Ben Bajarin: ‘We are very near peak iPhone ASP’

With last quarter’s $50 bump, says the principal analyst at Creative Strategies, the iPhone’s average selling price may have reached its natural limit.

From Bajarin, in last week’s Techpinions podcast Apple Earnings and Industry Learnings:

We’re probably nearing Apple’s peak for ASP. I’m not going to say it’s peak ASP because I do think they could have one more bump in them, especially if they broaden the line for designs like the iPhone X and bigger screens, and obviously they can tip the pricing for devices that are more than $1,100. I think we could still see at least maybe one more ASP bump and then it will normalize. But it won’t be a lot. It’s not going to be another 50 bucks. It might be another $10 or $15 increase in ASP. And then that’s probably about it. It might go down, it might fluctuate, but I do think we’re nearing the peak of what people will spend for these types of things.

In a clarifying e-mail Wednesday:

There is a threshold for consumers with how much they are willing to pay for tech and we are near that limit. This is true of TVs, PCs, etc., all things we can track sales of those over certain price points and you just see limits in volume at price points.The ASP bump I’m talking about would be next Dec quarter, if/when Apple releases new models of different sizes on the same design of the X. But we are very near peak iPhone ASP.

Note the Revenue-per-unit spike in the chart below (click here if you don’t see the two-part chart):


Note: These interactive Datawrapper charts are best viewed on a large screen. Click the category headings to toggle between bar charts. Mouse over the bars to see the quarterly values.

My take: What the ASP portion of the chart showed me was that in the history of the iPhone, there was only other spike like one last quarter. The first spike followed the opening of the iOS App Store on July 10, 2008, after which ASPs plateaued. With smartphone prices falling in the rest of the industry, Apple kept its ASPs level for nine and a half years. Then it raised them.

7 Comments

  1. Martin Beutling said:

    “Peak ASP…..” now THAT is a new one…..

    0
    February 8, 2018
  2. Robert Harris said:

    Amazing he feels he can determine that. Just like everyone said no one would pay $1000. Guess once again the worlds most profitable and richest company is doomed. Time to sell.

    1
    February 8, 2018
  3. David Emery said:

    If the ‘peak’ is a psychological one, then wouldn’t we see different peaks in different countries, reflecting the “magic number” in that country’s currency?

    0
    February 8, 2018
  4. Fred Stein said:

    Very useful visual.

    If the ASP falls in the future, which is likely, will fear-mongerers and their foolish followers push the stock down? But lower ASP is needed for long term unit growth, which investors should welcome.

    Just my wild guess, Apple will invest heavily to reduce the OLED cost in order to deliver lower priced iPhones and iPads. OLED screens are the single biggest cost items in iPhone X BOM. Apple will ship a Trillion OLED screens over time, including iPads..Apple has been investing, often by lending to their manufacturers, to reduce component cost.

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    February 8, 2018
  5. John Blackburn said:

    You can quibble about where that line is, but the existence—the inevitability—of a peak ASP as a concept is rational. Some will continue to purchase well above that price, but the broad market that smartphones enjoy, like any market, will eventually deem a price too high, with sales falling thereafter.

    Making this observation needn’t equate to “Apple is doomed” any more than observing that any other basic economic principle holds.

    Apple understands this and is likely growing services and introducing ancillary devices like AirPod and HomePod in part to grow the market laterally as a result.

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    February 8, 2018
  6. John Kirk said:

    Actually, I don’t think this is very controversial. Quite the contrary. For most tech products, Average Sales Price peaks on the first day it is sold. From then on, prices drop. Sometimes precipitously.

    What’s actually amazing is that the Average Sales Price for the iPhone has gone UP — and gone up by a lot — almost 11 years after the product was introduced! It’s almost akin to alchemy.

    Now, I think it’s possible — possible mind you — that the average sales price could go up one more time if, for example, Apple came out with a large screen iPhone X and consumers embraced it. But again, we shouldn’t be surprised that the Average Sales Prices will eventually fall. We should, instead, be amazed that they have defied the laws of (marketing) gravity for so long as they have.

    1
    February 8, 2018

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