Piper Jaffray upgrade survey: 50-50 split iPhone XS and XS Max

That should raise some eyebrows, given Ming-Chi Kuo’s much-cited report that demand for the Max is 3 to 4 times the XS.

From a note to clients by Michael Olson that landed on my desktop Monday:

We asked >700 domestic iPhone owners which iPhone they would buy if they were to upgrade this year. 39% pointed to iPhone Xs or Xs Max, with approximately a 50/50 split between the two models. Our previous model assumed only 35% of units from Xs or Xs Max (with a 50/50 split). The remaining 61% indicated they would upgrade to either the iPhone Xr, 7 or 8. Considering Apple has not yet started marketing for iPhone Xr we expect interest for that device to grow in the coming weeks (Xr is available to order on 10/19 and ships on 10/26). Our model currently assumes 30% of FY19 iPhone units are iPhone Xr. If, however, we assume a similar mix from newly released devices in FY19 vs. what we estimated in FY18 (75% from the new models in FY18 – iPhone X and iPhone 8 & 8 Plus), it implies iPhone Xr would be 36% of units, driving our ASP assumption even higher.

Raising iPhone ASP Assumptions for FY19. We are now expecting an FY19 ASP of $770 (vs. previous estimate of $758). If, as described above, iPhone Xr proves to have a higher mix than our estimate (i.e. 36% instead of 30% — to allow for new iPhones to account for 75% of mix, similar to FY18), it would take our FY19 iPhone ASP to $780 (vs. current consensus of $768).

Maintaining Overweight rating and $250 price target.

My take: It makes sense that upgraders would be less interested than early adopters in the top-of-the-line iPhone. A 50-50 split, if it holds up, would be a surprise.