“Apple shares are currently trading around an all-time high figure of $180. We believe that the current stock price represents the fair value for Apple’s shares,” Trefis Team writes. “However, the tech giant could potentially unlock a sizable amount of value for investors by introducing a cheaper version of the iPhone to target other segments of the rapidly growing smartphone market. Under such a scenario, we estimate the company’s value could be closer to $215 per share – representing an upside of 20%.”

“The more iPhones Apple manages to get into users’ hands, the more revenues it can generate through its closed ecosystem – a benefit none of its rivals have,” Trefis Team writes. “We estimate that the introduction of a meaningfully cheaper iPhone variant could boost iPhone sales to 300 million a year (up from 232 million under the base case scenario).”

“While cheaper iPhones will have a negative impact on Apple’s margins, we believe that this decline will be more than made up for by revenue gains from Apple Services, which is a high-margin revenue stream, as well as from the sale of other hardware and accessories (like the recently launched HomePod), which have margins in excess of 30%,” Trefis Team writes. “Accordingly, we expect the overall margin to improve to 23% (from 21.6% under the base case scenario).”

Much more in the full article here.

MacDailyNews Take: With iPod, Apple dove down market great success. With iPhone SE, the company is sort of dipping a toe into the water, perhaps rightly so as iPhone already takes more revenue than all other makers combined and dominates in profit share.

After all, how many HomePods, AirPods, Apple Watches, Apple Music subscriptions, etc. would Apple really sell to the type of customer who’s looking for a cheap iPhone?

With the Mac, iPhone, iPad, and Apple Watch, Apple has proven that cornering the market on quality customers, those with disposable income and the will to spend it, trumps amassing the most users.

Android is, as it ever was, the poor man’s iPhone. Apple takes the grain and leaves the also-rans with the chaff.MacDailyNews, February 7, 2018

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