Apple will 'set the world on fire' with iPhone 6 sales

Analysts anticipate an 'unbelievably massive' second half of '14 for a new, larger-screen iPhone, in part because Apple's committed a near-record $21B for components, tooling and manufacturing

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"It's so hard to put this into context, because Apple's revenues and shipments from iPhone are growing constantly, and it's virtually a certainty that the fourth quarter will be Apple's biggest quarter ever even if it doesn't launch new products," Dawson said in an email. "As such, you'd expect to see a ramp up in this stuff."

Thompson echoed that. "I do think most of the investment is for [the iPhone 6] specifically," he said in an emailed reply to questions Saturday.

Even so, Dawson was intrigued by the $5.6 billion in commitments for tooling and equipment, the largest amount Apple has ever poured into that bucket, and 24% more than the previous record of $4.5 billion in the second quarter of 2012. That was just months before the introduction of the iPhone 5 and the iPad Mini, the latter a new segment of its tablet line.

"I found it interesting that the 'other' commitment is by far the biggest ever, which covers things like production facilities and factories," Dawson said. "If they're investing in new ways of making products, that's where that would show up. I think it's extremely likely that Apple is planning for a very big iPhone quarter at the very least, but I think the sheer level of spending points to one or more new products, too."

The June quarter was the second straight that Apple had significantly boosted its tooling/equipment commitments. In 2014's first quarter, Apple reported $2.8 billion in such obligations, an 87% increase from the previous quarter, and with the exception of 2012's June quarter, the highest ever until the just-reported period.

In the last six months, Apple has committed $8.4 billion to the tooling/equipment category, 21% more than any other two-quarter stretch in the company's history -- another data point that may support Dawson's contention that Apple has something new up its sleeve.

Like Baker, Dawson and Thompson, most analysts anticipate a big second half for 2014's iPhone, again assuming that Apple does debut handsets with 4.7-in. or larger displays and, like last year, starts selling the new model(s) late in September.

Brian White of Cantor Fitzgerald, for example, has forecast Apple will sell 37 million iPhones in the third quarter -- a 9.5% increase over 2013 -- and 57.8 million in the final, fourth quarter, which would represent a 13.2% boost from last year.

China will be key, White said in a note to clients last week after Apple announced the June quarter financials. "We believe Apple has the potential to be one of the major beneficiaries in the smartphone world within China given its relatively new relationship with China Mobile and our expectation of a larger-sized iPhone 6," White wrote.

Apple struck a deal with China Mobile -- China's and the world's largest mobile carrier -- late last year; the carrier began selling the iPhone in mid-January. The iPhone 6 will be the first model available to China Mobile subscribers at launch.

Brian Marshall of ISI Group was even more bullish than White on the fourth quarter, predicting that Apple will sell 62 million iPhones in the year's last three months, an increase of 21.5% over 2013, when the Cupertino, Calif. company unloaded a single-quarter record of 51 million iPhones.

"If Apple releases new ~5-in. iPhone models in 2014 as expected, this could create a massive upgrade cycle," Marshall told clients Tuesday. "Not only have many in Apple's installed base been waiting for a larger phone, many loyal Apple users who switched to Android for a larger display are likely to return to iPhone as well."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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