Bloomberg discovers, disavows Apple’s secret

From “Apple Doesn’t Do Low Budget,” posted Monday by Shira Ovide under the Bloomberg “Opinion” rubric:

Apple’s ability to sell the most expensive smartphone in its lineup has been the biggest happy surprise in the company’s last year. The average iPhone sale price rose to $758 in the nine months ended June 30 compared with $661 at the same point in 2017. That is testament to demand for the $1,000-and-up Phone X, which Apple says has been the top-selling iPhone model since it went on sale. If its average iPhone sale price had stayed constant, Apple’s iPhone revenue would have increased just 0.4 percent so far in this fiscal year. Instead it rose 15 percent.

bloomberg discovers apple secret

The flip side of the iPhone X’s prevalence is the forgettable other 2017 models, the iPhone 8 and its larger-screen sibling, the 8 Plus. Those were the good and better versions, and Apple barely mentions them now.

This fits with a pattern of Apple’s relatively low-end iPhones not setting the world on fire. Remember the iPhone SE released in 2016? Apple said at the time that some people wanted a relatively smaller smartphone when most phones were getting supersized. It could have been the iPhone for the masses, but the $399 iPhone SE has been relegated to a niche in Apple’s product lineup. The 2013 iPhone 5c was considered a budget alternative at $100 less than the $650 flagship model of the time. It is the Voldemort of iPhones. No one speaks of it.

My take: The Voldemort line is good, but I don’t see anything controversial, even new here. Ovide deserves better than the boilerplate caveat at the bottom of her piece:

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

They don’t tag Gurman’s pieces like that.

14 Comments

  1. Patrick Beyrouti said:

    There is no iPhone for the masses!!
    A terrible strategy if it were true!!

    There will be no cheap iPhone introduced , not possible in the current Apple strategy .
    The 5C was a terrible experiment , same with iPad mini , note APPLE is moving away from cheap devices!! The iPhone ASP will keep climbing , INVESTORS should cheer….

    0
    August 28, 2018
    • Gregg Thurman said:

      There will be no cheap iPhone introduced

      The extension of that statement is, “there will be NO lower priced 6.1″ LCD iPhone”.

      0
      August 28, 2018
    • John Konopka said:

      At an Apple store I mentioned that some people wanted to see the iPad mini go away. The employee there said it was extremely popular.

      I think you always need a product line from low end to high.

      1
      August 28, 2018
      • Patrick Beyrouti said:

        Does it work when you are in premium products
        Of course people want a cheap iPad mini , but it does not make money for APPLE. Let the competition deal with that . Notice how the iPad mini collection is very narrow.

        By the way Apple employees will never say anything negative !! nor strategic .

        I am extremely happy with moderate volumes , high ASP and high margins : Exemplified by the iPhone strategy . TRY selling 15 % more ( volume) iPhones to the masses , you will fail ( profit wise) .

        Try offering a premium product , high price / high margin to the Apple club : They will take it like hot cakes.

        0
        August 29, 2018
        • Gregg Thurman said:

          I am extremely happy with moderate volumes, high ASP, and high margins:

          WS should be as well, alas it isn’t.

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          August 29, 2018
      • Richard Wanderman said:

        The iPad mini is extremely popular and if it gets discontinued many folks will be sad. The Plus size iPhone is not a substitute for these folks.

        I have friends who are pilots who use the mini in the cockpit to run ForeFlight. They could certainly use larger iPads but the mini doesn’t get in the way as much, is easier to handle and if needed, clip onto the yoke. This isn’t a complete market but there are many other areas where the mini is useful.

        I maintain two sections of the Appalachian Trail and I can say that thru hikers who carry iPads carry minis.

        The iPad mini, like the Mac mini and Power Macintosh and the MacBook Air may be suffering from Apple neglect rather than lack of popularity.

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        August 29, 2018
  2. Robert Paul Leitao said:

    The remarkable aspect of Apple’s average iPhone selling price isn’t the price. It’s the technology and advanced feature set incorporated in the devices that necessitates the higher selling price. The more advanced the handsets the more advanced the Services buyers will consume.

    This is why, in part, non-gaming apps are selling so well and in part why Services revenue is rising so quickly. Again, the Street is focusing on the wrong metric. What’s also remarkable is the iPhone X has been available this model year in only one size and it has been the best selling handset in the first three quarters of the fiscal year.

    This is a perfect set-up for the coming model year’s handsets as Apple expands its iPhone offerings that incorporate the X’s advanced features and functionality. iPhone unit sales will increase in FY2019 with average selling prices similar to this year.

    2
    August 28, 2018
  3. Fred Stein said:

    Ovide’s opinion piece is just that, opinion. Yes, we all know about rising ASP, and especially when Apple introduced the X and also the 6 and 6+. No secret. As investors, we’re delighted. And this demolishes the commoditization of hardware trope.

    No one talks about older models like the SE, which are great values, precisely because there’s nothing new, nothing to say, except lower price.

    It would be nice if Apple extended the “SE” thinking to the MacBook Air. Tweak the specs, drop the price..

    1
    August 28, 2018
    • Patrick Beyrouti said:

      drop the price …. I would never wish for that .

      Actually the best thing for Apple is continuously introduce higher priced / higher margin items . THIS is what shareholders should wish for .

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      August 29, 2018
  4. Patrick Beyrouti said:

    drop the price …. I would never wish for that .

    Actually the best thing for Apple is continuously introduce higher priced / higher margin items . THIS is what shareholders should wish for .

    0
    August 29, 2018

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