As analysts debate iPhone 7 demand, Apple nixes MVNO speculation

Apple CEO Tim Cook offered his clearest comments yet on the possibility of the iPhone vendor launching its own MVNO service, explaining that Apple typically operates at a global scale and therefore likely wouldn't launch an MVNO in a specific country.

"Our expertise doesn't extend to the network. We've worked with AT&T in the US, O2 in the UK, as well as T-Mobile and Orange, and we expanded as we learned more. But generally, the things Apple likes to do, are things we can do globally," Cook said during an interview in Amsterdam, as reported by 9to5Mac. "We don't have the network skill. We'll do some things along the way with e-SIMs along the way, but in general, I like the things carriers do."

Apple generally has eschewed building specific products for specific countries and instead has worked to develop products that work on a global scale. Although the company initially launched the iPhone exclusively on AT&T's network, the company has since expanded that availability to virtually every carrier and network across the globe. Moreover, Apple continues to work to reduce the number of iPhone variants it produces -- in the United States, for example, the company only offers two different variants that work across a wide range of carriers and spectrum bands.

However, Apple's SIM strategy has allowed the carrier to provide its customers with more carrier options. For example, the cellular-enabled version of Apple's new 9.7-inch iPad Pro includes an embedded Apple SIM that allows customers to switch service after they purchase the device. In the United States, Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) support that switching capability, while cellular-enabled iPads sold at AT&T's (NYSE: T) retail stores are tied to its network. And Verizon (NYSE: VZ) packages a separate SIM in the iPad, disabling the Apple SIM that can access multiple networks.

Beyond Apple's MVNO ambitions, analysts are already looking toward the expected release of the iPhone 7 this fall. Wells Fargo analysts pointed to recent media reports that said Apple has asked its suppliers to prepare for iPhone 7 units in the 72-78 million range for this year -- reportedly the highest in two years. "If we assume 15MM are slated for the September quarter, this implies around 57-63MM in the December quarter," the analysts wrote. "And assuming iPhone 7 will conservatively account for 75% of the mix in the quarter, this would imply total units of around 80MM at the mid-point (vs our 82.2MM forecast and above Consensus of 74MM). Given the new iPhone SE and Apple's strategy to drive lower end demand at the time of new high-end iPhone launch, we believe there could be a greater mix of non-iPhone 7."

The Wells Fargo analysts also addressed speculation that Apple would add an OLED screen to its iPhone in 2017, and whether that might dampen demand for this year's iteration. "While it is reasonable to assume Apple may introduce an iconic iPhone in 2017, we believe it is not a foregone conclusion that the consumers will skip the iPhone 7 upgrade in 2016," the analysts wrote. "The core of our premise revolves around continued competition for subscribers as two year contract come up for renewal. As our units per carrier analysis shows, there appear to be more subscribers eligible for upgrades in non-S cycles. If carriers continue to aggressively run promotions to mitigate churn or, conversely, get more aggressive to try to attract those users coming off two year contracts, we believe there may be strong incentives for subscribers to upgrade (as there have historically been)."

For more:
- see this 9to5Mac article

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