Morgan Stanley thinks iPhone 16 will spur bigger upgrade cycle than 5G

Morgan Stanley analyst Erik Woodring is back with a series of predictions around Apple’s upcoming iPhone announcement, which he thinks hits a market more primed for upgrades than it was the last time the company experienced a sales spike with the first 5G iPhone.

Apple may perform better than it usually does

“We do see the potential for Apple to perform better than historical seasonality into year-end as the introduction of the iPhone 16 and Apple Intelligence helps to unlock pent-up demand,” he wrote.

The analyst estimates that the iPhone upgradable base is 40% larger than ahead of the 5G cycle. He also thinks Apple Intelligence may accelerate the replacement cycle, which is currently at around 4.8 years.

Apple Intelligence remains the key to unlocking pent up iPhone demand and accelerating this replacement cycle, which is why AI integration on the new iPhone 16 will be the big draw.

Other key details to watch for include:

iPhone pricing, which he expects to be unchanged though the entry level 128GB iPhone model may disappear.
iPhone battery life – he thinks this will improve to support AI, but that may also make for general improvement for those who don’t choose to use that feature.
How Apple teases the integration of Apple Intelligence with the iPhone 16.

What he thinks we’ll see

Otherwise, the analyst expects everything we’ve all been anticipating: a new 3nm chipset (A18), 8GB of DRAM (up from 6GB in the iPhone 15/15 Plus) and the addition of an Action Button. For the iPhone 16 Pro and Pro Max, he anticipates bigger displays, thinner bezels, and a periscope lens for the iPhone 16 Pro, which may alos gain a new and faster chip (A18 Pro).

“We expect pre-orders for the iPhone 16, 16 Plus, and 16 Pro/Pro Max to start Friday, September 13, with in-store availability/shipping to start Friday, September 20,” the analyst wrote.

“The build orders for CY2H24 currently remain unchanged at 85-90mn units but might be revised around mid-October after early sell-through read-throughs. We expect the rising mix of premium models to our estimated 68% of iPhone 16 shipments, vs. 52% three years ago,” he said.

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