“Consumers are willing to pay up for bigger screens, according to new research, which should help the new Apple phones, expected to arrive later this year, keep average selling prices up in the short-term,” David Marino-Nachison reports for Barron’s.
“‘Over the last six years, screen size is the lone feature that we believe has demonstrated a consistent ability to drive both volume and pricing power,’ KeyBanc Capital Markets wrote Tuesday. ‘This was evident in the iPhone 6 cycle, where a step-up in screen size drove both pricing and volume, and in the iPhone X cycle, where a larger screen in a similar-sized form factor drove strong pricing power,'” Marino-Nachison reports. “KeyBanc analysts, who have a ‘hold’ rating on the Barron’s Next 50 company’s shares, don’t believe the underlying screen technology—whether, say, a phone uses a liquid crystal or organic light-emitting diode-based display—matters to buyers much. Both, they wrote, ‘offer high quality experiences.'”
“‘Apple’s coming iPhone lineup is likely to maximize the available screen real estate within form factors that will still fit in pants pockets, which suggests we have reached a limit of screen size as an incremental driver of demand. Further, we do not anticipate a new hardware feature that will replicate the pricing power of screen size for the foreseeable future,'” Marino-Nachison reports. “That, they suggest, means Apple will either need to lower prices for large-screen phones — hurting ASPs — or risk losing customers to companies that do.”
Read more in the full article here.
MacDailyNews Take: Apple holds other unique advantages over would-be competitors such as processor speed, security, privacy, ecosystem, etc. Display size is not the only demand driver.
What did this analyst have to say about the prospect of a $1,000 high end iPhone? Were they encouraging Apple to make some piece of crapola for $300 instead?
The analysts also used to bang on about how important it was for Apple to release a Netbook.
If you were to run a company the way that some analysts wanted you to run it, you would run that company into the ground.
I’m still not convinced that analysts understand how important profit share is compared to market share, although some analysts must do because they occasionally complain about Apple eroding it’s margins with a new mass market product, but seldom give Apple any credit for releasing products like iPhone X, where the margin is about $100 more than previous models.
Apple COULD actually make a dramatically cheaper phone that wasn’t… crapola. They’d just need to stop wanting to make ridiculous margins on their devices. The amount of money flowing into Apple’s coffers is obscene, when you think about it. And the only thing that large margins do is allow other companies like Samsung to charge similarly and earn as much or more. A lower profit margin would squeeze other manufacturers and not allow them to earn enough to profit to survive without cheap components.
If Apple really wanted to, they could price their phones cheaper and still make a profit on their phones and force Samsung to sell some of their phones at a loss…
But Wall Street Friend Timmy only thinks of dollars and cents.
” Were they encouraging Apple to make some piece of crapola for $300 instead?”
Like the $350 iPhone SE?
This really surprises me. I have had the iPhone 6s+ and 7s+ and now that I’ve had the iPhone X I’m never going back to a phone bigger than 5.8″. Damn things just don’t fit in any pockets when they get bigger than that. Its the perfect size for me.
This spacious article is just another version of “Apple products are over-priced so it must lower its prices or it will die soon.”