How Apple’s iPhones are like gas pumps

It’s all about the replacement cycle.

From Barron’s A Ray of Light for Apple ($):

Alas, with 3 billion smartphone subscribers worldwide, and paltry 1.2% growth, it appears that the smartphone market has fully matured. That’s hurting shares of the devices’ makers. Samsung Electronics  stock dropped 17% in the fourth quarter, Apple (AAPL) lost 30%, and Apple suppliers that Barron’s tracks fell over 20%, on average. Investors could be worried that they have to wait for 5G before smartphone growth accelerates again, but mature markets have an additional growth card to play—replacement cycles. And the phone replacement cycle should help out the sector in 2019.

Replacement cycles are often an important source of demand for mature industries. For instance, industrial companies Dover (DOV) and Fortive (FTV) have been growing their fueling businesses by double-digit percentage points because of a replacement cycle for gas pumps.

Gas pumps outlast smartphones. According to industry surveys, people are holding on to smartphones longer, but still replace them every two to three years.

We estimate that old phones—which are prime for replacement—represent over 12% of the smartphone installed base today.

My take: Someday those fossil fuel pumps may be mothballed for good. Electric Apple car, anyone?

8 Comments

  1. David Emery said:
    Actually, I was involved with an effort to do charging stations in parking garages. That’s not an easy problem (including some safety concerns.) Presumably, the companies that build gas pumps are also looking into charging stations.

    Charging stations would probably have a lot fewer moving parts, though (just as electric cars have fewer things to wear out than gas powered cars.)

    0
    February 23, 2019
  2. Gianfranco Pedron said:
    Just musing about how a Google or Facebook-like monetization scheme would work for charging stations … charging station operators would offer some sort of incentive (or not) to allow access to the connected accumulators, forming a massive pool of energy, for resale back to utilities during peak demand at premium rates.

    Skimming of user data and vehicle usage information, solely for the purpose of improving the user experience, of course 🙂 , would be a given.

    1
    February 23, 2019
  3. Turley Muller said:
    Users waiting longer to upgrade just increases future demand since iPhones don’t live for ever, and they will have to be replaced. I published some charts on my Financial Alchemist blog for anyone that would like to take a look-see.

    2
    February 23, 2019

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