iPhone Sales Are Going To Crush Expectations This Quarter, According To Morgan Stanley

Apple's iPhone sales are likely to be better than analysts' expect, according to Katy Huberty at Morgan Stanley.

Huberty has a new report highlighting the results of Morgan Stanley's "AlphaWise Smartphone Tracker," which "compiles sell-through data using web search analysis." It sounds like a hokey, but AlphaWise has proven to be directionally accurate in the past two quarters.

Huberty says the AlphaWise tracker is predicting 39 million iPhones sold during this quarter (the June quarter). The consensus on the street is 35 million, so it would be a significant beat on iPhone sales for Apple. It would deliver 25% year-over-year growth in iPhone units, if it was accurate.

iPhone sales are being driven by strong upgrade promotions, says Huberty. Apple, for instance, is offering $99 for an iPhone 4, and $199 for iPhone 4S to people that upgrade to a new phone. The iPhone 5C has also been diversified, with a lower-cost, lower-storage 8 GB model selling around the world.

Carriers are retailers have also been offering pretty good discounts on both the iPhone 5C and 5S to drive sales.

Here is a table from Huberty that show how the AlphaWise Tracker forecasts have compared to actual results. As you can see, it's not perfect, but it's better than Wall Street estimates.

And here is a chart showing the same data...