New Street survey: ‘Significant’ pent-up demand for new iPhone, Sprint and T-Mobile to profit

New Street Research's survey predicts pent-up demand for Apple's next iPhone.

According to a new customer survey from Wall Street financial analyst firm New Street Research, there’s notable pent-up demand among Americans for Apple’s next iPhone – and T-Mobile and Sprint are poised to gain new subscribers as a result.

Specifically, the firm’s survey of 1,000 “demographically representative respondents” shows that fully 10 percent of respondents plan to switch from their current carrier to a new one in the next three to four months. “If these respondents all followed through, it would suggest retail churn of ~2.5% in 4Q16,” the firm reported in a research note to investors. “This would be higher than churn reported in either 2014 or 2015. Again, we don’t think all those who say they will switch will actually switch, but the data seems to suggest pent up demand for switching too. Interestingly, 6% of respondents said they were waiting specifically for the next iPhone to switch.”

New Street added that “switching activity will increase, which will benefit the share takers (TMUS & Sprint), while driving bigger losses for the share losers (VZ & AT&T).”

It’s no secret that Apple’s yearly iPhone launches stand as a major item on wireless carriers’ calendars. Indeed, U.S. Cellular’s CEO specifically mentioned the launch during his comments on the company’s second-quarter conference call with analysts: “We will compete aggressively during the iPhone launch,” Kenneth Meyers, U.S. Cellular’s president and CEO, said during the call. “We know there are still many non U.S. Cellular customers out there that are still unaware that we carry Apple products so we will be looking to increase that awareness and win their business.”

New Street said the results of its new survey suggests “a significant number of subs are waiting for the new device to switch carriers or upgrade. … Volumes could be up more than investors and the carriers expect in 2H16.”

The firm’s survey found that 22 percent of respondents said they plan to buy Apple’s forthcoming iPhone as soon as the device is released or within the next three or four months. Among those, 5 percent plan to switch carriers while the remainder hope to upgrade with their existing carrier. “The survey likely overstates actual activity (it seems people don’t always do what they say they will do); nevertheless, there seems to be a lot of pent up demand,” New Street wrote.

Further, according to the survey, 25 percent of respondents are specifically waiting for the newest iPhone launch to upgrade. “Almost 60% are content with the phone they have; we would assume it would take a killer device to get these people to upgrade,” the firm said.

Those comments are noteworthy in light of a recent report from the Wall Street Journal that said Apple will make only minor modifications to the iPhone models expected to be released this fall, waiting until next year to release a version with more substantial design changes. Citing unnamed "people familiar with the matter," the Journal said the next iPhone – which is highly likely to be branded the iPhone 7 – will be available with the 4.7-inch and 5.5-inch displays that were first introduced in 2014. Apple will remove the headphone plug in the next version, creating a thinner, more water-resistant handset, according to the report.

However, the report predicted that the 2017 version of the device could sport far more significant changes, including potentially an edge-to-edge OLED screen and a fingerprint sensor built into the display.

Such a release schedule would be something of a departure for Apple, which has generally made substantial design changes to its flagship phone every two years.

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