Apple Set To Break Average iPhone Price Record Twice In Coming Months

Apple is expected to break its iPhone average price record twice in the coming months, with customers opting to buy more expensive “Pro” models that boost the tech giant’s margins.

Demand for the new iPhone 14 unveiled earlier this month is already robust enough to predict that the worldwide “average selling price” – or ASP – will reach a record high of $892 in the September quarter and $944 in the during the December quarter, according to Counterpoint Research, a data provider, which bases its projections on consumer demand, market intelligence and discussions with vendors.

The current record is $873, reached in the fourth quarter of last year.

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The average selling price of iPhones is a key Apple metric for Wall Street, as smartphone sales still account for about 50% of the group’s revenue. The upward trajectory of these prices – from just $690 at the end of 2015 – is all the more significant given that Apple opted out of raising the prices of its devices earlier this month during its annual product release. flagship, a move some analysts called the biggest surprise of the event.

Driving the trend is the popularity of the iPhone 14 Pro and Pro Max models, which feature a faster chip, 48-megapixel camera, and a new information hub called “Dynamic Island.”

When research group Evercore ISI polled some 4,000 consumers this month, it found that 56% of those likely to buy an iPhone planned to buy a Pro model, up from 41% last year. It predicted that next year’s ASPs would be around $940, about 10% higher than in the iPhone 13 cycle.

“We are increasing our iPhone revenue estimates for the next four quarters on the back of stronger-than-expected ASPs,” Evercore analyst Amit Daryanani told clients.

The numbers suggest Apple is in a much better position today than in January 2019, when it was forced to issue its first revenue warning in 16 years due to weak iPhone sales in China. .

It has since taken a larger market share in China thanks to the launch of 5G-enabled iPhones in 2020 and the fall of Huawei, which was barred from selling 5G phones following US sanctions.

Between the end of 2020 and the end of 2021, Apple’s market share in China increased from 15.9% to 23%, according to Counterpoint.

“Other Android makers – Vivo, Oppo and Honor – have all entered the premium segment, but premium brand status cannot be built overnight,” said Archie Zhang, an analyst at Counterpoint.

Globally, the high-end market for phones costing over $400 has outpaced overall sales for nine straight quarters with Apple taking 57% market share last quarter, according to Counterpoint data.

The ultra-premium segment — phones priced above $1,000 — nearly doubled last quarter from a year ago, with Apple capturing 78% of the market.

The upward trajectory of iPhone ASP reflects the success of a strategy Apple launched in 2018 when it stopped reporting the number of iPhones it sold each quarter. The move had sparked “maximum iPhone fears,” while Apple argued it was focusing on volume toward revenue and margins.

Today, analysts believe Apple is in another transition to move from ASPs to “lifetime user value” – a strategy to increase revenue from its more than one billion iPhone users with a expanding array of services.

At the end of 2020, the company launched Apple One, offering a bundle of Apple services including Music and iCloud at a reduced price. The next logical step is for an iPhone itself to be part of the bundle, allowing users to pay monthly fees in perpetuity in exchange for services and a new smartphone every year or two, without incurring any upfront costs.

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