Apple Inc. (Nasdaq: AAPL) customers with older model iPhones that seem to be slowing down may have Apple to blame. But don’t worry, the company is only trying to help. And if you own AAPL stock, you definitely shouldn’t worry, at least according to Morgan Stanley.
Cynical iPhone users have long speculated that Apple deliberately slows down speeds on older iPhone models in an attempt to force users to upgrade to newer models. As it turns out, AAPL is actually limiting processing power on older iPhones to help aging batteries handle the workload, the company says.
In a statement obtained by TechCrunch on Wednesday, an Apple representative explained the situation.
“Last year we released a feature for iPhone 6, iPhone 6s and iPhone SE to smooth out the instantaneous [power] peaks only when needed to prevent the device from unexpectedly shutting down during these conditions. We’ve now extended that feature to iPhone 7 with iOS 11.2, and plan to add support for other products in the future.”
As iPhone batteries age, they may no longer be able to handle the smartphone’s peak processing power. In an effort to prevent iPhones from shutting off as a protective measure, Apple says it is simply attempting to smooth out those power peaks to help manage the limited capabilities of older batteries.
Potential impact on Apple stock. While some iPhone users are criticizing Apple for slowing iPhone speeds rather than simply replacing older batteries, AAPL stock owners are perfectly fine with the company giving users another reason to upgrade to higher-priced, higher-margin models, such as the iPhone X.
Morgan Stanley analyst Katy Huberty says the iPhone X launch is going extremely well, especially in China. The firm’s latest data suggests Chinese consumers are adopting the iPhone X much faster than they did the iPhone 8.
“As a result, we believe upgrades to the iPhone X from the base of two-year-old iPhone owners, which is up 56 percent year-over-year entering this supercycle, aren’t yet captured and provide a runway for continued iPhone X growth over the next two quarters,” Huberty says.
Looking ahead, Huberty says long-term investors can expect China to provide a major boost for Apple stock.
“Recent AAPL stock performance trails past supercycles, implying there is still significant room for Apple shares to run as China, [average sales price], margin, and tax reform catalysts play out,” she says.
Morgan Stanley has named…
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