Customer loyalty among iPhone users may be peaking at the perfect time for Apple Inc. (ticker: AAPL) investors. A new survey by Morgan Stanley suggests Apple may take a huge bite out of its competitors’ market shares when it releases the highly-anticipated 10-year anniversary iPhone model later this year.
An April survey of more than 1,000 iPhone users revealed that 92 percent of users that intend on upgrading their smartphones within the next 12 months plan on getting another iPhone. Apple’s 92 percent iPhone retention rate is up 6 percent from a year ago when Morgan Stanley conducted a similar survey.
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“It’s our belief that a maturing installed base that is accustomed to iOS and increased press around potential new technologies in the upcoming iPhone drove the strong [year-over-year] increase,” Morgan Stanley analyst Katy Huberty says.
The surge in customer loyalty is bad news for all of Apple’s smartphone competitors, but it’s especially bad news for Samsung Electronics.
“Importantly, the rise in Apple’s loyalty rates comes after Samsung, Apple’s biggest competitor in the U.S., introduced the Galaxy S8, which was available for pre-order starting March 30,” Huberty says.
Together, Apple and Samsung account for 79 percent of the U.S. smartphone market. With Morgan Stanley projecting that Apple will gain 3.5 percent smartphone market share in the next year, most of that share will likely be taken from Samsung.
The survey revealed that Apple’s customer loyalty was unparalleled among leading smartphone producers, topping the loyalty rates of Samsung (77 percent), LG Electronics (59 percent), Motorola (56 percent) and Nokia (42 percent).
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Apple shares have been on fire so far in 2017 as investors anticipate a huge iPhone upgrade cycle. Still, even with the stock up more than 32 percent so far in 2017, there could be plenty of upside remaining. Morgan Stanley maintains an “overweight” rating on Apple and has raised its price target for the stock from $161 to $177.
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Apple Inc. (AAPL) Tightens Its Grip on the Smartphone Market originally appeared on usnews.com
