new iPhone [this fall], I was impressed with the results," Van Baker of Gartner said about Apple's second-quarter earnings released on Tuesday. "That tells me when the next generation comes out, they're going to set the world on fire."

On July 22, Apple reported it sold 35.2 million iPhones in the second quarter, a 13% increase over the same period the year before. The number was under Wall Street's expectations of 35.8 million, but still surprising to some, Baker included, because sales have tended to droop in the quarter prior to the debut of new models.

Virtually everyone expects Apple to unveil at least one new iPhone, possibly several, in September and the following months, if only because of a rising tide of component leaks from sieve-like Asian suppliers. That smartphone, dubbed "iPhone 6" by outsiders in lieu of any formal acknowledgement by Apple, will reportedly boast a larger 4.7-in. screen, with an even-bigger second model sporting a 5.5-in. display possible at the same time, or more likely, later this year or early in 2015.

Pent-up demand for a larger screen from Apple will trigger a buying spree, analysts have predicted. Smartphones with bigger displays are increasing their share of the total market, and are especially important in countries like China, where they serve as both phone and tablet substitute. Apple boosted the size of the iPhone's display from 3.5-in. to 4-in. with 2012's iPhone 5, but contrary to some expectations, used the same-sized screen for last year's iPhone 5S and 5C.

And China, as Apple CEO Tim Cook has repeatedly said, is the company's best growth opportunity.

"But there's a lot of pent-up demand among developed economies for a bigger iPhone, too," Baker contended. "I think [the iPhone 6] is poised to do extremely well."

Other long-time Apple watchers were on board, too. "I am extremely bullish about the iPhone 6," said Ben Thompson, an independent analyst who covers the technology field from his Stratechery website. "It's going to be unbelievably massive."

Apple seems to be expecting the same: In the second quarter, it committed a near-record $21 billion to third-party manufacturers for components and equipment as they presumably geared up for a string of new product announcements this fall.

Those commitments, as Apple has regularly laid out in its quarterly filings with the U.S. Securities and Exchange Commission, are pre-payments for outsourced manufacturing and the components those companies use to assemble products. As of the end of June, Apple had $15.4 billion in such commitments.

 

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