Jul 23

Apple’s Average Selling Price On iPhones In Q3 Suggest Promotions Are Moving Devices, Older Models Popular

Posted in: Today's Chili

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Apple’s quarterly results are up, and the one thing that many of the financial big brains are paying attention to is the average selling price of the iPhone: It currently sits at around $580, compared to $613 last quarter, which is a big change sequentially. There’s a couple of reasons that could be happening, and they aren’t necessarily bad for Apple.

AT&T introduced some considerably aggressive pricing promotions this past quarter, including giving away free iPhone 5 devices with iPhone 4S trade-ins. AT&T said on its earnings call that it sold more iPhones this quarter than in the year ago quarter, even though it isn’t revealing exactly how many it sold. That likely means it did very well, which means it may have given away a lot of free iPhones. Recall also that T-Mobile introduced the iPhone 5 this past quarter, and that it initially began selling the iPhone at a reduced price compared to its competitors (though it isn’t clear who was absorbing the loss).

This could also be a strong indication that Apple is selling a lot of older devices, like the iPhone 4 and iPhone 4S, which are still available. Apple charges considerably less for these, and ASP on those are often lower, too. Walmart discounts on iPhone also began in late June, on iPhone 5 and iPhone 4S models, which would also result in lower ASP.

So why would that be good for Apple? 31 million iPhones is one very good reason. Apple increases its market share by pushing ASP lower, which is a long-term boon for the platform and for its overall device sales, since the company finds a halo effect for iPhone owners who tend to buy other Apple kit. And lower ASP could mean it’s making bigger inroads into new and emerging markets, which is also a long-term benefit for the company. Should it introduce iPhone models that are lower cost and cheaper to produce in the fall, that market could open up further, too.

Still, Apple said on its earnings call that “iPhone 5 remains by far the most popular iPhone,” but also noted that they “were also very happy with our sales of iPhone 4 and 4S.” So promotions, more than older devices, may have been a bigger part of the ASP change.

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Jul 23

iPad Sees First Ever Yearly Decline With 14.6M Units Sold In Q3, iPhone Remains Strong With 30M Units Sold & 20% YOY Growth

Posted in: Today's Chili

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Apple today released its Q3 2013 earnings report, announcing 31 million iPhones sold in the three-month period ending June, along with 14.6 million iPad units sold. Both the iPhone and iPad sales are down from the previous quarter, but this marks the first time the iPad has seen a yearly decline in sales, a 14 percent decrease YOY.

Analysts expected Apple to sell 27 million iPhones, 18 million iPads, 3.85 million Macs, and 4.9 million iPods this quarter.

Last quarter, Apple showed a slight drop in sales from the previous record-breaking quarter with 37.4 million iPhones and 19.5 million iPads sold.

This quarter’s 31 million iPhones represent a quarterly loss of 21 percent, while still being up 20 from the same quarter last year. However, the iPad is down 25 percent sequentially and is down 14 percent from last year.

Interestingly, the average selling price for the iPhone has decreased from $613 last quarter to around $580 this year, perhaps marking that cloud innovation has required users to purchase less capacity, but more likely pointing toward the near ubiquity of smartphones.

When everyone owns a smartphone, as opposed to early adopters and tech fanatics, the lower-end model becomes a more attractive option in terms of pricing, especially with aggressive promotions from carriers.

The drop in iPad and iPhone sales quarterly can be attributed to the fact that this is a historically slow time for Apple and all CE companies, and that both devices are expecting a refresh soon.

The iPhone 5 was unveiled last fall, with the next-generation Apple smartphone expected in the fall alongside iOS 7. In terms of the iPad, the most recent refresh came in November with the availability of the iPad mini.

Of course, that Christmas quarter was Apple’s strongest yet for iPhone and iPad sales, breaking previous records for both products. But things have not-so-surprisingly slowed down since the star products’ unveiling, with many now waiting for the newer models to go on sale.

Meanwhile, Mac and iPod sales remain relatively flat from last quarter. Apple sold 3.75 million Macs in the quarter ending in June, down just barely from 3.9 million last quarter. This represents a 7 percent YOY loss, down 5 percent from the previous quarter.

Obviously, the PC market is dying all around us, so flat yearly and quarterly growth is actually quite impressive.

Mac sales usually do best during the back-to-school season. In Q4 of 2012, which goes from July through September, Mac sales hit 4.9 million, which was actually a 1 percent increase from the year before.

But during Christmas, the first full quarter of the 13-inch Retina MBP’s availability, Mac sales only reached 4.1 million units, representing a 16 percent quarterly decrease. Worse yet, it was a 21 percent fall from the same time last year. Last quarter, Mac sales were essentially flat again with 3.95 million units sold, down just one percent from the quarter before and nearly flat with the 4 million they sold in the previous year during the same period.

iPods continue to lose traction with a group of users who are increasingly interested in the iPhone and iPad, both of which offer similar, yet more robust technology.

Third quarter sales totaled 4.5 million, down from 5.63 million last quarter and a YOY loss of 32 percent.

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