Apple Inc (NASDAQ:AAPL, XETRA:APC) iPhone ecosystem is showing signs of increased customer loyalty and steady demand, while its high-margin services business remains a key support to profitability, according to UBS analysts.
The bank, which maintains a 'Neutral' rating on Apple with a 12-month price target of $280, cited findings from its Evidence Lab survey of roughly 4,000 iPhone users globally. The data suggests that iPhone “stickiness” continues to improve, even as replacement cycles remain relatively stable.
UBS said the average age of iPhones in use globally was largely unchanged year-over-year at about 33 months. Outside China, device age edged slightly higher to around 38 months, a trend the analysts said could push some upgrade demand into 2027.
At the same time, customer retention strengthened, with the global iPhone retention rate rising about 200 basis points to roughly 74%. Gains were particularly notable in the United States and China, where retention increased by 200 and 700 basis points, respectively. UBS belives that this indicates Apple is maintaining share despite a competitive smartphone market.
Purchase intent also improved across regions, with more surveyed users indicating their next smartphone would be an iPhone. The UK recorded the largest increase, while China also saw a meaningful rise despite what UBS described as a challenging competitive backdrop.
The report highlighted continued growth in Apple’s services ecosystem, particularly iCloud and Apple Music. Attach rates for iCloud reached about 42%, while Apple Music stood near 30%, trends UBS said should help sustain services gross margins above 75% through fiscal 2026 and 2027.
Higher-tier iCloud usage is also increasing, even as Apple raises base storage on newer devices. Among iPhone 17 users, 77% reported subscribing to mid- to high-tier iCloud storage plans, compared with roughly 60% across the broader installed base. UBS noted that additional services uptake carries incremental gross margins of at least 90%, helping offset potential pressure from rising memory costs.
On the hardware side, consumers are also opting for higher storage configurations. UBS wrote that 56% of iPhone 17 users purchased models with more than the base storage, up about 800 basis points year-over-year. This shift could support product margins, with incremental storage estimated to generate gross margins of around 75% on roughly one-fifth of sales.
Looking at the installed base, UBS estimates about 68% of iPhones in use are from the 14 through 17 series, while around 40% are Pro or Pro Max models. The analysts said this premium segment could be a target market for a potential foldable iPhone, though they expect the opportunity to be relatively limited given the anticipated price range of $2,000 to $2,500.
UBS estimates a foldable launch could result in as many as 8 million units in fiscal 2026, contributing roughly 6 million incremental iPhone shipments, or about a 2% uplift to its forecast of 251 million units.
Shares of Apple are down almost 7% so far this year, trading hands at $254.