Price increase for iPhone 6, 6 Plus will add $17 billion to Apple's coffers
The prices of Apple's new iPhone 6 and iPhone 6 Plus are higher than those of their previous models, the iPhone 5S and 5C. That isn't news.
But it is interesting that Apple's new pricing structure for iPhones will also have the effect of lifting the floor on prices of Apple's cheapest phones and raising the ceiling on the most expensive ones. Apple is driving through a vast price increase for all its new customers, in other words: And it will add $17 billion in sales by 2015.
This chart shows the effect of the new prices over time. Note that the overall trend for all models is upward over time. The chart shows various prices for the iPhone 4, 4S, 5, 5S, 5C, 6 and 6 Plus, which were available at differing times - hence the uneven clusters. Here's the detail on that, from analyst Gene Munster at Piper Jaffray:
According to Munster, Apple will get an extra $17.2 billion in iPhone sales revenue in fiscal 2015, compared to the sales it had for the same product category in 2013 (the last year before iPhone 6 was launched).
Apple isn't just introducing two new, more expensive phones. It is also eliminating the 32GB storage capacity versions of iPhones — requiring customers to pay more for higher capacity, Munster notes.
The last iPhone was introduced at an average selling price (ASP) of $649, Munster says, and the new ones will have an ASP of $749. There is a mix of iPhone 5S and 5C devices in there too, and that will grant Apple an extra $33, on average, to the price of an iPhone. The lowest priced model will move upward from $451 to 542 under the new structure.
In terms of iPhone revenues, here is the effect that will have on Apple's revenue over the next two years, according to Munster's estimates:
FY 2013: $91.3 billion FY 2015: $108.5 billion That's a $17.2 billion addition to sales, simply by upping the price.
One interesting factor: Apple had previously experimented by selling the iPhone 4 cheaply in India as a discount, entry-level device. But the Apple Store in India is currently not offering that model for sale. Airtel is currently selling the 5C at only a slight premium to the 4S — suggesting that the companies want to move low-end customers off the 4 and into the 5 series.
But it is interesting that Apple's new pricing structure for iPhones will also have the effect of lifting the floor on prices of Apple's cheapest phones and raising the ceiling on the most expensive ones. Apple is driving through a vast price increase for all its new customers, in other words: And it will add $17 billion in sales by 2015.
This chart shows the effect of the new prices over time. Note that the overall trend for all models is upward over time. The chart shows various prices for the iPhone 4, 4S, 5, 5S, 5C, 6 and 6 Plus, which were available at differing times - hence the uneven clusters. Here's the detail on that, from analyst Gene Munster at Piper Jaffray:
According to Munster, Apple will get an extra $17.2 billion in iPhone sales revenue in fiscal 2015, compared to the sales it had for the same product category in 2013 (the last year before iPhone 6 was launched).
Apple isn't just introducing two new, more expensive phones. It is also eliminating the 32GB storage capacity versions of iPhones — requiring customers to pay more for higher capacity, Munster notes.
The last iPhone was introduced at an average selling price (ASP) of $649, Munster says, and the new ones will have an ASP of $749. There is a mix of iPhone 5S and 5C devices in there too, and that will grant Apple an extra $33, on average, to the price of an iPhone. The lowest priced model will move upward from $451 to 542 under the new structure.
In terms of iPhone revenues, here is the effect that will have on Apple's revenue over the next two years, according to Munster's estimates:
FY 2013: $91.3 billion FY 2015: $108.5 billion That's a $17.2 billion addition to sales, simply by upping the price.
One interesting factor: Apple had previously experimented by selling the iPhone 4 cheaply in India as a discount, entry-level device. But the Apple Store in India is currently not offering that model for sale. Airtel is currently selling the 5C at only a slight premium to the 4S — suggesting that the companies want to move low-end customers off the 4 and into the 5 series.
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