Analysts see Apple getting a bump in the ASP

From Eric Savitz’ “The iPhone 13 Didn’t Surprise Anyone. Apple’s Stock Still Might.”  ($) posted Friday in Barron’s:

A few analysts view the new option for one terabyte of flash memory storage on iPhone 13 Pro models as a big deal. While it’s not entirely clear to me who needs that much capacity, the trend towards higher average storage on phones is a good thing not only for Apple, but also for memory chip manufacturers Western Digital (WDC) and Micron Technology (MU). The base model phones now have twice the storage capacity as last year. The $799 iPhone 12 had 64 gigabytes of storage; this year, the same price comes with 128 GB. Last year, a phone with 256 GB would run $949; this year, you can have the same capacity for $899. If you want a top-of-the-line, 6.7-inch Pro Max with one terabyte of storage, it will set you back $1,599.

Bernstein analyst Toni Sacconaghi sees Apple’s pricing strategy as designed to continue a trend toward increasing iPhones’ average selling prices, or ASPs. He estimates that Apple is on track for an 18% year-over-year increase in ASPs for the September 2021 fiscal year. He reports that the iPhone ASP earlier this year reached more than $880, the highest since the phone was launched in 2008.

Driving the trend is an apparent consumer preference—at least among iPhone 12 fanciers—for higher-end Pro and Pro Max models, which he argues carry margins 10 percentage points higher than non-Pro models. (Apple apparently generates huge margins on incremental memory.) Sacconaghi calculates that, if the iPhone sales mix on the new lineup is comparable to the iPhone 12’s, average selling prices would be up 5%.

My take: Apologies for bringing Sacconaghi into the conversation.

8 Comments

  1. Aaron Belich said:
    “(Apple apparently generates huge margins on incremental memory.)“

    DUH!

    Does anyone wish to bring up the other things that Apple has huge margins on? Or should we wait for him to figure that out for himself?

    0
    September 17, 2021
  2. Horace Dediu said:
    Toni Sacconaghi does not know the ASP. He is guessing. A high ASP guess gives him an excuse to lower his guess on unit volumes to suit an agenda. Apple unit volumes are not known. What is known is the total number of active devices.

    14
    September 17, 2021
    • Gregg Thurman said:
      He is guessing. A high ASP guess gives him an excuse to lower his guess on unit volumes to suit an agenda.

      Absolutely brilliant!

      3
      September 17, 2021
  3. Robert Paul Leitao said:
    I’m less concerned with ASPs than I am with ARPU (average revenue per user). Higher performance and higher storage capacity iPhones will lead to greater customer engagement and consequently higher Services revenue which carries much higher margins than device sales. Considering the huge global market for pre-owned iPhones, buyers of new iPhones will trend to more powerful devices with greater storage capacity. Looking at ASPs on new iPhone sales alone will provide a glimpse of only a “portion of the picture.”

    5
    September 17, 2021
  4. Jerry Doyle said:
    Apple is hitting on all cylinders. Soon, WS analysts and investors will see that fact and feel it poignantly when successive quarterly performances keep undulating in record breaking numbers for products and services catapulting the stock price ever higher where it deserves to go. As brother Joseph Bland always denotes, one can’t keep the beach ball below water for long before it “pops” to the surface.

    October begins the fall season when the markets begin to maneuver forward with increasing intensity into the Holiday Season. Apple will have an eye-catching 4th quarter performance followed by a whopping Q1 2022 quarterly performance that gets us to $175 by the Q1 earnings call. WS cannot ignore the tech gorilla continuing prodigious quarterly performances. The revenues and profits are mounting higher and higher, increasing the value of this company and its stock price.

    Laissez le bon temps rouler! Geaux 

    5
    September 17, 2021
    • Gregg Thurman said:
      Soon, WS analysts and investors will see that fact

      Apple investors have been saying that nigh on 20 years now. With regard to WS’s understanding of Apple’s business, nothing has changed. If they can’t create a spread sheet to analyze something they’re lost.

      2
      September 17, 2021
      • Jerry Doyle said:
        @Gregg Thurman:

        I hear you Gregg T. I have been an Apple investor for a quarter of a century never having sold a single share. Never have I remembered, though, when Apple was firing on all cylinders as the company currently is doing and with each successive quarter just blowing off the barn doors over such an expansive period of quarters as now; and I do not see it letting up going forward. It almost is if I am witnessing “exponential growth” in the company’s performance. I believe WS will feel compelled at some point to acknowledge what we all see is happening.

        Laissez le bon temps rouler! Geaux 

        3
        September 18, 2021
  5. Peter Kropf said:
    And a Report on the Telecom Trade-in Deals.//on launch//.

    All 3 are offering

    – $1,000 towards buying an iPhone when trading in an 11 Pro or Pro Max.
    – $800 towards buying an iPhone when trading in an XR.

    I believe iPhones have never //launched// with even a $500 trade-in offer.

    iPhone 13 may ship huge numbers due to these unprecedented high subsidies and the chip shortage creating Android delivery shortfalls.

    6
    September 17, 2021

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