iPhone sales could hit 189 million in fiscal 2015 -- analyst

Apple could sell 189 million iPhones over the next year, at least that's what one analyst sees in his crystal ball.

In an investors note released on Thursday, BMO Capital Markets analyst Keith Bachman offered the 189 million number for Apple's fiscal 2015, which starts next month and ends in September 2015. That estimate is around 10.6 million units higher than Bachman's previous forecast.

Though 189 million sounds like a hefty amount, JP Morgan analyst Rod Hall came out with a considerably more bullish forecast in early September of 235 million iPhone units sold in fiscal 2015.

Which iPhones will account for most of the sales over the next year?

Bachman said he assumes the new iPhone 6 will generate around 74 percent of the demand. More specifically, the 4.7-inch iPhone 6 will be responsible for 70 percent to 75 percent of the new models sold, leaving the 5.5-inch iPhone 6 Plus accounting for the remaining 25 percent to 30 percent.

Looking at the December quarter, Bachman estimates total iPhone sales of 58 million units. However, that number could prove a low-ball figure if iPhone sales are able to take off in China before the end of the year.

The iPhone 6 has run into regulatory issues that have stalled its launch in China. Last week, Apple received approval for the iPhone 6 to tap into the country's domestic frequencies, according to the official government Xinhua news agency. But the government's Ministry of Industry and Information Technology must still officially approve the new iPhones for network access before retailers can start offering them.

China represents a lucrative market for Apple, which sold a record number of iPhone 5S units in the country during 2013's fourth quarter. Overall, China accounted for 16 percent of Apple's $37.4 billion in sales last quarter, according to Bloomberg.

"For iPhones, we remain unclear about Apple's ability to sell the iPhone 6 and 6 Plus in China, particularly in the December quarter, and we think China could affect the December quarter by more than 10 million units," Bachman said. "If iPhones are available for sale for the full December quarter, then we are likely conservative with our 58 million iPhone unit estimate."

And what of Apple's other devices?

Bachman doesn't seem to be sold on the Apple Watch and expects sales to reach just 12 million units for fiscal 2015 (or 20 million for the full calendar year).

"We think the price point, at least the starting price, is high, and we are not yet convinced the Watch is ready with all features," the analyst said. "For example, is the Watch waterproof? Also, we think the Watch was a tad fat (thick). We think the category holds tremendous promise, but we feel that Apple's initial Watch products may pale in comparison to products that will be available in years to come."

Bachman also shrunk his fiscal 2015 forecast for iPad unit sales by 9.5 million to 58.3 million. The new estimate is based on his belief that large-screen smartphones will cannibalize iPad sales. But despite the potential for lower iPad sales, Apple will actually come out ahead thanks to its new larger-screened iPhones.

"With our estimate changes, we are adding roughly $7 billion incremental iPhone revenue and eliminating $4 billion of iPad revenue, which implies a net addition of an incremental $2.4 billion of gross profit dollars, all else equal," Bachman said. "To say it a different way, we believe that if Apple sells one iPhone and does not sell one iPad Mini, Apple increases gross profit by about $200, all else equal."

Finally, the analyst doesn't see the new Apple Pay mobile payments feature dramatically affecting overall revenue in fiscal 2015 or even 2016. Instead, he believes the new feature is more about selling iPhones than adding more dollars to Apple's coffers.

"Apple Pay will help sell iPhones, but will not add meaningful incremental revenues for Apple," Bachman said.