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.