iPhone 7 Plus pricing may make up for overall slump in demand for the series
As we crash upon Apple’s imminent earnings report for its 2016 holiday quarter, we’re going to see where bottle-necked demand and disappointingly long wait times for products to ship meet.
On the whole, investors are in good spirits about growth — Apple will have to beat 74.78 million unit sales in order to keep its record breaking ways. But with more price points for the iPhone than ever before between the iPhone SE and the iPhone 7 Plus, we’re wondering where the average dumbbell lays: will it rank above $75.9 billion in overall revenue?
Financial firm Cowen & Co. projects that of the 58.5 million estimated iPhone 7 sales Apple made, just over 40 percent or 24 million of them were of the Plus model. This comes the same year that the company decided to widen the price gap between the 4.7-inch and 5.5-inch sizes from $100 to $120 — and that’s at base levels.
Tim Arcuri of Cowen & Co. said that the base iPhone 7 hasn’t whetted consumer appetites for the best and brightest in mobile. The iPhone 7 Plus, though?
“They pulled that [price] lever like never before,” Arcuri said to The Wall Street Journal.
UBS is targeting average unit sales price to buck up a couple dollars from last quarter to $693. Its analytics point to sales in the critical Chinese market this holiday falling 10 percent from last holiday, though the iPhone 7 Plus made more than half of that sales pool, up 12 percentage points from last year. Number one for Apple, though, is the US — Creative Strategies thinks that the Plus proportion grew from 35 percent to 47 percent.
If Apple pulls a “win” on Tuesday, analyst Arcuri believes that a showboat iPhone 8 can outstretch further on this limb of premiums.
“The market is saying, ‘We still value what Apple is doing and value it enough to even spend more on it,” Arcuri said.
With President Donald Trump angling for a confrontation with China on trade the same time he’s urging Apple to manufacture in the US, it may be that the masses will pay more for an iPhone anyways — wherever it gets made.
Overall, the market’s soft target for Apple revenue should be up 2 percent from last year and sit at either side of $77.4 billion with help from 78 million iPhone sales — that number up 4 percent from 2016. Even those figures seem a big ask at this point, especially with this being the first year where growth isn’t expected to be in the double-digit percentages.
Apple reports its first quarter earnings for fiscal year 2017 on January 31 at 5pm Eastern.