“Some are predicting Apple’s iPhone might have gained an upper hand against its most ardent competition because some feel the companies have launched underwhelming updates to their respective flagship smartphones (read: Samsung Galaxy S5),” Andrew Tonner writes for The Motley Fool. “The stage is clearly set and expectations are outsized for Apple’s iPhone 6. And it appears Apple is also well aware of this as word recently broke that Apple, in discussions with carriers, is exploring the possibility of hiking the price of the iPhone 6.”
“According to reports initially circling back to Jefferies analyst Peter Misek, Apple has pitched the idea of starting its iPhone 6 at a subsidized price of $300 when the device debuts later this year,” Tonner writes. “If Apple were to successfully gain the support to a significant enough portion of their telecom partners to accept this supposed $100 price increase, Misek estimates that in a so-called ‘worst case’ scenario, Apple would see its unit shipments fall 10% due to the price increase.”
“But baking in the effect that that incremental $100 per device, Misek’s model suggest that Apple’s EPS would still increase 14% overall, even after the 10% drop in unit sales,” Tonner writes. “On a more positive note, he also models the financial impact of the $100 price hike if iPhone shipments were to remain unaffected by this development. In this scenario, Misek’s models claims that Apple’s EPS would grow 24%.”
Tonner writes, “If Apple were able to pull this off, it would certainly signal that it’s hand is stronger than most of us realize today, either because the new iPhone will feature some new truly game-changing technology or that this year’s other major smartphone launches are perhaps performing substantially worse than expected.”
Read more in the full article here.
MacDailyNews Take: As we wrote on Monday:
Exotic materials, esoteric manufacturing processes, unparalleled build quality, and seamless access to unequaled ecosystems that patent-infringing imitators simply cannot match is worth well more than $100.
Analyst: Apple looks to raise prices by $100 for iPhone 6 – April 14, 2014