UBS Survey on Apple (AAPL) Services Shows Better Engagement Globally, Nearly 80% of Users Upgrading From a Prior iPhone

April 15, 2021 10:06 AM EDT
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UBS analyst David Vogt shares the data coming from the UBS’ latest survey with around 4,000 Apple (AAPL) iPhone users across four different geographies. The aim of the survey is to get a better understanding of the iPhone installed base and traction of different Apple services.

Accordingly, Vogt shares six key takeaways from the survey:

1) Excluding China, the ecosystem remains sticky with nearly 80% of consumers upgrading from a prior iPhone,

2) Replacement cycle shortened slightly to 2.1 years from 2.2 last year mainly driven by China likely due to 5G driven upgrades,

3) Upgrade rates remain lower at the tail-end of the install base (3+years/generation old phones),

4) Roughly a third of the phones are high-end ($999 and above) while 20% still have an iPhone 7 or older phone, positive for ASPs going forward,

5) Penetration of all six services we track increased YoY,

6) App store engagement increased YoY across all regions.

Apple services are also tracking higher on a year-to-year basis, Vogt notes.

“Despite varying ages of Apple Services, the paid attach rate of all six services we track increased YoY in the 2021 survey data. iCloud (30%) and Music (27%) unsurprisingly the two most cited services iPhone users pay for increased in 2021 despite being older services. Importantly, more recent services like Arcade, News, and TV+ all posted solid YoY increases in attach rate in all regions,” the analyst wrote in a note.

The data also shows that iPhone user engagement, as measured by spending, increased meaningfully compared to a year ago.

“Consumers in the US and China report they spend the most in the App Store with 31% of US iPhone users noting they spend $30+/month while almost 75% of respondents in China indicate they spend between $10-$30/month. The three most frequently cited categories by iPhone users that they are "willing to spend" on are Movies/TV, Games and Music. While both Movies/TV and Games experienced solid YoY interest in all regions ex China, Music ownership interest has stalled likely due to alternative "streaming services" like Spotify.”

Vogt has a $142.00 per share price target on Apple (AAPL) that reflects the “core” valuation of the company. The price objective reflects not only a value for Apple's "Core" of ~$128 but also “an evenly-weighted probability value of Apple's auto opportunity ($14/share),” the analyst concludes.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $132.03 yesterday.

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