How many iPhone 5s will Apple sell?

Apple's marketing chief Phil Schiller stated (under oath) that when assessing sales for a new model of the iPhone, Apple used an easy shorthand:

Each new generation sold approximately equal to all previous generations combined.

That's a helpful gauge but does it hold and will it continue to hold?

In order to test this rule of thumb we need to know generational sales. Although we know overall unit sales for a given quarter, since Apple has been selling several versions simultaneously, we need to make some guesses about the ratio of generations in the mix. My guess is about 10 per cent for 3G vs. 90 per cent of 3GS and five per cent 3GS vs. 10 per cent  4 vs. 85 per cent  4S. That results in the following pattern:

The cumulative totals for these generations can then be generated and they appear as follows: 

The solid bars are the shipments for each generation (to date) and the outlined bars are the cumulative shipments of all prior generations. The assumptions show that:

• The 3G easily outsold the original iPhone. In fact, it sold nearly four times as many.
• The 3GS also handily beat the 3G original total by a factor of 1.6
• The 4 also beat the 3GS 3G original. As the 4 may continue to sell into the future, the beat will only grow larger.
• The 4S is only half way through beating  the 4 3GS 3G original. Assuming the current quarter's sales roughly equal the last quarter's, the total for 4S will reach two thirds of the sum of the previous generations (i.e. 100 million) by the end of September. Bearing in mind that the 4S is likely to remain in production at least one more year means it has a potential to come close to the target of 162 million.

This leaves us with the question of how many iPhone “5″s will sell. As it stands today, the cumulative total would have to be greater than 263 million units (including assumptions for the current quarter.) That target is shown below:

Is that a reasonable target?

Unfortunately, this is a moving target. As the 4S (and maybe 4) remain in production, the target continues to increase with time. However, we can still take a stab at this.

Recall the analysis of production based on budgeted CapEx spending. It resulted in a best guess of about 165 million iOS units sold in the following two quarters. I further forecast iPhones in isolation to be about 102 million over the same period. Taking that forecast forward and assuming a 60 per cent growth rate,  I currently have about 200 million iPhones over the next twelve months. If 85 per cent of those are the next generation, that yields about 170 million iPhone “5″s through mid 2013.

This is well short of a target of 265 million. But that's only over the next four quarters. If the iPhone “5″ remains in production for at least as long as the 3GS then it might cross 200 million. There is also the question of whether the “mix” will begin to favor the older generations more. If that's the case, we might see version “5″ meet its target.  

Underlying all this is the question of a change in strategy toward more penetration (vs. current skimming.)  That might allow for sustaining the 100 per cent historic growth rate. If so then Apple will easily sell 250 million iPhone “5″s.

Horace Dediu is founder and managing director of Asymco, a Helsinki-based app developer/industry analysis advisory firm. You can find his blog here.